NFO NEST

March 2014

Flurry of FMPs

Fund houses are rushing to launch FMPs as investors are looking to take advantage of double indexation benefit from longer tenure FMPs. As many as 40 FMPs are currently open for subscription. High interest rates, excessive supply of FMPs and lack of liquidity are posing a challenge for some fund houses to raise money in FMPs. Recently some fund houses had to extend the NFO period as they could not raise the mandatory Rs. 20 crore in their FMPs. According to rough industry estimates, Rs. 1 lakh crore has matured from FMPs in the last few months, which is likely to flow back into the system. Rs. 10,000 crore to Rs. 15,000 crore is expected to flow into FMPs in March 2014. The industry had collected Rs. 21,581 crore in March 2013. Typically a lot of high net worth investors invest in FMPs in March to take advantage of double indexation benefits. There is a good appetite for both short term and long term FMPs.  Some fund houses do not launch FMPs as these are not very high margin products. Fund houses have to compete on wafer thin margins by keeping expense ratios low in order to offer superior returns.  Except Franklin Templeton, Quantum, and PPFAS most fund houses launch FMPs. FMPs may lose their sheen if direct tax code (DTC) is implemented. The tax arbitrage between FMPs and fixed deposits will also diminish. If held for more than one year, income from FMPs is treated as long term capital gains which is taxed at 10% or 20% with indexation whereas the income from fixed deposits is taxed as per the nominal income tax rate. This is set to change under DTC as gains from FMPs will be added to the income and taxed at the nominal rate.

Birla Sun Life Focused Equity Fund – Series 2

Opens: February 26, 2014

Closes: March 19, 2014

 

Birla Sun Life Focused Equity Fund Series 2 is a close ended equity fund investing in eligible securities as per Rajiv Gandhi Equity Savings Scheme, 2013, as amended from time to time. The objective of the fund is to generate capital appreciation, from a portfolio of equity securities specified as eligible securities for Rajiv Gandhi Equity Savings Scheme, 2013 (RGESS) (95% – 100%) medium to high risk profile and Cash and Cash Equivalents (cash and bank balance or overnight investment in CBLO, reverse repo) and Money Market Instruments (0% – 5%) low to medium risk profile. The fund is benchmarked against CNX 100. The fund will be managed by Anil Shah.

HDFC Corporate Debt Opportunities Fund

Opens: March 6, 2014

Closes: March 20, 2014

 

HDFC Corporate Debt Opportunities Fund is an open ended income fund. The investment objective of the fund is to generate regular income and capital appreciation by investing predominantly in corporate debt. The fund is benchmarked against CRISIL Short Term Bond Fund Index. The fund will invest up to 100% in debt and money market instruments excluding medium government securities and state development loans. Investments in securitised debt, if undertaken, shall not exceed 50% of the net assets of the fund. The fund shall not invest in Government securities and State Development Loans. The fund shall not undertake repo / reverse repo transactions in Corporate Debt Securities. The fund will be managed by Rakesh Vyas and Shobhit Mehrotra.

 

IDBI Diversified Equity Fund

Opens: March 10, 2014

Closes: March 24, 2014

IDBI Diversified Equity Fund is an open ended diversified equity fund. The fund will provide investors with opportunities for long-term growth in capital through investment in a diversified basket of equity stocks, debt, and money market. The equity portfolio will be well-diversified and actively managed to realize the fund objective. Benchmarked against S&P BSE 500, IDBI Diversified Equity Fund will invest in fundamentally strong companies having investment merits like competitive position in market, potential earnings growth, good management quality, etc. The fund will follow a combination of growth as well as value picking. However, more weightage will be given to growth picking strategy. The fund is designed to capture mispriced opportunities in the market since valuations are very cheap at the moment. The fund will select stocks on the basis of quantitative and qualitative analysis. While quantitative factors involve companies showing improvement in margin and having reasonable or manageable debt, qualitative factors will track companies with high corporate governance and strong market position. The fund will be managed by Mr. V. Balasubramanian.

ICICI Prudential Multiple Yield Fund – Series 6 – Plan B

Opens: March 11, 2014

Closes: March 24, 2014

ICICI Prudential Multiple Yield Fund - Series 6 - Plan B is a close ended income fund. 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 fund's assets in equity and equity related instruments. The fund will allocate 75% to 95% of assets in debt securities (including government securities) with low to medium risk profile. It would allocate up to 20% 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 30% of the asset in equity or equity related securities with medium to high risk profile. The investments in debt instruments, 82% to 87% would be invested in AA rated non convertible debentures. The benchmark index for the fund will be CRISIL MIP Blended Index. The fund will be jointly managed by Rahul Goswami, Aditya Pagaria (debt portion), Rajat Chandak (equity portion) and investments under the ADRs/GDRs and other foreign securities will be managed by Abhishek Pathak.

R* Shares Consumption Fund

Opens: March 14, 2014

Closes: March 28, 2014

 

R* Shares Consumption Fund is an Open Ended Index Exchange Traded Fund.  The investment objective of the fund is providing investment returns that, before expenses, closely correspond to the total returns of the securities as represented by the securities constituting CNX Consumption Index (95% – 100%) with Medium to High risk profile and Money Market instruments including CBLO (with maturity not exceeding 91 days) and liquid schemes of Mutual Fund (0% – 5%) with Low to Medium risk profile subject to tracking errors. The performance of the fund will be standardized against CNX Consumption Index and Krishan Daga will be the fund manager.

SBI Dynamic Asset Allocation Fund, Goldman Sachs CPSE Exchange Traded Fund, Edelweiss Arbitrage Fund, Axis Opportunities Fund Series I & II, Axis Inflation Indexed Bond Fund, SBI Inflation Indexed Bond Fund, SBI Debt Fund Series A - 26-50, Kotak India Growth Fund Series I & II, ICICI Prudential Capital Protection Oriented Fund Series VI, and Birla Sun Life Capital Protection Oriented Fund Series 21 to 24 are expected to be launched in the coming months.