Since the ban of entry loads on mutual fund schemes in August 2009, the number of new fund offers (NFO) has come down. In the last six months only 12 NFOs have been launched and with a collected over Rs 2,700 crore.
If mutual fund executives are to be believed, there will be very few NFOs in the coming few months, since several distributors are still not selling mutual fund schemes. In fact, the market regulator, Securities and Exchange Board of India (Sebi) has also not cleared several NFOs as they are similar to many of the existing schemes. SBI Mutual Fund MD Achal Kumar Gupta said, ?The cost of advertising and promotion has increased as distributors have stopped selling equity schemes so there were very few NFOs. Also there are no new features that we can offer to investors because between the fund houses, most of the themes have been exhausted.? Adds Sandesh Kirkire, CEO, Kotak Mahindra Mutual Fund, ?Investors are now looking at the track record of funds which obviously NFOs don?t have.?
Dhirendra Kumar, CEO of Valueresearch online says, ?We have seen that after the ban on entry load several distributors have stopped selling mutual funds. Apart from that, the market regulator did not clear many NFOs in 2009.? According to the Kumar, approximately 60 offer documents were filed with Sebi but only 14-16 funds were ultimately launched.
Currently, only one offer document for an NFO, that of Religare Mutual Fund, is pending approval of Sebi. The remaining applications are for debt funds. According to the data provided by the Association of Mutual Funds in India (Amfi), in August 2009 only three equity schemes were launched which collected Rs 82 crore while in September, five new schemes from fund houses mopped up Rs 826 crore. No new schemes were launched in October and December last year.