Monday, April 16, 2012

NFO NEST
April 2012


NFOs (equity) at its nadir


Leaving aside the regular stream of fixed maturity plans (FMPs) (close-ended debt funds) in the mutual funds’ NFO space, there has been a dearth of NFOs of equity and non-FMP debt funds in recent months. An FCRB analysis, however, reveals no let up in the steady flow of draft offer documents being filed by various mutual funds with SEBI, which propose the launch of non-FMP funds. Draft offer documents for FMPs still outnumbered the former. Some of the proposed non-FMP funds from the draft offer documents even offer attractive features and scope for investors. In the past one year (March 2011 to February 2012), as per Capitaline NAV India mutual fund database, 34 NFOs took place for funds which were not FMPs. Of these, 13 were non-FMP bond funds, four were liquid funds, five gold fund-of-funds (FoFs), three equity funds, two gold exchange-traded funds (ETFs), two gilt funds, two tax-planning equity funds, two global FoFs, and one equity index ETF.

In the same one-year period, as per the SEBI website, 213 draft offer documents were filed with SEBI, out of which, 92 were not for FMPs. However, of these 92 proposed NFOs, only 18 hit the mutual fund NFO market. The remaining 74 have not come out with the NFOs either due to non-receipt of clearances from SEBI or due to their own delays. These 74 funds, whose draft offer documents were filed with SEBI but did not hit the NFO market, included the usual range of funds from regular bond funds to domestic equity funds. But, they also included some novel or uncommon NFO proposals such as Smallcap Benchmark ETF (filed in May last year before Goldman Sachs India MF acquired Benchmark MF), BNP Paribas Russia Fund, Axis Focussed 25 Fund, DSP Blackrock Emerging Europe Fund, Baroda Pioneer Global Equity-Gold and Mining Fund, HSBC China Consumer Opportunities Fund, DSP Blackrock Global Allocation Fund, IIFL Dividend Opportunities ETF, Quantum Multi Asset Fund and FT India Feeder-Templeton Asian Growth Fund.

In the 2011, ten new equity fund offers have been launched. This is the lowest for any 12-month period since 2004. With 29 NFOs in 2004, the number of NFOs has been 43, 39, 48 and 41 in 2005, 2006, 2007 and 2008 respectively. It fell drastically to 17 in 2009 and 23 in 2010 before reaching an all time low of 10 in 2011. The fund raised from NFOs rose from Rs 4384 crore in 1994 to around Rs 20000 crore to Rs 40000 crore in the next four years – Rs 25,225 crore, 36,741 crore, 29,284 crore, and 21,071 crore in 2005, 2006, 2007 and 2008 respectively. It dropped to Rs 4411 crore and Rs 4659 crore in 2009 and 2010 respectively and further still to Rs 612 crore in 2011.

The presence of just one fund in the April 2012 NFONEST bears testimony to the fact that the number of non-FMP NFOs continues to dwindle in 2012 as well.

ICICI Prudential Multiple Yield Fund – Series 2 Plan F
Opens: April 10, 2012
Closes: April 24, 2012


ICICI Prudential Multiple Yield Fund – Series 2 Plan F is a closed-end fund with a tenure of 1100 days that seeks to generate returns by investing in a portfolio of fixed income securities/debt instruments. 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 manager is Chaitanya Pande. The benchmark is CRISIL MIP Blended Index.


Union KBC Gold Fund, Canara Robeco Gold Savings Fund, Taurus Credit Opportunities Fund and Taurus Twin Advantage Fund are expected to be launched in the coming months.

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