After a 3-month gap, mutual fund NFOS flood mkt in July
After a forced threemonth break, asset management companies have rushed in with more than two dozen mutual fund schemes in July, with passively managed funds dominating the new fund offerings (NFOS).
According to industry data, 18 fund houses have launched as many as 28 mutual fund schemes in July. Of the 28 NFOS, 24 are underway and four have been closed.
The NFOS which are now open include ICICI Prudential Nifty IT Index Fund, Aditya Birla Sun Life Nifty 200 Quality 30 ETF, Baroda BNP Paribas Flexi Cap Fund and Canara Robeco Banking and PSU Debt Fund.
Besides, DSP Nifty Midcap 150 Quality 50 Index Fund, HDFC Nifty 100 ETF, Motilal Oswal S&P BSE Quality Index Fund, IDFC Midcap Fund, Mirae Asset Balanced Advantage Fund, Quantum Nifty 50 ETF Fund of Fund, Union Gilt Fund and Quant Large Cap Fund are also underway.
In addition, half a dozen NFOS, which included one by Franklin Templeton MF that is floating a new scheme after a gap of two-and-ahalf years, have been lined up for the next month.
In April, the Securities and Exchange Board of India (Sebi) had barred fund houses from floating new schemes until the industry complied with its guidelines on pooling investors' funds by intermediaries and distributors latest by July 1.
Also, the regulator had asked fund houses to implement guidelines like dual authentication for redemption, verification of source of accounts while mutual fund investments are made. These measures were aimed at safeguarding investors' interest and to boost investor confidence in mutual fund investing.
The Sebi's diktat impacted the launch of new schemes as this financial year till June saw the introduction of only four NFOS that garnered a cumulative Rs 3,307 crore, with ICICI Prudential Housing Opportunities Fund taking the lion's share of Rs 3,159 crore.
In 2021-22, asset management companies (AMCS) launched 176 new mutual fund schemes, garnering Rs 1.08 lakh crore—which meant an average of less than 15 a month. In 2020-21, 84 NFOS were floated and cumulatively, these funds mobilised Rs 42,038 crore.
Going forward, there will be a slew of new fund launches in both debt and equity space with passive strategies leading the race, said Nitin Rao, head products & proposition, Epislon Money Mart.
Amar Ranu, headinvestment products & advisory at Anand Rathi Shares & Stock Brokers, said most of the NFOS launched recently applied for approval from the regulator long before the three-month ban.
Association of Registered Investment Advisors’ board member Vishal Dhawan suggested investors to consider new mutual fund schemes only where there are limited options available in those categories of mutual funds, or if there is something particularly unique that a particular NFO offers. According to him, the new schemes can be considered once they have built a track record.