NFO NEST

January 2016

NFOs on a downhill ride

Total money mobilisation through equity mutual funds reduced by 28% during the calendar year 2015. With cap on the upfront commission payout by the Asset Management Companies (AMCs) to distributors imposed from April 2015, there has been a decline in the number of new launches and the assets garnered. There were 63 equity new fund offers (NFOs) in 2015, mobilising assets worth Rs 8,816 crore, compared with mobilisation of Rs 12,219 crore through 75 equity NFOs a year ago. In the first four months of 2015, before the cap on upfront came into existence, nearly 25 close-ended equity schemes hit the market, garnering assets worth Rs 3,600 crore. These schemes were front-loaded with commissions as high as 7-8%. Now the cap is at one per cent upfront, making distributors less enthused about selling new offers to investors. The impact was well felt in the following months as only 12 more close-ended equity schemes were offered in the rest of the year. Gone are the days when NFOs were pushed on the basis of higher commissions. Unless there is something that differentiates an NFO from the existing product basket, offer launches will remain low. With rising awareness, investors prefer schemes with proven track record. This is well reflected in equity schemes inflows, wherein the existing products with a reasonable performance track record of a minimum 3-5 years are accounting for more incremental inflows. In 2015, total net inflow in equity segment was Rs 90,000 crore. However, the NFOs could garner less than 10% of the total fresh money.

Close-ended NFOs continue to adorn the January 2016 NFONEST.

ICICI Prudential Capital Protection Oriented Fund – Series IX

Opens: January 4, 2015

Closes: January 18, 2016

ICICI Prudential Mutual Fund has launched a new fund named as ICICI Prudential Capital Protection Oriented Fund - Series IX - 1378 Days Plan D, a close ended capital protection oriented fund. The tenure of the fund is 1195 days. 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 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 would allocate 70%-100% of assets in debt securities and money market instruments with low to medium risk profile and invest up to 30% of assets in equity and equity related securities with medium to high risk profile. The performance of the fund will be benchmarked against Crisil Composite Bond Fund Index (85%) and Nifty 50 (15%) Index. The fund managers are Vinay Sharma (equity portion), Chandni Gupta and Rahul Goswami (debt portion) and Shalya Shah (For investments in ADR / GDR and other foreign securities).

SBI Dual Advantage Fund – Series XIII

Opens: January 5, 2015

Closes: January 19, 2016

SBI Mutual Fund has unveiled a new fund named as SBI Dual Advantage Fund - Series XIII, a close ended hybrid fund. The tenure of the fund is 1171 days from the date of allotment. The primary investment objective of the fund is to generate income by investing in a portfolio of fixed income securities maturing on or before the maturity of the fund. The secondary objective is to generate capital appreciation by investing a portion of the fund corpus in equity and equity related instruments. The fund will invest 55%-95% of assets in debt and debt related instruments, invest up to 10% of assets in money market instruments with low to medium risk profile and invest 5%-35% of assets in equity and equity related instruments including derivatives with high risk profile. Benchmark Index for the fund is CRISIL MIP Blended Fund Index. Rajeev Radhakrishnan shall manage debt portion and Dharmendra Grover shall manage investments in equity and equity related instruments of the fund.

ICICI Prudential Business Cycle Fund – Series 3

Opens: January 8, 2015

Closes: January 22, 2016

ICICI Prudential Mutual Fund has launched a new fund as ICICI Prudential Business Cycle Fund - Series 3, a close ended equity fund. The tenure of the fund is 1125 days from the date of allotment. The investment objective of the fund is to seek to generate income by investing in a portfolio of fixed income securities/debt instruments maturing on or before the maturity of the fund. The fund will invest 80-100% of its assets in equity and equity related instruments with medium to high risk profile and invest up to 20% of assets in debt, money market instruments and cash with low to medium risk profile. The investment in derivatives can be up to 50% of the Net Asset of the fund. The benchmark Index for the fund is S&P BSE 500 Index. The fund will be jointly managed by Sankaran Naren and Mittul Kalawadia. The investments under ADRs/GDRs and other foreign securities will be managed by Shalya Shah.

Axis Hybrid Fund Series 29

Opens: January 12, 2015

Closes: January 25, 2016

Axis Mutual Fund has launched a new fund named as Axis Hybrid Fund Series 29, a 1275 days close ended debt fund. The primary objective is to generate income by investing in high quality fixed income securities that are maturing on or before the maturity of the fund whilst the secondary objective is to generate capital appreciation by investing in equity and equity related instruments. The fund will allocate 70% to 95% of assets in debt instruments including securitized debt with low to medium risk profile, invest up to 25% of assets in money market instruments with low risk profile and it would allocate 5% to 30% of assets in equity and equity related instruments with high risk profile. Investment in securitized debt would be up to 50% of the net assets of the fund. The fund shall not invest in foreign securitized debt. Benchmark Index for the fund is a combination of Crisil Composite Bond Fund Index (85%) and Nifty 50 Index (15%).The fund managers are Devang Shah and Ashwin Patni.

Sundaram Value Fund Series III

Opens: January 18, 2015

Closes: February 1, 2016

Sundaram Mutual Fund has launched a new fund as Sundaram Value Fund Series III, a close-end equity fund. The investment objective of the fund is to provide capital appreciation by investing in a well-diversified portfolio of stocks through fundamental analysis. The product is suitable for investors who are seeking long term capital growth by investing in a well-diversified portfolio of stocks through fundamental analysis. The benchmark of the fund is S&P BSE 500 Index. The fund managers are S Krishnakumar, Madanagopal Ramu (Co-Fund Manager-Equity) and Dwijendra Srivastava (Fixed Income).

Sundaram Long Term Tax Advantage Fund Series II

Opens: November 3, 2015

Closes: March 15, 2016

Sundaram Mutual Fund has launched a new fund as Sundaram Long Term Tax Advantage Fund -Series II, a 10 year close ended equity linked savings scheme. The investment objective of the fund is to generate capital appreciation over a period of ten years by investing predominantly in equity and equity-related instruments of companies along with income tax benefit. The duration of the fund is 10 years from the date of allotment of units. The fund will allocate 80%-100% of assets in equity and equity related securities with high risk profile and invest up to 20% of assets in fixed income and money market securities with low to medium risk profile. The performance of the fund will be benchmarked against S&P BSE 500 Index. The fund will be managed by S. Krishnakumar and Dwjendra Srivastava.

SBI Long Term Advantage Fund Series III

Opens: December 31, 2015

Closes: March 30, 2016

SBI Mutual Fund has launched a new fund as SBI Long Term Advantage Fund - Series III, a 10 year close -ended equity linked savings scheme. The investment objective of the fund is to generate capital appreciation over a period of ten years by investing predominantly in equity and equity related instruments of companies along with income tax benefit. The fund will allocate 80-100% of assets in equities, cumulative convertible preference shares and fully convertible debentures and bonds of companies with high risk profile and invest up to 20% of assets in money market instruments with low to medium risk profile. The fund's performance will be benchmarked against S&P BSE 500 Index. The fund will be managed by Dharmendra Grover.

ICICI Prudential Multiple Yield Fund Series II, LIC Nomura MF Short Term Debt Fund, DHFL Pramerica Hybrid Fund – Series 1 to 5, Birla Sunlife Banking ETF, and ICICI Prudential Retirement Income Fund are expected to be launched in the coming months.