Monday, September 21, 2009

NFO Nest
(September 2009)

The hope and the hype …

NFOs almost came to a halt in early 2009 after the markets reached their nadir following the global financial crisis. In the first four months of 2009, NFOs could garner a paltry Rs 57 crore. The better-than-expected corporate earnings for the June quarter and the upswing in several sectors have brought hope to investors who were badly beaten by the market downturn. According to AMFI data, inflow from NFOs rose to Rs 2394 cr in July, the highest in 2009. This can partly be attributed to the rush by fund houses to launch as many NFOs as possible before the regulation banning entry load came into effect from August 1, 2009.

We have witnessed enough instances in the past of NFOs coming out with fancy names with the underlying scheme being pretty much the same as a scheme that already existed. The result – nearly 60% of the NFOs have an AUM of a mere Rs 25 crore each. SEBI, concerned about the tendency of fund houses to launch new schemes instead of strengthening the existing ones, is now summoning the trustees and asking them to explain as to why the NFO under review should be cleared and in what way it is different from the existing schemes.

These developments could explain the appearance of a single fund in NFO Nest in September, 2009.

Mirae Asset China Advantage Fund
Opens: Sept 14, 2009 Closes: October 9, 2009

Mirae Asset China Advantage Fund is an open-ended fund of funds that will invest predominantly (80% to 100%) in units of Mirae Asset China Sector Leader Equity Fund, a SICAV fund domiciled in Luxembourg and/or units of other mutual fund schemes, units of ETFs investing in equities and equity related securities of companies domiciled in or having their area of primary activity in China and Hong Kong with high risk profile. It would also invest 0% to 20% in money market instruments / debt securities with low to medium risk profile. The regular plan will charge an exit load of 1%, if redeemed up to 90 days from the date of allotment and 0.50%, if redeemed after 90 days but before 180 days from the date of allotment. In the case of systematic investment plan/ systematic transfer plan/systematic withdrawal plan the exit load charge will be 1%, if redeemed up to 365 days from the date of allotment. The scheme’s performance will be benchmarked against MSCI China Index (in Rupee Terms).

Mirae Mutual Fund is the second house to target China for growth. In July 2009, JP Morgan Asset Management Company had launched the Greater China Equity Offshore Fund, which had collected Rs 53 crore. These international fund of funds will provide you access to one of the world’s growing economies, which is poised to lead the world out of the global slowdown, thanks to the gargantuan domestic demand and stimulus packages from the Government. An excellent opportunity to prudently diversify your portfolio.

Fidelity Forward India fund, IDFC Dynamic Equity Fund, Reliance Target Appreciation Fund, IDFC Ultra Short-term Fund, SBI PSU Fund, Religare Equity PSU Fund, Infrastructure Benchmark Exchange Traded Scheme, UTI Dynamic Bond Fund, Hang Seng Benchmark Exchange Traded Fund, Birla Sunlife India Reforms Fund, Sundaram BNP Paribas Select Thematic Fund PSU Opportunities, Reliance MSCI India Exchange Traded Fund, IDFC Asset Allocation Fund of Fund, DSP BlackRock Long/Short Equity Fund, Religare Long/Short Equity Fund, Principal PNB Gold Exchange Traded Fund, ICICI Prudential Gold Exchange Traded Fund, HDFC Gold Exchange Traded Fund, Axis Dynamic Bond Fund, Axis Short-term Fund, Axis Equity Fund, Axis Liquid Fund, Axis Treasury Advantage Fund, and Axis Tax Saver Fund are expected to be launched in the coming months (includes offer documents filed in the past three months) .

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