NFO NEST
December 2010

A brief reprieve in the NFO rain!

It is raining NFOs in the mutual fund industry. According to Value Research, an independent mutual fund tracking firm, more than 200 NFOs have managed to mobilise Rs 43,251 crore in the past five months. The fund houses launched NFOs across the spectrum, including 14 equity funds, 20 debt funds, 2 gold funds, 15 hybrid funds, and a host of FMPs. The corresponding figure for the previous year was 100 schemes which managed to mop up around Rs 14,077 crore. In short, there is no denying the abundance of NFOs in the mutual fund industry. However, all NFOs are not great money-making opportunities for retail investors. In fact, SEBI has chided the mutual fund industry for launching schemes with little distinction and making the selection process difficult for the average investor.

With the deadline for KYC compliance less than two weeks away and the herculean task involved in getting the compliance, there has been a temporary lull in the NFO market in December 2010, with a single fund figuring in the December 2010 NFONEST.

Religare Medium Term Bond Fund
Opens: December 13, 2010
Closes: November 24, 2010

Religare Medium Term Bond Fund, an open ended income fund, seeks to generate regular income and capital appreciation by investing in a portfolio of medium term debt and money market instruments. A minimum of 80% of assets and up to 100% will be invested in high quality debt securities having residual maturity of up to five years. The investment strategy of the Religare Medium Term Bond Fund particularly rests on three pillars. This is intended for investors who have got a moderate risk appetite with a minimum investment horizon of six months towards bond fund. This portfolio will be constructed based on good quality assets of both corporate bonds and securities. Secondly, it is biased towards holding assets until maturity. Thirdly, it will play down on the rolled out effect on the yield curve and it will also capture the positive valuation changes given the changes in the yield curve. With the increasing stock market volatility, investors have turned cautious. Portfolio diversification is the key and bond funds aim to provide regular income and lower volatility and can act as a cushion against the unpredictable ups and downs of the stock market. The Benchmark Index for the scheme will be CRISIL Composite Bond Fund Index. The Fund will be managed by Mr. Nitish Sikand and Mr. Pranav Gokhale.

Pramerica Treasury Advantage Fund, Pramerica Short Term Income Fund, Reliance Indonesia Opportunities Fund, MOST Shares NASDAQ-100 ETF, MOST Shares Midcap 100 ETF, Templeton India Corporate Bond Opportunities Fund, and IDBI Tax Savings Plan are expected to be launched in the coming months.