Asset management companies in the country are betting big on the stock markets again with three fund houses setting into motion new fund offers (NFOs).
SBI Mutual Fund on Monday launched SBI PSU fund, which will invest in PSU companies ? including IPOs that are in the pipeline. NFOs that are currently on offer are Birla Sun Life India Reforms, DSP BlackRock Focus 25, and IDBI Nifty Index fund. Ever since the entry load was banned by Sebi, inflows into equity funds have taken a beating.
From Aug 2009 till date, only Rs 2,956 crore worth of inflows have come into pure equity NFOs. Could the recent surge in NFOs change the tide?
?There are challenges at this point due to the regulatory changes. Our main aim is to target retail clients in the NFO,? said Achal Kumar Gupta, MD and CEO of SBI Mutual Fund. However, a CEO of a leading fund house said that with big mutual fund houses jumping into the NFO bandwagon, there are chances of revival in collections.
Post entry load, collections aren?t happening in large numbers ? Axis equity which collected the most during the period ? mopped up Rs 909 crore. With fund houses like DSP Blackrock targeting Rs 2000 crore, it seems a lot is at stake.
There have been times when NFO collections were as much as initial public offers of companies. In 2007-08, IPOs collected Rs 53,000 crore equity NFO collections were marginal lower at Rs 46,000 crore.
Sebi recently tweaked NFO rules ? reducing the NFO period to 15 days (from 30 days) from July 1.