MFs rehash existing schemes to cash in on NFOs

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Mumbai, Aug 5: Taking a cue from the fast moving consumer goods (FMCG) sector, mutual funds are giving existing schemes a makeover and re-launching them. They have found out that new fund offerings (NFOs) are fetching more monies than the existing schemes.

The fund houses are re-launching schemes that have already earned investors’ goodwill. They are offering attractive commissions to distributors and spending on effective advertising. The MFs are re-launching these schemes on the lines of the FMCG sector’s re-branding and re-launching of consumer durables.

According to sources in the industry, MF industry has registered gross sales of Rs 90,516 crore for equity funds for a one-year period ending June, 2007. Of this, the existing scheme sales were of Rs. 68,350 crore and NFO sales stood at Rs. 22,166 crore. The redemptions in the existing schemes were at Rs. 69,127 crore, marginally higher than the schemes that existed during the corresponding period.

An analysis shows that the net sales for the industry stood at Rs 21,388 crore and that growth in terms of sales (not assets under management) has come through NFOs.

In step with the industry trend, Fidelity Fund Management has decided to re-launch its existing scheme—Fidelity Equity Fund. The fund house will release an ad campaign on the re-launch.

Earlier this year, the UTI MF had also re-launched its three existing schemes—UTI Infrastructure Fund, UTI Leadership Fund and UTI Dividend Yield Fund—under a focused fund offer (FFO). “We are exploring more such FFOs in the near future,” a top UTI MF executive said.