NFO NEST

April 2011

Whither NFO Culture?

Several open-ended equity schemes have failed to attract any meaningful investment, but are still alive. The list is long and almost all fund houses are still selling such schemes, which were launched long ago, but failed to mop up enough money from investors. Many of the small schemes are a product of the NFO culture prevalent till recently. Fund houses exploited the high entry loads and upfront charges by rolling out schemes till SEBI broke up the party. The regulator has stopped clearing NFOs unless it is convinced that a new scheme will have an investment objective different from the available schemes and capable of fetching sufficient returns for investors. Following the tightening of norms, the net inflow in NFOs has come down to Rs 5,000-crore as against Rs 25,000-30,000 crore in earlier years.

Four funds from diverse categories make their appearance in the April 2011 NFO NEST.

Axis Dynamic Bond Fund

Opens: April 6, 2011 Closes: April 20, 2011

Axis Mutual Fund has launched Axis Dynamic Bond Fund, an open-ended debt fund. The fund will endeavour to generate optimal returns while maintaining liquidity through active management of a portfolio of debt and money market instruments. The fund will allocate upto 100% of assets in debt instruments including Government Securities and corporate debt with low to medium risk profile. On the other side, it would allocate upto 100% of assets in money market instruments with low risk profile. Debt instruments include securitized debt upto 30% of the net assets of the scheme. Investments in derivatives shall be up to 75% of the net assets of the scheme. The benchmark index for the fund is CRISIL Composite Bond Fund Index. The fund will be managed by Mr. R. Sivakumar and Mr. Ninad Deshpande.

ICICI PRUDENTIAL MIP 5

Opens: April 14, 2011 Closes: April 27, 2011

ICICI Prudential Mutual Fund has launched ICICI Prudential MIP 5, an open-ended income fund. The primary investment objective of the fund is to generate regular income through investments in fixed income securities so as to make regular dividend distribution to unit holders seeking the Dividend Option. The secondary objective of the fund is to generate long-term capital appreciation by investing a portion of the fund's assets in equity and equity related instruments. The fund will allocate 90% to 100% of assets in debt securities, money market instruments and upto 10% of assets in equities & equity related securities with medium to high risk profile. The fund offers Cumulative and Dividend Options. Cumulative Option shall also have the facility of Automatic Encashment Plan. Dividend option shall have dividend payout and dividend reinvestment facility with dividend reinvestment as default facility. Dividend option will have Monthly, Quarterly and Half Yearly dividend frequencies. The minimum investment amount is Rs 5000 and in multiples of Rs 1 under Cumulative and Dividend option. Whereas under, Automatic Encashment Plan it is Rs 25000 and in multiples of Rs 1. The fund’s performance will be benchmarked against Crisil MIP Blended Index. The fund will be managed by Mr. Chaitanya Pande (Debt) and Mr. Mrinal Singh (Equity).

HSBC Brazil Fund

Opens: April 15, 2011 Closes: April 29, 2011

HSBC Mutual Fund has launched the HSBC Brazil Fund (HBF), an open-ended Fund-of-Funds Scheme that seeks to provide long-term capital growth by investing in Brazil - an emerging market economy through HGIF Brazil Equity Fund. The Brazilian economy has a pronounced investment in commodities. The fund may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a significant part of its corpus. The fund may also invest a certain proportion of its corpus in money market instruments and / or units of liquid mutual fund schemes, in order to meet liquidity requirements from time to time. The fund will invest up to 95%-100% units/shares of HGIF Brazil Equity Fund with medium to high risk profile and invest upto 5% in Money Market instruments (including CBLO & reverse repo) and/or units of liquid mutual fund schemes with low to medium risk profile. HBF will not invest in the underlying scheme(s), which invest more than 10% of their net assets in unlisted equity shares or equity related instruments. Benchmark Index for the scheme is MSCI Brazil 10/40 Index. Gaurav Mehrotra and Niren Parekh will be the fund managers for foreign securities and Sanjay Shah will be the fund manager for investments in Indian market.

Birla Sunlife Gold ETF

Opens: April 25, 2011 Closes: May 9, 2011

Birla Sun Life Mutual Fund has launched Birla Sun Life Gold ETF, an open-ended gold exchange traded fund. The investment objective is to generate returns that are in line with the performance of gold, subject to tracking error. Birla Sun Life Gold ETF is a passively managed fund tracking the price of Gold and reflects the performance of the Gold price. The fund would invest in physical gold of prescribed quantity and quality (fineness) and endeavour to track the spot price of gold. The fund invests in gold regardless of investment merit. The fund would invest upto 100% in Physical Gold and/or upto 5% in debt and money market instruments to meet the liquidity requirements, subject to tracking error. The fund may buy or sell gold at different points of time during the trading session at the then prevailing prices which may or may not correspond to its closing price, due to disinvestments to meet redemptions, transactions cost and recurring expenses, execution of large buy/sell orders etc. The benchmark is the domestic price of physical gold. The fund manager of the fund will be Mr. Satyabrata Mohanty.

Tata Retirement Fund, Edelweiss Midcap Fund, Axis Gold Fund, Fidelity Income Saver Fund, L & T Short-term Debt Fund, Tata SIP Fund, FT India Feeder – Franklin US Opportunities Fund, FT India Feeder – Templeton Asian Growth Fund, Peerless Equity Fund, Axis Hybrid Fund, Pramerica High Yield Fund, and ICICI Prudential Pharma and Life Sciences Fund are expected to be launched in the coming months.