NFO NEST

December 2013

 

Is the lull in the NFO market set to end?

 
After new equity fund launches hit a decade-low in 2012, such new fund offers (NFOs) have made a smart come back so far in 2013, as benchmark indices hover at historic peaks. Not only have the number of equity NFOs doubled but they could also mobilise more than three times the funds they collected in 2012. Between 2005 and 2008, the Indian mutual fund industry had launched 171 equity NFOs and collected Rs 1.12 lakh crore. However, since then, the magic of new equity launches lost sheen, as global stock markets collapsed after the global financial crisis. In 2012, the mutual funds came up with just eight equity NFOs and collected a little over Rs 500 crore in all. In 2013, there have been 14 NFOs so far (a couple of more are scheduled to be closed in December 2013), which mopped a sum of Rs 1,532 crore. Though the statistics look encouraging, when we delve a little deeper, it appears that the situation continues to remain worrisome. Of the 14, four NFOs were close-ended products from fund houses like IDFC, ICICI Prudential, Axis, and Union KBC, while six others were Rajiv Gandhi Equity Saving Schemes or RGESS from Birla Sun Life, DSP BlackRock, HDFC, IDBI, LIC Nomura, and UTI. These 10 launches, put together, cornered the lion’s share of Rs 1,100 crore or over 70% of the total assets. The remaining four managed a paltry collection of Rs 190 crore. It is this predominance of close-ended products that is a major cause for concern. 
Fund houses are now rushing to launch close-ended funds, with all five funds figuring in the November 2013 NFONEST being close-ended.
 

ICICI Prudential Capital Protection Oriented Fund - Series IV Plan G (60M)

Opens: December 2, 2013

Closes: December 16, 2013

ICICI Prudential Mutual Fund has unveiled a new fund named ICICI Prudential Capital Protection Oriented Fund IV - Plan D - 60 Months Plan D, a close-ended capital protection oriented fund. The investment objective of the fund is to seek to protect capital by investing a portion of the portfolio in highest rated debt securities and money market instruments and also to provide capital appreciation by investing the balance in equity and equity related securities. The securities would mature on or before the maturity of the Plan under the fund. The fund will allocate 70% to 100% of assets in debt securities and money market instruments with low to medium risk profile. On the flipside, it will allocate up to 30% of assets in equity and equity related securities with medium to high risk profile. The fund's performance will be benchmarked against CRISIL MIP Blended Index. Debt portion of the fund will be managed by Rahul Goswami and equity portion will be managed by Rajat Chandak. The investments of the fund in ADR/GDR and other foreign securities will be handled by Aditya Pagaria.

Sundaram Hybrid Fund – Series D

Opens: December 5, 2013

Closes: December 19, 2013

Sundaram Mutual Fund has launched a new fund named Sundaram Hybrid Fund - Series D, a three year close-ended income fund. The objective of the fund will be to generate capital appreciation and current income, through a judicious mix of investments in equities and fixed income securities. The fund will allocate up to 65%-90% of assets in fixed income securities, up to 30% of assets in money market instruments and cash equivalent with low to medium risk profile and invest up to 10%-35% in equity and equity related instruments with high risk profile. The fund's performance will be benchmarked against CRISIL MIP Blended Index. Siddharth Chaudhary will be the fund manager for the debt portion and Shiv Chanani will be the fund manager for the equity portion.

ICICI Prudential Capital Protection Oriented Fund - Series IV Plan H (36M)

Opens: December 11, 2013

Closes: December 24, 2013

ICICI Prudential Mutual Fund has unveiled a new fund named ICICI Prudential Capital Protection Oriented Fund IV - Plan H - 36 Months Plan, a close-ended capital protection oriented fund. The investment objective of the fund is to seek to protect capital by investing a portion of the portfolio in highest rated debt securities and money market instruments and also to provide capital appreciation by investing the balance in equity and equity related securities. The securities will mature on or before the maturity of the Plan under the fund. The fund will allocate 80% to 100% of assets in debt securities and money market instruments with low to medium risk profile. On the flipside, it will allocate up to 20% of assets in equity and equity related securities with medium to high risk profile. The fund's performance will be benchmarked against CRISIL MIP Blended Index. Debt portion of the fund will be managed by Rahul Goswami and equity portion will be managed by Rajat Chandak. The investments of the fund in ADR/GDR and other foreign securities will be handled by Aditya Pagaria.

Reliance Close ended Equity Fund - Series B

Opens: December 13, 2013

Closes: December 27, 2013

Reliance Mutual Fund has launched a new fund named Reliance Close Ended Equity Fund - Series B. The investment objective of the fund is to provide capital appreciation to the investors, which will be in line with their long term savings goal, by investing in a diversified portfolio of equity and equity related instruments with small exposure to fixed income securities. The fund will allocate 80% to 100% of assets in equity and equity related instruments with high to medium risk profile and it will allocate up to 20% of assets in debt and money market instruments with medium to low risk profile.  The fund will be benchmarked against S&P BSE 200 Index and will be co-managed by Sailesh Raj Bhan and Jahnvee Shah.

Sundaram Select Microcap Fund - Series I

Opens: December 16, 2013

Closes: December 30, 2013

Sundaram Mutual Fund has launched Sundaram Select Micro Cap - Series I, a close-ended equity fund. The fund seeks capital appreciation by investing predominantly in equity/ equity-related instruments of companies that can be termed as micro-caps. A company whose market capitalisation is equal to or lower than that of the 301st stock by market cap on the NSE at the time of investment will be considered to be in micro-cap category. The fund will invest up to 65%-100% in equity and equity related securities of companies of micro-caps with high risk profile. On the other hand, it will invest up to 35% in other equity with high risk profile and fixed income and money market securities with low to medium risk profile. The fund will follow a bottom-up approach with emphasis on investing in companies with quality management, unique business strengths, sustainable long-term growth prospects, and reasonable valuations. The fund will be benchmarked against S&P BSE Small Cap Index. The fund managers will be S. Krishnakumar (Equity) and Dwijendra Srivastava (Fixed-Income).

Birla Sunlife RGESS Series 2 and 3, ICICI Prudential Capital Protection oriented Fund V - Plan A to A, SBI Tax Advantage Fund - Series III, LIC Nomura Capital protection oriented Fund – Series 2, Principal Index Fund – Midcap, UTI Medium Term Fund, Baroda Pioneer Money Market Opportunities Fund, HDFC Capital protection oriented Fund - Series II, ICICI Prudential Value Fund - Series 3 and 4, DWS Residual Duration Fund - Plan A to Plan D, Principal Asset Allocation Fund of Funds, Tata Dual Advantage Fund (Scheme B to D), BOI AXA Capital Protection oriented Fund - Series 2, HDFC Debt Fund for Cancer Cure 2014, ICICI Prudential Multiple Yield Fund – Series 6 Plan A to F, Motilal Oswal MOSt Asset Allocation Fund – Series 1, and ICICI Prudential Credit Opportunities Fund are expected to be launched in the coming months.