Riding high on improvement in the economy and a rising equity market, mutual fund houses have lined up a slew of new fund offers (NFOs).
Since start of the current calendar year, around 35 offer documents have been filed with the market regulator Sebi. Over 20 of these are equity offerings.
These offer documents are focused on diverse themes such as manufacturing, retirement, economic recovery, e-commerce and evenmid caps and exchange traded funds (ETFs). According to industry estimates these 20 equity schemes will collect a corpus in the range of R6,000-8,000 crore. Data from Association of Mutual Funds in India (Amfi) shows 48 new equity schemes. which were launched between August 2014 and January 2015, had collected over R10,000 crore.
Nimesh Shah, MD and CEO at ICICI Prudential Asset Management Company (AMC) says, “The Indian economy is in a transitory phase, moving from a vicious to a virtuous cycle. With improvement in macro indicators, focus on new and existing projects, uptick in business sentiment and the government’s thrust on reforms, we believe the economy has reached an inflection point and will recover.”
Out of the offers that have been filed, over half a dozen are close ended in nature. These nclude schemes such as Canara Robeco India Opportunities, Sundaram Select Micro Cap, Pramerica Build-in-India Fund and Kotak India Growth Fund. In the last one year fund houses have favoured close ended funds, which collected around R9,000 crore in 2014.
ICICI Prudential AMC in particular, has filed offer documents based on the Indian recovery theme. These include funds such as ICICI Prudential Business Cycle Fund, ICICI Prudential Manufacture in India Fund and ICICI Prudential India Recovery Fund.
It remains to be seen whether such theme-based funds can deliver better returns than equity diversified funds. Vidya Bala, head mutual funds research at FundsIndia.com says, “These NFOs are a result of a booming equity market. With a clear road map for reforms and pick-up in growth, people are opting to invest for the long term. In the past, whenever markets have recovered, we have see fund houses launch new funds.”