FUND FULCRUM

December 2015

Investors pulled out more than Rs 31,000 crore from various mutual fund schemes in November 2015, with liquid and money markets contributing the most to the outflow. This follows an inflow of about Rs 1.35 lakh crore into mutual fund products in the preceding month. According to data from the Association of Mutual Funds in India, investors withdrew a sum of Rs 31,196 crore from mutual fund schemes in November 2015. Mutual funds saw an outflow in mutual fund schemes last month mainly on account of huge redemptions in liquid and money market funds. However, investors continued to maintain bullish stance on the equity schemes. Liquid or money market fund category saw Rs 42,059 crore being pulled out last month, while equity and equity linked schemes saw an inflow of Rs 6,379 crore. Liquid and money market funds invest mainly in money market instruments like commercial papers, treasury bills, term deposits, and certificate of deposits. These funds have a lower maturity period and do not have any lock-in period. With the latest outflow, the net inflow in the schemes was at Rs 1.84 lakh crore in the period April-November 2015. The asset base of the country's 44 fund houses fell to Rs 12.95 lakh crore in November 2015 from an all time high of Rs 13.24 lakh crore in October 2015.

Equity mutual funds witnessed an addition of nearly 27 lakh investor accounts or folios in the first eight months of the current fiscal, primarily on account of strong retail participation. This follows an addition of 25 lakh folios for the entire last fiscal, 2014-15. Folios are numbers designated for individual investor accounts, though one investor can have multiple accounts. According to the SEBI data on investor accounts with 44 fund houses, the number of equity folios jumped to 34,367,673 last month from 31,691,619 at March-end, a gain of 26.76 lakh. April last year saw the first rise in more than four years. Prior to 2014-15, equity mutual fund sector had seen a continuous closure of folios since March 2009, following the global financial crisis in late 2008. From March 2009, as many as 1.5 crore folios had been closed. The investor base reached its peak of 4.11 crore in March 2009, while it stood at 3.77 crore in March 2008. Before 2014-15, there was a complete lull in equity inflows as well as generation of new folios, but in the past one year, equity markets have come back to life and yielded solid returns. Heightened investor interest has led to a sharp increase in retail folios. It is the optimism of investors because of which the folios in equity segment have increased. Besides, increased participation by retail investors in equities has led to an increase in folio numbers.  Mutual Funds have reported net inflows of Rs 66,314 crore in equity schemes in the first eight months of 2015-16, helping the industry grow the folio count. Besides, addition in equity folios helped increase overall base to 4.52 crore in November 2015 from 4.17 crore at the end of March 2015. 

Piquant parade

Shriram Asset Management Company Ltd. has recently got the go-ahead from Securities and Exchange Board of India to undertake 'offshore fund management'. Simplifying norms for domestic funds to manage offshore pooled assets, SEBI earlier this year, among others had dropped '20-25 rule', which required a minimum of 20 investors and a cap of 25% on investment by an individual, for funds from low-risk foreign investors. India's relatively higher growth and diversity of themes present an attractive opportunity for foreign investors over the medium-to-long term. The sentiments have become investor-friendly due to government's announcement of a series of reform measures in recent months, such as not imposing retrospective MAT on overseas investors for the years prior to April 1, 2015.

Nomura has initiated the process of exiting from the mutual fund business in India. In a BSE filing, LIC Housing Finance informed the markets that it is buying Nomura’s 19.3% stake in LIC Nomura Mutual Fund. The deal has been pegged at Rs. 27.36 crore. The mutual fund company is co-owned by LIC, LIC Housing Finance, and Nomura Holding with 45%, 20%, and 35% stakes respectively. With this deal, Nomura’s stake will come down to a little above 15%. This is the first step towards Nomura completely exiting the mutual fund joint venture.

Regulatory Rigmarole

Investors need to work again to complete their KYC. New KYC requirement expects investors to furnish their networth details, and if they are politically exposed. There are a couple of details that every investor needs to provide and one of them relates to the fact that they should indicate the amount of income that they earn or their net worth which will give the fund an idea of the kind of income or the assets that are held by the investor. This is meant so that there is some sort of linkage of the amount that is invested and the income or the assets held so that there is no big discrepancy present. This is meant to ensure that there is no money laundering that is going on and that the investor is investing the funds that are his own. The investor also needs to indicate whether he is a politically connected person and this has to be answered in the form of a yes or no. The other detail that has to be submitted relates to the coverage under the new agreement signed for disclosure of foreign assets if a US citizen invests in India and hence this is also a significant thing as it could put the mutual fund at risk if it is discovered that the investor has hidden assets in the country from the US tax department.

SEBI is likely to come out with guidelines on electronic KYC soon to expedite the process of client verification. e-KYC enables financial institutions to complete KYC process online with direct authorization of clients. By going electronic, KYC can be done on a real time basis. The key objective of e-KYC is to reduce turnaround time and paper work. Typically, KYC Registration Agencies (KRAs) take 8 to 10 days to verify a KYC application. Earlier, SEBI had allowed fund houses to accept e-KYC of UIDAI as a valid proof for the KYC verification. The e-KYC service offered by UIDAI enables individuals to authorize service providers to receive electronic copy of their proof of identity and address. Investors have to authorize intermediaries to access their Aadhaar data through UIDAI system to avail this facility. However, it has not taken off in a big way due to lack of coordination between UIDAI, financial institutions, and KRAs. Banks and insurance companies are already using Aadhaar linked e-KYC service to carry out their KYC verification procedure. However, many banks and insurance companies insist on submitting physical documents even after carrying out eKYC. It remains to be seen whether the new eKYC can address these issues and provide hassle free service to investors.

In a fresh twist on e-commerce distribution space, SEBI is likely to ask e-commerce distributors either to develop their own skill sets like IFAs or work in a tie up model with IFAs (market place model). SEBI has reportedly decided to come out with the guidelines on distribution of mutual funds through e-commerce websites like FlipKart, Amazon, and Snapdeal at a meeting of SEBI’s Mutual Fund Advisory Committee. SEBI said that there would be three routes through which mutual funds would be distributed on e-commerce – distributor route (both online and offline facility), only distribution route (online distribution), and advisor route (direct route).

In a bid to rationalize costs, SEBI has barred new ELSS schemes from charging an additional 20bps TER. Thus, the three recently launched ELSS – Mirae Asset Tax Saver Fund, DHLF Tax Savings Fund, and Peerless Long Term Advantage Fund are not charging this 20bps extra TER. SEBI had allowed fund houses to charge an additional TER to the extent of 20 bps with effect from October 2012 in lieu of exit loads. Also, the market regulator had mandated that the entire exit load should be credited back to the schemes. Typically, ELSS schemes have a lock in period of three years and have no exit load period. ELSS category manages Rs. 40,313 crore as on October 2015. A rough calculation shows that the industry is charging close to Rs. 81 crore in lieu of exit loads in ELSS. Most closed end schemes are charging an additional 20bps. In fact, a few no-load schemes are also charging this additional expense from investors. Meanwhile, IFAs are demanding that all closed end schemes and schemes with no exit loads should be barred from charging extra TER. Almost all existing ELSS schemes and closed end schemes charge this additional TER despite the fact that these schemes do not have exit load periods. SEBI should look at these schemes to make mutual funds more cost effective for investors.

SEBI will introduce norms that will restrict investments by mutual funds in rated debt instruments. There could be some sort of sectoral cap or single-company investment limit (in terms of bonds). The new norms are aimed at preventing excessive exposure of a mutual fund to a single company and come in the wake of Amtek Auto defaulting on Rs. 190-crore worth of bonds held by funds of JP Morgan. At present, a mutual fund scheme can invest up to 15% in debt papers issued by a single company.

Even though the year started with great expectations around economic reforms and revival, these hopes were belied to a large extent over the next few months. As a result, stock markets corrected sharply in the second half of the year, dragging down the benchmark indices nearly 15% from their peaks. The main cause for the correction was global markets, which were hit by expectation of Fed raising interest rates and sharp fall in commodity prices, leading to capital outflows from emerging markets in general and the debt crisis in Greece. The slowdown in corporate earnings growth was another factor that led to the downfall. In spite of these factors, Indian markets exhibited a Buddha-like calm to begin with. But what upset the scale was fear of massive slowdown in China along with weakness in major global economies such as Brazil, Russia, and Japan. "Currency war" was the other oft-heard thing during the year as China sharply devalued the yuan, which put pressure on most emerging market currencies. The positive side of these developments was that market valuations became reasonable and retail investors invested in a big way, effectively filling in the void created by the exodus of foreign investors.

NFO NEST

December 2015

NFOs hit speed bump

NFOs seem to be moving in a low gear as fund houses have launched only 340 new schemes in April-September of 2015 following SEBI's direction to rationalise and consolidate offerings with similar goals. In comparison, mutual funds had come out with 1,059 NFOs for the whole of 2014-15. The numbers stood at 1,023 and 1,168 in 2013-14 and 2012-13, respectively. Over the past few years, there has been a declining trend in the issuance of NFOs. This trend has been partly due to the regulator's direction to rationalise and consolidate mutual fund schemes with similar objectives, according to a report titled 'Indian Mutual Fund Industry- The Road Ahead' from ASSOCHAM. The requirement from the regulator to demonstrate the differentiation in investment style and attributes of a potential new fund has also impacted the pace of approvals. Furthermore, the requirement of disclosing details and number of funds managed by each fund manager has also led to more circumspection. Most of the new schemes launched in April-September have been aimed at investment in equity and equity-related securities. Besides, the products have been focused on diversified funds, exchange-traded funds, tax-saving instruments, and arbitrage schemes. Overall, a total of 120 draft documents have been filed with capital markets regulator SEBI to roll out new NFOs in the current fiscal so far.

Close-ended NFOs adorn the December 2015 NFONEST.

SBI Debt Fund Series B - 29

Opens: December 17, 2015

Closes: December 21, 2015

SBI Mutual Fund has unveiled a new fund named as SBI Debt Fund Series B - 29, a close ended debt fund. The tenure of the fund is 1200 days from the date of allotment. The investment objective of the fund is to provide regular income, liquidity, and returns to the investors through investments in a portfolio comprising of debt instruments such as Government Securities, PSU & Corporate Bonds, and Money Market Instruments maturing on or before the maturity of the fund. The fund will invest 70%-100% of assets in debt and invest up to 30% of assets in money market securities with low to medium risk profile. Exposure to domestic securitized debt may be to the extent of 40% of the net assets. Benchmark Index for the fund is CRISIL Composite Bond Fund Index. The fund manager is Rajeev Radhakrishnan.

ICICI Prudential Capital Protection Oriented Fund Series IX Plan C

Opens: December 8, 2015

Closes: December 22, 2015

ICICI Prudential Mutual Fund has launched a new fund named as ICICI Prudential Capital Protection Oriented Fund - Series IX - 1195 Days Plan C, 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 CNX Nifty (15%). The fund managers are Vinay Sharma (equity portion), Chandni Gupta & Rahul Goswami (debt portion) and Shalya Shah (For investments in ADR / GDR and other foreign securities).

Sundaram Long Term Tax Advantage Fund Series II

Opens: November 3, 2015

Closes: March 15, 2016

Sundaram Mutual Fund has launched a new fund named as Sundaram Long Term Tax Advantage Fund -Series II, a 10 year close ended equity linked savings scheme. The duration of the fund is 10 years from the date of allotment of units. 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 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 fund's performance will be benchmarked against S&P BSE 500 Index. The fund will be managed by S. Krishnakumar & Dwjendra Srivastava.

UTI Long Term Tax Advantage Fund Series III

Opens: December 18, 2015

Closes: March 30, 2016

UTI Mutual Fund has launched a 10 year close-ended equity linked savings scheme as “UTI-Long Term Advantage Fund-Series III”. 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 be benchmarked against S&P BSE 100 Index. This is an ideal plan for long term wealth creation and tax-saving under section 80C of Income Tax up to a deposit amount of Rs. 1,50,000/-. Besides this, as per the present tax laws there are no tax on long term capital gain too. It is a tax saving scheme and a wealth creator too for the investor. 1^st series of UTI – Long term Advantage fund was launched in 2007 & the 2^nd series in the year 2008 and both have done a fair job in wealth creation as well as tax–savings for the investors.

IDFC money Market Fund, ICICI Prudential CPSE ETF, Reliance Children Fund, Canara Robeco Equity Opportunities Series 1 and 2, IDFC Sensex ETF, IDFC Nifty ETF, and SBI Children Benefit Fund – Investment Plan are expected to be launched in the coming months. 

GEMGAZE

December 2015 

Average investors need a balanced investment portfolio in order to earn reasonable returns at an acceptable level of risk. This is achieved by investing money in debt funds besides diversified equity funds.

All the GEMs from the 2014 GEMGAZE have performed reasonably well through thick and thin and figure prominently in the 2015 GEMGAZE too. 

ICICI Prudential Long-term Gilt Fund Gem

Launched in August 1999, ICICI Prudential Gilt Investment Fund sports an AUM of Rs 1738 crore. Being a gilt fund, the credit quality of the portfolio is very high with Government of India securities constituting 97.64% of the total assets. There are thirteen holdings in all with an average maturity of 23.88 years and yield to maturity of 7.95%. The fund earned a return of 5.81% in the past one year as against the category average of 6.55%. The expense ratio is 0.95%. The fund is benchmarked against the I-SEC Li-BEX index. The fund is managed by Mr. Rahul Goswami and Mr. Anuj Tagra.

 

Canara Robeco Income Fund Gem

Canara Robeco Income Fund was launched nearly a decade ago in 2002. The current AUM of the fund is Rs. 172 crore with 17 holdings. Central Government and State Government loans and securities constitute 94.48% of the total assets and 2.88% is invested in AAA rated bonds. The credit quality of the fund is reasonably high. The interest rate sensitivity of the fund is high with the average maturity at 20.56 years and yield to maturity of 8.03%. Its return in the past one year is 5.64%, almost on par with the category average of 7.27%. The expense ratio of the fund is high at 1.9%. The fund is benchmarked against the CRISIL Composite Bond Index. The fund is managed by Mr. Avnish Jain since June 2014.

Birla Sunlife Dynamic Bond Fund Gem

Birla Sunlife Dynamic Bond Fund manages assets worth Rs. 15,898 crore, making it the largest fund in the income category. This fund is a steady top quartile performer with low volatility. It has delivered returns across interest-rate cycles and is among the top few in its category. The one-year return of the fund is 7.74% as against the category average of 7.27%. In the last five years, Birla Dynamic Bond Fund has generated compounded annual returns of 9.88%, putting it among the top couple of funds in its category and ahead of peers such as SBI Dynamic Bond, Kotak Flexi Debt, and BNP Paribas Flexi Debt. Consistency of returns shows in the fund trailing its benchmark in only one of the last ten years (2013) and beating its category in all ten years. It has managed good returns even in difficult periods for bond markets such as 2005 and 2009. The NAV took a knock of 3.7% in the bond shock of May-August 2013 but has since more than made up for it with high one-year returns. Not overly focused on G-secs, the fund does use a mix of G-secs and corporate bonds in its portfolio to deliver returns. The number of holdings in the fund’s portfolio is 55 with an average yield to maturity at 8.15%. The expense ratio is 1.36%. Maneesh Dangi is the fund manager since September 2007.

Birla Sunlife Government Securities Long term Fund Gem 

Launched in October 1999, the fund has an AUM of Rs 919 crore. The one-year return of the fund is 5.37% as against the category average of 6.55%. The fund is benchmarked against the I-Sec Li-Bex. The fund has eleven holdings with the yield to maturity of 7.79%. The expense ratio of the fund is 1.42%. Prasad Dhonde and Kaustubh Gupta have been the fund managers since October 2012 and June 2014 respectively. 

Birla Sunlife Floating Rate Short term Fund Gem

This relatively young fund, launched in October 2005, boasts of a massive AUM of Rs 3628 crore.  In the past one year, this liquid fund has returned 8.44% as against the category average of 8.1%. The number of holdings in the fund’s portfolio is 46 with an average yield to maturity at 7.55%. The expense ratio is a mere 0.12%. The fund is benchmarked against the CRISIL Liquid Index. Sunaina da Cunha and Kaustubh Gupta are the fund managers.

FUND FLAVOUR

November 2015

When planning to invest in mutual funds, whether equity or debt, there are two questions you must ask yourself:

·         What is my risk appetite?

·         What is my investment horizon?

The reason being these two questions determine your investment avenue. So if you are a risk-taker with a long-term horizon (at least 5 years) you can park your money in equity funds. Conversely, for risk-averse investors with 3-5 years’ investment horizon, debt funds are a safer and better option. Debt funds are mutual funds that invest in debt and fixed-income securities, such as corporate bonds, debentures, government securities, and commercial papers. These securities guarantee safety of principal and income. However, these two features come at a cost — returns are much lower than that of equities in the long run. Therefore, debt funds suit you if you prefer certainty of income with low or moderate level of risk.

Debt funds vis-à-vis Bank Fixed Deposits

But safe investors will say why not invest in bank fixed deposits instead of debt mutual funds? Well, here is why you should not:

1.      Gains from falling interest rates: The 50-basis point repo rate cut by the RBI recently has led to the lowering of FD rates. Many banks have cut their deposit rates by 25 basis points. So, if you have been parking your investments in bank deposits, your returns from future deposits will take a beating. But, guess what — even falling interests could help you earn more! Unlike bank deposits, debt funds allow you to gain from falling interest rates as bonds prices have an inverse relationship with interest rates.

2.   Better liquidity: Bank deposits are not tradable and if you wish to withdraw money, you cannot close the fixed deposit in part. Banks charge penalties for premature withdrawal. However, debt funds are more liquid as you can withdraw any amount from your total fund value.

3.      Low taxation: Debt funds attract almost nil taxes after 3 years while interest earned from bank deposits is taxable. Moreover, the interest earned from bank fixed deposits will be taxed under your maximum tax slab while a debt fund redeemed after 3 years would attract long-term capital gains (LTCG) tax of 20% flat rate with indexation. Thus, if you fall under higher tax bracket, you stand to gain from investing in debt funds even if the rate of returns from debt funds and fixed deposits are the same.

Points to ponder

However, there are some aspects that buyers must keep in mind while investing in a debt fund. There are attractive opportunities in debt schemes for retail investors, starting from overnight investment in liquid funds to duration debt products like, gilt funds, income fund, and dynamic bond funds. Liquid debt funds are ideal for those with an investment horizon of less than a month and ideally should be used to park money instead of a savings bank account. Ultra-short term fund investments are for less than 90 days and can be compared with short-term fixed deposits. Short-term debts funds are ideal for those with an investment horizon of 12 months. The tenure of the debt fund is very important because due to the longer period, there is additional risk and higher exposure to interest rate fluctuation. As the value of bonds is inversely proportional to the interest rate, a rise in the interest rate will see a fall in the price of bonds and vice-versa. So, a bond with shorter duration has less chance of fluctuation in the interest rate as compared with long term bonds. Investors must focus on the risk appetite and return expectation to decide on the right tenure of debt fund.

The economy paints a rosy picture…

Apart from these parameters, the prevailing economic conditions may also influence your decision to invest in debt funds. Let us review some of the factors that may affect the performance of debt funds in short- to medium-term horizon.

         Falling interest rate regime: The Reserve Bank of India (RBI) has already cut the repo rates by 125 basis points in 2015.  The latest 50 basis points rate cut by the RBI on September 29, 2015 has led to hike in bond prices in India. During a falling interest rate regime, debt funds with longer investment horizon, such as dynamic bond funds, gilt funds, and income funds, would gain the most when compared to short-term debt funds.

         Falling global commodity and fuel prices: The falling global commodity and fuel prices would ease inflationary pressures in India which would, in turn, give RBI more room to further bring down interest rates. As bonds prices and interest rates have an inverse relationship, falling interest rates would further increase bond prices, thereby, pushing up the value of your investments in debt mutual funds.

         Volatility in global markets: In a globalized world, Indian markets cannot stay totally immune to adverse events in peer markets. The present volatility in global markets, coupled with slowdown in China, has adversely affected the FII inflows into India. An expected Federal Reserve rate hike may further lead to flight of capital from emerging markets, including India. As the reduced FII inflows may hurt returns from your equity funds, you can invest in debt funds if your risk appetite is limited.

To sum it up, in the current economic scenario, if you are a risk-averse investor looking for assured returns, debt mutual funds would provide higher returns compared to other fixed income options like bank fixed deposits.

…but are debt funds lagging their benchmarks?  

For actively managed mutual funds, the return generated in excess of the chosen benchmark is what determines the worth of the fund. While this is particularly true in the case of equity funds, debt funds are not subjected to this scrutiny for various reasons. But a close inspection of fund performance relative to benchmark brings out a sharp contrast in the two categories' performance in recent times. While equity funds' relative performance has been strong, debt funds have not fared well on this count. Over the past one year, for instance, 49% of debt funds have underperformed their respective benchmarks. For the same period, just 17% of diversified equity funds failed to beat their benchmark. Over three years, 57% of debt funds have been beaten by their benchmark whereas only 11% of equity funds met the same fate. While debt funds by nature cannot outperform their benchmarks to the same extent as equity funds, the degree of underperformance in the former does raise some questions. Lack of liquidity in the debt market is the primary reason for debt funds' underperformance. The underperformance is visible across short-term and long-term debt funds. However, short-term debt funds cannot outperform much. They are highly susceptible to redemption pressures arising out of liquidity needs. A slight underperformance in debt funds should not be a concern. Unlike equity funds, relative performance is not really much of a criterion in the selection of debt funds. A good debt should provide the right balance between safety of capital and reasonable return.

Selection strategy

Debt funds are considered to be the safe investment, but if not selected properly in line with the suitability, they can be as risky as equity funds. Some of the checks one can make before selecting among debt funds are as follows:

1.     Average Maturity: You should be clear about your goal and time horizon. Your time horizon should match with the average maturity of that fund. Average maturity tells the weighted average maturities of all securities held in that fund. So if you want to park your money for 1 month then you should not go with Income funds or Gilt funds having higher average maturity. The best selection for you would be liquid or ultra-liquid Funds.

2.     Modified duration: Modified duration is the measure of sensitivity of particular fund to market interest rates. Like Beta is for equity funds, Modified duration is for debt funds. Higher the modified duration, higher will be the volatility. Thus if you expect market interest to go down in near future than you should go with the funds of higher Modified duration. But be informed it also carries equal risk, which means that if your expectation does not turn up correct then your assumed gains can be converted into losses.

 3.     Yield to maturity (YTM): This figure will give you an idea of what returns can you expect out of fund’s portfolio. This figure must be compared with current returns of your safe instruments like PPF/Bank Fixed deposits. Yield of funds should not be much higher in comparison. Higher yields sometimes would mean compromising on the quality of papers and thus safety of instruments. This increases credit risk in those bonds and sometimes leads to liquidity risk also.

 4.     Quality of papers in portfolio: The quality of debt instruments in the fund’s portfolio is of utmost importance and should be scrutinised closely. One should check the credit rating assigned to each instrument like AAA, AA+ etc. This signifies the level of credit/default risk. The higher the rating, the safer the instrument. While a debt fund with a risky paper is likely to yield higher returns, it may work unfavourably for the investor. As to a debt investor the safety of capital is very important, so one should avoid the funds with low quality investments.

5.     Expenses ratio: The expense ratio is very critical for a debt fund as the returns are low. Return expectation out of debt fund is in the range of 8-10%, thus expensive cost structure will have a negative effect on the returns. So it is very important for investors to ensure that the cost structure is low and in line with the returns being offered by the fund.

Match holding period with the specific strategy you choose

The recent downgrade of a bond held by two schemes of a major fund house has brought risks involved in debt mutual funds back into the limelight. The episode has shifted the focus on how fixed income mutual funds work and how they should be used in a portfolio. It is believed that robust portfolio construction (how you allocate your money across different debt mutual funds categories) is the most crucial element to be put in place before buying debt mutual funds or reviewing the funds that you have in your portfolio. A well balanced debt mutual fund portfolio needs to have different elements combined together to deliver superior risk adjusted returns. Combine different strategies: Debt mutual funds serve different purposes — liquid and ultra-short-term funds are for parking temporary surpluses, and tend to outperform savings/current accounts in banks where short-term surpluses are typically kept. Dynamic bond funds have the flexibility to decide how the fund manager wishes to allocate the money across the mentioned strategies. In addition, there are also fixed maturity plans (FMPs) which hold bonds to maturity to try to lock into a certain rate of interest. A clear understanding of each of these strategies is critical, and to combine them together to create a well-diversified portfolio is imperative. Always keep time horizon in mind: Each of the above strategies is suited for a certain holding period and it is therefore critical to match the period with the strategy. A mismatch in holding period expectations and portfolio construction could cause a significant challenge. Factors like modified duration and average maturities of the portfolio, exit load structures and composition of underlying securities must be monitored. 

FUND FULCRUM (contd.)

November 2015

Mutual fund investments in stock markets have begun to cool in the past two months. After investing an average of Rs 8,200 crore each in the first six months of the financial year, mutual fund managers invested just an average of Rs 3,600 crore in October 2015 and November 2015. The drop in investment comes amid weakness in stock markets due to earnings disappointment and concerns around delay in reforms. In addition, gross redemptions from equity schemes have been on the rise, providing less leg-room for fund managers for fresh investment in stocks. In October 2015, fund managers invested less than Rs 3,000 crore, while so far this month they have bought (net of sales) shares worth around Rs 4,200 crore. Mutual fund investments are seen as a key support to the market at a time when foreign flows this year are on course to be the lowest in five years. So far this year, mutual funds have invested Rs 65,000 crore in Indian stocks. In comparison, foreign institutional investors (FIIs) have invested just Rs 21,351 crore during the same period. In 2014, FIIs had pumped in Rs 97,054 crore. The benchmark indices this year are down six per cent after a 30% rally last year. Till October 2015, the gross sales in the equity segment have surpassed Rs 1 lakh crore. However, at the same time what is worth noticing is the fact that gross redemptions too are about Rs 44,000 crore - a sizeable figure. New fund offers (NFOs) have considerably slowed down as well.

The National Securities Depository Ltd (NSDL) and the Central Depository Services Ltd (CDSL) allow investors to deposit securities by opening an account. The securities such as shares, debentures, bonds of investors are held in electronic form (dematerialised form) at the depositories. The two depositories, CDSL and NSDL, witnessed an addition of about 1.8 lakh investor accounts during September 2015. With 1.65 lakh more dematerialised (demat) accounts in October 2015, overall 17.35 lakh new investor accounts have now been opened in the past 12 months (till October 31, 2015), according to latest data available with the depositories and market regulator SEBI. At the end of October 2015, the total number of investor accounts at NSDL stood at nearly 1.42 crore, up from 1.41 crore registered till September-end this year. This implies an addition of 68,809 accounts in October 2015. CDSL reported 1.02 crore investor accounts till October-end this year, an addition of about 96,556 accounts in the month. According to information available with NSDL, an average of 3,589 accounts has been opened per day on the depository since November, 1996.

Regulatory Rigmarole

In a bid to expedite scheme mergers, SEBI has asked AMFI to prepare a report on schemes having similar fundamental attributes and persuade fund houses to merge such schemes. SEBI norms say that two schemes can be merged if the fundamental attributes of surviving scheme is not tinkered with. Fund houses are allowed to merge schemes keeping investors’ interests in mind. They have to get an approval by the board members and trustees. Fund houses then file a proposal with SEBI seeking such a merger. After getting an approval, AMCs give an exit option to investors. Typically, fund managers decide which schemes need to be merged. Usually, non-performing schemes or those which have a small AUM are merged with bigger funds. The shares held by the scheme which is getting merged are transferred to the surviving scheme. This results in increase in the number of units, AUM and the investor base of the surviving scheme. Despite the Budget 2015 having done away with tax liability on scheme mergers, the industry has not seen many scheme mergers so far. In addition, the government has reduced securities transaction tax (STT) from 0.25% to 0.001% in 2013. There could be a variety of reasons for this reluctance to merge schemes. A fund house may find it difficult to retain existing assets if schemes are merged. Secondly, fund houses have an incentive to charge higher expense ratio for small sized funds (scheme merger increases AUM). Finally, if AMCs have too many schemes, the probability of a few schemes doing well is high, which helps AMCs promote only the better performing schemes. Currently, the industry has close to 1,900 schemes. In fact, a few fund houses have three schemes each in the liquid fund and mid & small cap category. This creates confusion among distributors and investors.

Following the JP Morgan Mutual Fund’s decision to restrict redemption in two of its short term debt schemes due to Amtek Auto episode, SEBI is planning to come out with uniform guidelines on gating practices soon. The decision was taken at a recently held meeting of SEBI’s Mutual Fund Advisory Committee. Gating practices refer to the rights of fund houses to restrict investors from redeeming their investment from the fund if something went wrong with the scheme. Typically, fund houses put such exigency clauses in their offer documents and hence there are no uniform guidelines on gating practices currently. Gating practices defy the purpose of liquidity for which mutual funds are known for. Though such practices can limit investors from exiting the fund, it helps maintaining stability and restricts unnecessary redemption pressure. Earlier in August 2015, JP Morgan Mutual Fund had restricted redemptions in its two schemes – JP Morgan India Short Term Income Fund and JP Morgan India Treasury Fund having collective AUM of Rs. 2,964 crore.

SEBI has asked AMFI to issue guidelines for assessing credit risk of debt instruments. AMFI is likely to issue best practices guidelines on credit assessment practices soon. The decision was taken at a recently held meeting of SEBI Mutual Fund Advisory Committee.

Registrar and transfer (R&T) agents are reaching out to investors to comply with Foreign Account Tax Compliance Act (FATCA) guidelines. AMFI has recently issued uniform guidelines for fund houses to follow FATCA guidelines, which came into effect from November 1, 2015. AMCs are now updating the additional information of existing investors with the help of distributors and R&Ts. In the past three days, over 1 lakh investors have updated their records with CAMS. CAMS and Karvy have facilitated investors to update their details online. In addition, large distributors have been provided standardized format to electronically submit the declaration forms. The new declaration form requires information like type of address (residence, business, registered office, etc.), country of tax residence, tax identification number, Global Intermediary Identification Number (GIIN), and seeks investors consent for sharing the information with relevant tax authorities. FATCA is an anti-tax evasion law under which fund houses are required to report information on US investors to US IRS (Internal Revenue Service) through CBDT. India has agreed ‘in substance’ to FATCA by signing an Intergovernmental Agreement Model 1 (IGA-1) with US with effect from July 9, 2015. Simply put, the legislation is meant to prevent wealthy US individuals from parking money overseas to avoid paying taxes. Many AMCs had stopped accepting fresh investments from US investors due to stringent compliance requirement.

The Budget 2015 provision to levy Swachh Bharat Cess on all services comes into effect from November 15, 2015 according to a Central Board of Excise and Customs (CBEC) notification. This will increase the service tax burden of distributors by 50 basis points, which means the gross service tax payout goes up to 14.50%. According to industry estimates, the mutual fund industry paid Rs. 6,000 crore commission to distributors last fiscal. A 0.50% Swachh Bharat Cess translates into a payout of Rs. 30 crore. In 2012, the government had put the services of mutual fund agents under the negative list which exempted them from paying service tax. Till 2012, AMCs were deducting service tax and paying it to the government. In Budget 2015, this exemption was withdrawn.

Market regulator SEBI is likely to come out with guidelines on smart beta ETFs. Unlike regular ETFs which merely mimic a particular index, smart beta ETFs try to generate returns slightly higher than ETFs within the framework of passive management. This is a relatively new category in the Indian ETF landscape. Such products are one of the fastest growing categories in the international markets. A BlackRock report shows that as of December 2014, there are more than 700 smart beta ETFs listed around the globe, with $529 billion in assets. Indian fund houses are also trying to bring smart beta index funds/ETFs in India and SEBI is of the view that there is a need for bringing new rules for this emerging category to ensure such innovations do not pose a risk to investors. Since such funds are somewhat active in nature, the expense ratio could be higher than ETFs but lower than actively managed funds. In turn, the turnover ratio or the churning ratio of such funds would naturally be higher. One of the drawbacks of traditional ETFs is that they have exposure to underlying stocks which are weighted solely on market capitalization. Thus, the traditional ETF can be overweight on expensive stocks and underweight on cheap stocks. Smart beta ETFs try to fix this problem by using some attributes of active management.

Losses to unit holders and redemption pressure faced by JPMorgan Asset Management Company (AMC) in September 2015 have driven capital markets regulator SEBI to consider new investment limits for fund houses. According to a proposal under discussion, no fund manager would be allowed to invest more than 20% of a scheme in securities issued by companies belonging to a corporate group. While there are restrictions on the maximum amount that can be invested in a single company or sector, there is no cap on exposure to a single business group. The sector exposure limit is likely to be reduced to 25% from 30% while the single issuer limit may be brought down to 10% from 15%. The additional investment limit of 10% provided for securities issued by housing finance companies is also being reconsidered.

Equities and commodities market regulator SEBI has reiterated that research analysts — be it fundamental or technical — cannot deal/trade in securities that they recommend/follow in their research reports, 30 days before and five days after publishing a report. SEBI clarified in an informal guidance to Geojit BNP Paribas Financial Services that research entities shall not issue a research report that is not consistent with the views of individuals employed as analysts in a company.  SEBI added that in case contrarian views were held by research analysts employed in different teams of the research entity, the entity has to publish the report identifying the views of the different teams without altering them. The genesis of the issue lies in the fact that fundamental analysis is used to decide whether to buy a particular stock and technical analysis to decide when to buy and when to sell. Given the different nature of both the analyses, situations occur when a fundamental analyst gives a buy call on a stock while a technical analyst gives a sell call on the same stock. It also happens that while the retail research team of a brokerage house has a buy call on a scrip, the institutional research team may recommend otherwise.

A longstanding demand of distributors to get feeds of direct plan has finally been met. AMFI has sent a letter to fund houses communicating SEBI’s approval on providing feeds of direct plans to both distributors and RIAs. However, SEBI has asked fund houses to take prior approval of investors before sharing it with the intermediaries. Investors will have to give their consent in a standard format which is being worked out by AMFI. Also, SEBI has asked fund houses to issue a periodic declaration authorized by the trustees of AMCs that no consideration or brokerages are being paid to distributors or RIAs for such a service. Earlier, AMFI had requested SEBI to allow fund houses to provide direct plan feeds to the distributors and RIAs. It may be recalled that with the introduction of the direct plan, the distributor has been cut out. It was argued that tagging would enable the advisor to get access to client records for the investments recommended by him/her so that they could monitor their client portfolios. In other words, distributors wanted their ARNs to be tagged in direct applications so that they could get the feeds of schemes they recommend to their clients.

SEBI is likely to come out with a new regulation in which it will tighten disclosure norms for fund houses and intermediaries to make it more transparent. SEBI rules mandate fund houses to disclose commission payouts of top distributors on yearly basis on their respective websites. Currently, AMCs have to do due diligence of distributors who have multiple point presence (more than 20 locations), AUM over Rs.100 crore across industry in the retail category, commission received of over Rs. 1 crore per annum across industry and commission received of over Rs.50 lakh from a single mutual fund. In case a distributor has an excessive portfolio turnover, i.e. more than two times the industry average, AMCs have to do additional due diligence of such distributors.

Markets regulator, Securities and Exchange Board of India, will soon come out with measures to further strengthen investors’ confidence in the mutual fund sector. The mutual fund industry must come out with simple products that can be sold to people across India and they should be able to know the consequences i.e. the risks and rewards for investing in mutual funds. To increase investor participation in mutual fund sector SEBI had allowed cash transactions. This route has not been utilised to its full extent. Besides, online tractions mainly constitute about 16% and this route too has not been fully utilised.

FUND FULCRUM

November 2015

Driven by strong inflows in equity and liquid schemes, the asset base of the country's mutual fund industry surged 11.5% to an all-time high of over Rs 13.24 lakh crore in October 2015. The country's 44 fund houses together had an average asset under management (AUM) of over Rs 11.87 lakh crore in September 2015, according to the latest data of the Association of Mutual Funds in India (AMFI). The quarterly rise in AUM is largely on account of inflows in equity and money market liquid categories. Besides, retail participation in equity schemes has risen significantly in recent months. Investors remained buoyant on equity mutual funds despite the ongoing volatility. Overall inflow in mutual fund schemes stood at Rs 1.35 lakh crore at the end of August 2015, compared with an outflow of Rs 77,142 crore at the end of September 2015. Of this, liquid or money market category saw Rs 1.03 lakh crore coming in while equity segment saw an inflow of Rs 6,005 crore. Participation from retail investors has been rising in equity schemes as the segment witnessed an addition of over 21 lakh investor accounts or folios in the first six months of 2015-16. Besides, addition in equity folios helped increase overall base to go up to 4.44 crore in September 2015, from 4.17 crore at the end of March 2015.

Mutual fund industry’s folio base continues to show an upward trend. The latest SEBI data shows that the industry has added a total of over 28 lakh folios in seven months, i.e. April-October 2015. Among categories, equity funds saw the highest growth in folio count. The category saw addition of more than 21 lakh folios. Of this, equity funds added 19.22 lakh folios while ELSS added 2.17 lakh folios. The increase in folio count in equity is evident by the inflows in equity funds. From April till October 2015, equity funds (including ELSS) have received net inflows of Rs. 59,935 crore.  Some part of the money has also gone in new fund offers as the total number of equity funds went up to 407 in October 2015 from 383 in April 2015. The total folio count in equity funds went up from 3.19 crore in April 2015 to 3.41 crore in October 2015. Balanced funds too saw an addition of 2.26 lakh folios during April-October 2015. The total folio count in debt funds went up to 76.44 lakh in October 2015 from 71.86 lakh in April 2015, an increase of 4.58 lakh folios. Gilt and liquid funds added 3,518 and 25,396 folios respectively. In the debt category, income funds added the maximum folios (4.29 lakh). Gold ETFs continued to lose folios due to the lackluster performance of the yellow metal. The category has seen erosion of 22,751 folios in the last seven months. On the other hand, ETFs which track equity indices, continued to gain traction. Equity ETFs added 15,621 folios during the same period. Overall, the total folio count (across all categories) went up from 4.20 crore in April 2015 to 4.48 crore in October 2015.   

Piquant Parade

SEBI is likely to come out with the guidelines on distribution of mutual funds through e-commerce websites like FlipKart, Amazon, and Snapdeal. In addition to regular and direct plans, SEBI is looking to introduce a third plan in mutual funds called e-commerce plan. The TER of such schemes would be somewhere between direct plan and regular plan. The commission on mutual fund schemes sold through such websites will be capped at 50 bps. Two months back, SEBI has constituted a committee headed by Nandan Nilekani to suggest measures to reduce cost structure in mutual funds. The committee has already met three times and is likely to give its recommendations shortly.

Robo advisory is the new buzzword in the financial advisory profession. One more e-commerce startup Innovage Fintech has launched a robo advisory platform called ‘5nance.com’. 5nance.com will provide financial advisory service without charging any fees. The portal will distribute investment products like mutual funds, insurance, FDs, gold, bonds, equities, loans, credit cards, etc. The company is planning to acquire new clients through digital marketing initiatives and investor awareness programs. The company aims to build a client base of 3 lakh by 2016 and cross 70 lakh in the next 5 years. Innovage Fintech has raised over $3 million through angel investors and is planning to raise another $15 million in the coming months. Robo advisors use algorithms and model portfolio to construct client portfolio. Investors have to fill up their details and goals based on which these advisors recommend a plan or a list of schemes to invest in. In India, Fundsindia, Fundsupermart, MyUniverse, Scripbox, and Arthyantra claim to follow Robo advisory model.

As more retail investors enter equities through the mutual funds route, new players are lining up to win a share of the rapidly growing domestic asset management business. At least three new fund houses, including Ireland-based Zyfin Funds, Mahindra and Mahindra Financial Services, and Yes Bank are set to throw their hats into the ring, for a share of the industry that currently manages assets worth Rs. 13 lakh crore. Zyfin Funds is likely to announce its launch within the next few weeks. Zyfin (formerly Blufin) is a macro-analytics firm that publishes research and indices on macroeconomics, consumer sentiment, and the capital market. The company is backed by investment firms Zodius and Anthemis Group. Zyfin Funds, according to its website, is set to offer ETF products based on emerging market indices for global investors through an offshore fund platform. Zyfin Holdings will also offer advisory services (with regard to product modelling, theme selection, index generation) to global financial institutions, which will then co-brand their products with Zyfin. M&M Financial Services (Mahindra Finance) has also speeded up the process of launching its own fund house. The company received approval from SEBI in October 2011, but is yet to launch the fund house as it was unsure about entering the market. According to SEBI officials, the company’s application for final approval is under process. Mahindra Finance already has an extensive distribution network in place as it sells mutual funds for other fund houses. It is bound to capitalise on this network to help grow its business. Earlier this month, YES Bank received RBI approval to set up a mutual fund and will apply for approvals from capital market regulator, SEBI. The bank expects to launch its AMC within a year, and may even take over an existing mid-sized fund house (Rs.30,000-40,000 crore of assets). According to the SEBI website, Karvy Stock Broking, Trust Investment Advisors, and Fortune Financial Services/ Fortune Credit Capital are awaiting in-principle approval from the regulator on their mutual fund applications.

Religare Enterprises has entered into binding agreement to sell 51% stake in Religare Invesco Asset Management Co., which manages assets worth 21,594 crore, to foreign partner Invesco for 6% of assets under management (AUM) or 660-700 crore. The company is planning to mobilise resources through asset sales. The money from the divestment will be used to reduce debt at the holding level besides infusing funds in the health insurance and lending businesses. Religare Enterprises has debt of about Rs. 600 crore. 

The Securities and Exchange Board of India is planning to mandate fund houses to disclose the compensation paid to the senior management and also their individual investments in the schemes to investors. The regulator feels some of the fund officials are overpaid compared to the corpus they manage after examining the information provided by asset management companies on the compensation structure. Since executive compensation is paid from the management fees charged to the scheme, SEBI feels it is important that adequate disclosures regarding the same are made to investors. The move is aimed at promoting transparency in remuneration policies so that executive compensation is aligned with the interest of investors. At present, fund houses decide on the compensation structure for its employees and there are also no disclosure requirements on the payout to employees. In developed markets such as US, Europe, and Canada there are no regulatory restrictions on executive remuneration. However, post the global financial crisis, regulators across the globe are focusing on improving disclosure standards with respect to executive remuneration. In India, the Reserve Bank has mandated a compensation policy for the whole-time directors and CEO of domestic private sector and foreign banks and has also restricted payment of guaranteed bonuses to them. Listed companies too are required to disclose remuneration paid to key managerial personnel. SEBI feels managers' investment within the fund should also be provided to investors. 

In order to spread awareness about mutual funds, AMFI has put up a mutual fund stall in which it has invited AMCs to participate in the 35th India International Trade Fair held in Delhi. This 14-day-long fair has started on November 14. SEBI has organized a financial literacy campaign called ‘Bharat Kaa Share Bazar’ at this trade fair in which it has asked associations and stock exchanges like AMFI, NSE, BSE, NSDL, CDSL, NCDEX, MCX, and NISM to put up their stalls to create awareness. 12 fund houses are participating in this exercise to create awareness on mutual funds. Such events attract a lot of visitors and by setting up stalls investors will get to know more about mutual fund products. The idea is to make people aware about mutual funds and how versatile they are in meeting investor needs no matter what their goals, time horizons, or risk appetite are. The participating AMCs include UTI, Axis, BNP Paribas, Birla Sun Life, Reliance, IDBI, Peerless, Franklin Templeton, and L&T Mutual Fund. These fund houses are attracting visitors through a variety of activities like quizzes, skits, and game shows.

…to be continued…

NFO NEST

November 2015

NFOs of various hues

NFOs of various hues adorn the November 2015 NFONEST.

Peerless Long Term Advantage Fund

Opens: November 9, 2015

Closes: November 21, 2015

Peerless Mutual Fund has launched a new fund named as Peerless Long Term Advantage Fund, an open ended equity linked savings scheme with a 3 year lock-in. The fund will seek to invest predominantly in a diversified portfolio of equity and equity related instruments with the objective of providing investors with opportunities for capital appreciation and income generation along with the benefit of income tax deduction (under Section 80 C of the Income Tax Act, 1961) on their investments. The fund will invest 80%-100% in equity and equity related instruments with high risk profile and invest up to 20% of assets in debt and money market instruments with low to medium risk profile. Benchmark Index for the fund is S&P BSE 100 Index. The fund will be managed by Amit Nigam and Killol P.Pandya.

LIC Nomura MF Exchange Traded Fund - Sensex

Opens: November 9, 2015

Closes: November 23, 2015

LIC Nomura Mutual Fund has launched an open ended Exchange Traded Fund- LIC Nomura MF Exchange Traded Fund - Sensex. It is Rajiv Gandhi Equity Savings Scheme (RGESS) Qualified Scheme. The investment objective of the fund is to provide returns that closely correspond to the total returns of the securities as represented by the S&P BSE Sensex by holding S&P BSE Sensex stocks in same proportion, subject to tracking errors. The fund will invest 95%-100% of assets in securities covered by the Sensex  with medium to high risk profile and invest up to 5% of assets in cash and cash equivalent/money market instruments including CBLO (with maturity not exceeding 91 days) with low risk profile. The fund’s performance will be benchmarked against S&P BSE SENSEX and its fund manager is Sachin Relekar.

Reliance Capital Builder Fund II – Series B

Opens: November 10, 2015

Closes: November 24, 2015

Reliance Mutual Fund has launched a new fund named as Reliance Capital Builder Fund III - Series B, a close ended equity oriented fund with the duration of 582 days from the date of allotment. 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%-100% of assets in diversified equity and equity related instruments with high risk profile and invest up to 20% of assets in debt and money market instruments with low to medium risk profile. Benchmark Index for the fund is S&P BSE 200 Index. The fund managers are Omprakash Kuckian and Jahnvee Shah (Fund manager-overseas investments).

India Bulls Monthly Income Plan

Opens: November 10, 2015

Closes: November 25, 2015

Indiabulls Mutual Fund has launched the Indiabulls Monthly Income Plan, an open ended income fund. The investment objective of the fund is to generate regular monthly returns through investment primarily in debt securities. The secondary objective of the fund is to generate long-term capital appreciation by investing a portion of the fund's assets in equity securities. Monthly income is not assured and is subject to availability of distributable surplus. The fund’s performance will be benchmarked against CRISIL MIP Blended Index and its fund managers are Malay Shah and Sumit Bhatnagar.

Kotak NV 20 ETF

Opens: November 12, 2015

Closes: November 26, 2015

Kotak Mutual Fund launches a new fund as Kotak NV 20 ETF, an open ended exchange traded fund, with the objective of providing returns before expenses that closely correspond to the total returns of stocks as represented by the NV 20 Index, subject to tracking errors. The fund will invest 95%-100% of assets in stocks comprising NV 20 Index with medium to high risk profile and invest up to 5% of cash and debt/money market instruments with low risk profile. The fund's performance will be benchmarked against NV 20 Index. The fund will be managed by Deepak Gupta.

Axis Childrens Gift Fund

Opens: November 18, 2015

Closes: December 2, 2015

Axis Mutual Fund has launched the Axis Children’s Gift Fund, an open ended income fund. The fund aims at generating income by investing in debt and money market instruments along with long-term capital appreciation through investments in equity and equity related instruments. The fund managers are Pankaj Murarka and Kedar Karnik.

DHFL Pramerica Tax Savings Fund

Opens: October 19, 2015

Closes: December 4, 2015

DHFL Pramerica Tax Savings Fund is an open ended equity linked savings scheme with a lock-in period of 3 years. The primary objective of the fund is to generate long-term capital appreciation by predominantly investing in equity and equity related instruments and to enable eligible investors to avail deduction from total income, as permitted under the Income Tax Act, 1961 as amended from time to time. The fund will invest 80-100% of assets in equity and equity related instruments with high risk profile and up to 20% in cash, money market instruments and liquid schemes of DHFL Pramerica Mutual Fund with low to medium risk profile. The benchmark Index for the fund is BSE 200 Index. The fund will be managed by Brahmaprakash Singh (equity component) and Ritesh Jain (debt component). 

Tata Mutual Fund is launching five new funds and one existing fund under the theme of Own a Piece of India - Tata Banking and Financial Services Fund, Tata India Consumer Fund, Tata Digital India Fund, Tata India Pharma & Healthcare Fund, and Tata Resources & Energy Fund. UTI Long Term Advantage Fund Series III, Edelweiss Exchange Traded Scheme Quality 30, Axis Nifty ETF, DSP Blackrock Absolute Return Fund, Birla Sunlife Dual Advantage Fund Series I-V, Kotak capital Protection Oriented Scheme - Series 3 and 4, and IDFC Balanced Fund are expected to be launched in the coming months.