Monday, May 20, 2013


May 2013

Close-ended funds are back with a bang!

Close-ended equity schemes, which were out of favour in the past five years, are back in vogue. At least three fund houses are coming out with close-ended equity schemes in such a volatile environment. In fact, IDFC Mutual fund has already launched its IDFC Equity Opportunity-Series I, which is a three-year close-ended scheme. Other fund houses such as Reliance Mutual Fund and Axis Mutual Fund have already filed an offer document with the market regulator, SEBI seeking to launch their close-ended mutual fund scheme. 

During the boom in the markets between 2004 and 2008, we saw many fund houses coming out with close-ended schemes. During that period, the performance of close-ended schemes was not very inspiring to say the least. The ban on entry loads and streaks of measures from the market regulator has led to less monetary benefits to fund houses, which were shying away from launching close-ended schemes. That the fund houses are coming out with close-ended schemes now means they have done their homework well.

With close-ended FMPs flooding the market, only two funds (with one of them being a close-ended fund again) find their place in the May 2013 NFONEST.

PPFAS Long term Value Fund
Opens: May 13, 2013
Closes: May 21, 2013

PPFAS Long Term Value Fund is the maiden fund of Parag Parikh Financial Advisory Services Ltd, an investment advisory firm that has managed portfolio management services (PMS) schemes for many years. It is an equity diversified fund that will invest in companies across market capitalization. The fund plans to invest in stocks selected on the basis of value investing principles which can offer capital appreciation in the long term. The fund's investment objective is to generate long term capital growth from an actively managed portfolio primarily of equity and equity related securities. Fund manager will invest at least 65% of the money in equities. Maximum 35% of money can be invested in debt and money market instruments. Foreign securities can be bought to the extent of 35% of the scheme's assets. The fund does not have any sectoral or market capitalization bias. The fund manager aims to follow an active investment strategy primarily based on fundamental research driven by bottom up stock selection approach. The fund manager, Rajeev Thakkar, plans to invest in companies with a clear focus on long term. Such a fund is suitable for investors looking to own equities in the long term.

ICICI Prudential Multiple Yield Fund – Series 3 – Plan B
Opens: May 17, 2013
Closes: May 31, 2013

ICICI Prudential Mutual Fund has launched a new fund named as ICICI Prudential Multiple Yield Fund - Series 4 - Plan A, a close ended income fund. The tenure of the plan is 1825 days. The primary objective of the fund is to seek 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 scheme's assets in equity and equity related instruments. The fund will allocate 65% to 95% of assets in debt securities (including government securities) with low to medium risk profile. It would allocate up to 30% of assets in money market instruments, cash and cash equivalents with low to medium risk profile. On the flip side it would allocate 5% to 35% of the asset in equity or equity related securities with medium to high risk profile. Of the investments in debt instruments, 65% to 70% would be invested in AAA rated non convertible debentures. The benchmark index for the fund will be Crisil MIP Blended Index. Rahul Goswami, will manage the debt portion of investments under the fund. The equity portion will be managed by Rajat Chandak. The investments under the ADRs/GDRs and other foreign securities will be managed by Atul Patel.

Sundaram Capital Protection Oriented Fund 3 years (Series 10 and 11) and 5 years (Series 5 and 6), Union KBC Small and Midcap Fund, Reliance Corporate Bond Fund, IDFC Infrastructure Debt Fund Series 1, BOI AXA Triple Asset Allocator Fund, BOI AXA Equity Debt Rebalancer Fund, J P Morgan US Value Equity Offshore Fund, J P Morgan India Government Securities Fund, ICICI Prudential Capital Protection Oriented Fund IV (Plan A to J), J P Morgan India Balanced Fund, UTI Banking and PSU Debt Fund, Union KBC Capital Protection Oriented Fund Series 3, and J P Morgan India Monthly Income Fund  are expected to be launched in the coming months.

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