NFO NEST
March 2011

Resurgence?

NFOs have been few and far between since the 2008 crisis…But 2011 has been witnessing resurgence in NFOs thus far.

Pramerica Dynamic Monthly Income Fund
Opens: March 8, 2011
Closes: March 22, 2011

Pramerica Dynamic Monthly Income Fund aims to generate regular returns through investment in fixed income (debt and money market) instruments and to generate capital appreciation by investing in equity and equity related instruments. The asset allocation would be 70-95% in fixed income instruments and 5-30% in equity and equity-related instruments. Pramerica Dynamic Monthly Income Fund is a combination of fundamentals led asset allocation and active fund management, targeting generation of regular returns, with the help of Pramerica DART, a proprietary tool developed and managed by Pramerica AMC, to determine an optimum asset allocation mix between debt and equity, within the overall asset allocation of the scheme by taking into account key factors that have an impact on the market. When the markets are looking expensive, Pramerica DART is designed to book profits and when the markets are cheap, to increase the exposure to equities and thus reduce the impact of market volatility. Due to the current ongoing interest rate hike period, investing in fixed income makes sense. MIPs aim to provide investors with regular pay-outs (though dividends) and are suitable for senior citizens and others looking for regular income. MIPs also benefit those in the higher income tax brackets who are looking for investment alternatives to bank FDs (from tax saving point of view). The scheme offers Dividend Transfer Plan (DTP) – wherein investors can opt to automatically transfer (and invest) the ‘net dividend amount’ (net of dividend distribution tax) received under the existing mutual fund scheme into any other scheme of Pramerica Mutual Fund (of their choice). The fixed income portfolio of the scheme will be managed by Mahendra Jajoo and the equity portfolio will be managed by Ravi Gopalakrishnan. The Benchmark Index is the CRISIL MIP Blended Index.

Mirae Asset India-China Consumption Fund
Opens: March 9, 2010
Closes: March 23, 2010

Mirae Asset India-China Consumption Fund, the first of its kind in India, will focus on sectors/companies benefiting from consumption-led demand that is driving the world's fastest-growing economies—India and China. It will pursue a flavour of Indian and Chinese consumer stocks, providing Indian investors with the opportunity to benefit from the long-term structural growth trends in consumption and consumption-led sectors. In terms of asset allocation, the fund will seek to invest 65-90% of its assets in Indian equities and equity related securities of companies that are likely to benefit either directly or indirectly from consumption-led demand. The fund will also invest 10-35% of its portfolio in Chinese equities and equity-related securities of companies that are likely to benefit either directly or indirectly from consumption-led demand. The fund may take up to 25% exposure in money market instruments (including CBLO)/debt securities instruments in India and/or units of debt/liquid schemes of domestic mutual funds. The scheme will use a customised benchmark index that constitutes MSCI India Consumption Index (65%) and MSCI China Consumption Index (35%).

Peerless MF Child Plan
Opens: March 11, 2010
Closes: March 25, 2010

Peerless MF Child Plan is a multiple asset class product wherein the investment will be made in debt, equity, and gold exchange traded funds. The investment objective of the scheme is to generate long-term capital appreciation through a portfolio of fixed income securities, gold exchange traded funds (ETFs) of other mutual funds and equity and equity-related instruments. The fund invests a minimum 60% and maximum 90% in debt fund, 5-35% in equity and equity-related instruments and 5-35% in gold ETFs of other mutual funds. Mr Ganti N Murthy (debt) and Mr Kaushik Dani (equity gold fund) are the Fund Managers for the fund. The fund is benchmarked against Crisil MIP Blended Index + Price of Gold (85:15).

Birla Sunlife Capital Protection-oriented Fund - Series V
Opens: March 11, 2010
Closes: March 25, 2010

Birla Sun Life Capital Protection Oriented Fund - Series 5 (832 days) seeks to provide capital appreciation linked to equity market with downside protection at the end of the tenure. The fund expects to achieve down side protection by investing in debt securities with tenure comparable with the tenure of the plan, subject to the credit risk. The fund expects to achieve the market-linked appreciation (upside) by investing in the premium of exchange traded options. The fund proposes to restrict its derivative exposure only to the extent of buying of call options. Hence maximum loss could be equivalent to the premium paid, not any more. Moreover, the premium paid will be equal or lower to the coupon receivable from fixed income securities after providing for fund expenses. CRISIL Balanced Fund Index is the benchmark index. Satyabrata Mohanty and Ajay Garg are the fund managers.

IDBI Short-term Bond Fund
Opens: March 17, 2010
Closes: March 22, 2010

IDBI Short Term Bond Fund aims at providing investors with regular income for their investment. The fund will endeavour to achieve this objective through an allocation of the investment corpus in a diversified portfolio of debt and money market instruments. The scheme would allocate 65% to 100% of assets in money market instruments/debt instruments (including floating rate debt instruments and securitized debt) with maturity/residual maturity upto and including 2 years with low risk profile. On the flipside it would allocate upto 35% of assets in debt instruments (including floating rate debt instruments and securitized debt) with duration/maturity/residual maturity above 2 years and not exceeding 3 years with low to medium risk profile. Benchmark Index for the scheme is Crisil Short Term Bond Fund Index. The fund manager of the scheme will be Gautam Kaul.

Motilal Oswal Most Shares NASDAQ-100 ETF
Opens: March 16, 2010
Closes: March 23, 2010

The `MOSt Shares NASDAQ-100' ETF is India's first US equities based ETF and will track Nasdaq-100 index. This is the second global equity index based ETF in India. Last year Benchmark Asset Management had launched an ETF that tracks Hong Kong Stock Exchange's benchmark index Hang Seng index. Nasdaq-100 is one of the most widely traded and held index. It is also the second most liquid index in the world. Motilal Oswal Most Shares NASDAQ-100 exchange traded fund aims to mirror the performance of the NASDAQ-100 index, subject to tracking error. It will invest at least 95% of its total assets in the securities comprising NASDAQ-100. The Nasdaq-100 constituents generate 60% of their revenues from USA, Canada, Latin America and South America. Investing in the fund will bring the much required diversification for Indian investors. The fund is a good vehicle to participate in the much-awaited economic recovery in the US economy and the developed nations. The index fund further ensures that the investors get to invest in some of the best of non-financial companies in the US and at the same time there is no fund manager risk. However, investors may face the risk from a fizzled out economic recovery in the US and other developed nations. Again, the rupee-dollar exchange rate will also have a bearing on the returns. The fund will attract the taxation treatment of a debt fund. Rajnish Rastogi is the fund manager for the scheme. The units will be listed on BSE and NSE to facilitate trading post new fund offer.

Shariah-compliant personal investment products are slated to flood the market as exchanges and mutual funds seek to tap Muslim investors who refrain from trading in stocks and commodities. While the MCX-owned National Spot Exchange Limited (NSEL) plans to market shariah-compliant investment products in a fortnight, SBI Mutual Fund and UTI Asset Management are looking at ways to launch such products in the next few months. Tata Mutual, Benchmark Asset Management, Taurus Mutual and Sundaram Mutual Fund have ethics-based investment products already. Kotak Mutual, ICICI Prudential Asset Management, Reliance Mutual, HSBC, and UTI Mutual Fund have a series of shariah-tolerant offshore funds that allow foreign investors to invest in Indian stocks. Besides these, IDBI SENSEX Fund is expected to be launched in the coming months.