Monday, November 16, 2009

NFO Nest
(November 2009)

The unrelenting NFO slow down…

AMFI data reveals that a mere 58 NFOs (only 14 equity funds with a majority being income funds) have been launched in the past seven months (April-October 2009). The mutual fund industry mobilized Rs 14,181 cr in the past seven months in contrast to Rs 93,285 cr during the same period in 2008 – a massive fall of 85%. In September and October 2009 alone 30 NFOs were launched out of which 23 were income funds, 5 were diversified equity funds, 1 each were ELSS and liquid funds respectively. The fund houses chose to go in for income funds as against equity funds, inspite of the euphoric rise in the stock markets since March, 2009 in view of the prevalance of a low interest rate structure, thanks to the easy monetary policy adopted by the RBI. Debt securities are lucrative and reap rich rewards in a low interest regime. The tight October 2009 monetary policy has sought to reverse this trend.

Against the backdrop of a tough environment for equity collections, the recently concluded Religare PSU Equity Fund has turned in a decent performance with a reasonable collection of Rs 230 cr.

Stringent regulations – abolition of entry loads and insistence on uniqueness in NFOs - rolled out by the market regulator in the past few months could explain the appearance of a single fund once again in NFO Nest in November, 2009.

Axis Equity Fund
Opens: Nov 11, 2009
Closes: Dec 8, 2009

After Axis Liquid Fund and Axis Treasury Advantage Fund, the fledgling fund house has now come out with Axis Equity Fund. It is a diversified scheme for investing in Nifty stocks. The fund seeks long term capital appreciation from a diversified portfolio of stocks across the market capitalization spectrum. The fund will focus on growth companies with a sustainable model and follow a bottom up stock picking system. The fund has enabling provisions to be fully invested in derivatives, up to 40% in overseas financial markets through ADRs, GDRs, and debt and its own or other mutual funds. The fund is benchmarked against the S& P CNX Nifty.

Industry data indicates that in the last five years (as on October 30, 2009), diversified equity schemes have given positive returns with the worst giving 12% p.a. and the best giving 34% p.a. Having noticed the demand for simple yet trustworthy products that are total solutions, the fund house has come out with a generic product in the most effective category, Diversified Equity Funds. The fund house’s proprietary four-step investment process and the team of experienced equity professionals will aid risk mitigation, besides offering a potential answer to the long term solution that the investor is seeking.

ICICI Prudential Oil Fund, Birla Sunlife T-20 Fund, IDFC Real Estate Equity Fund, Mirae Asset Korea Discovery Fund, Canara Robeco Active Money Manager, Canara Robeco Gilt Short-term Fund, HDFC Medium term Opportunities Fund, Baroda Pioneer Infrastructure Fund, and Canara Robeco Large Cap+ Fund are expected to be launched in the coming months.

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