Sachin Bansal-led MF files for 7 passive funds in a day
Navi Mutual Fund (MF), among the latest entrants to the ~35-trillion industry, is looking to make a mark in the passive investment space, which is gaining traction in the country. Flipkart co-founder Sachin Bansal (pictured)-led fund house filed as many as seven offer documents with the markets regulator Securities and Exchange Board of India (Sebi) on a single day, on Tuesday.
Some of the schemes that Navi MF plans to launch are Navi NASDAQ 100 Fund of Fund, Navi Nifty Commodities Index Fund, and Navi Nifty 100 ESG Index Fund. It will also launch Navi Total US Stock Market Fund of Fund, which will allow investors to put money in Vanguard Total Stock Market Index Fund ETF (VTI). The fund will invest in units of VTI, shows the offer document. Vanguard is among the world’s largest asset managers and a pioneer in the passive investing space.
“Navi plans to focus largely on launching passive funds as they are easy to understand and cost-effective. In the next few days, they are planning to file a few more funds with the regulator,” said a source.
“The focus will largely remain on launching passive funds as they are easy to understand and cost-effective. In the next few days, we are planning to file a few more funds with the regulator and launch as and when we start getting clearance from Sebi,” said a company official.
Earlier in August, the fund house had filed offer documents for Nifty Next 50 Index Fund, Nifty Midcap 150 Index Fund, and Nifty Smallcap 250 Index Fund. Passive funds aim to mimic the performance of a particular market index. On the other hand, active MFS have professional investment teams trying to outperform the index benchmark and other funds. Passive funds tend to be more tax-efficient and have a lower expense ratio than active funds. In July, the fund house had launched Navi Nifty 50 Index Fund with an expense ratio of 0.06 per cent — the lowest in the index schemes category.
Over the past few years, the demand for passive funds has increased as the performance of equity funds faltered. The trend is largely seen in the large-cap category where top returns are generated by the passive funds. The data from Value Research shows that among the top ten performers over the past year, seven schemes are passive in nature. On average, large-cap funds have given returns of 51.79 per cent over the past year.
Schemes having index funds, exchange-traded funds (ETFS), and fund of funds investing overseas have seen a huge surge in their assets. The data from the Association of Mutual Funds in India (Amfi) shows that such schemes had net assets under management (AUM) of ~1.65 trillion as of March 2020 which increased to ~3.21 trillion by March 2021.