Over 32 NFOs are lined up for next 3 months
To cash in on the current bull run (even after about 1,000-point fall in the Sensex in the past three sessions notwithstanding), there are a slew of new fund offerings (NFO) waiting to hit the market.
By Gaurie Mishra, TNN |
NEW DELHI: To cash in on the current bull run (even after about 1,000-point fall in the Sensex in the past three sessions notwithstanding), there are a slew of new fund offerings (NFO) waiting to hit the market.
As many as 32 NFOs are slated to be launched over the next three months, and experts say if all these schemes run, the total funds raised will be anywhere between $2-$3 billion.
Some of the schemes that will be launched in the next few months include Reliance Capital Shield Fund, Lotus India Equity Fund, Reliance Close Ended Gilt Fund, DSPML World Gold Fund, Sundaram BNP Paribas Savings Plus — 4 years, Tata Arbitrage Fund and OptiMix Dynamic Multi Manager FoF Scheme-SeriesIII.
Experts say with average traded volume of Rs 14,000 crore, the market can absorb more mutual fund schemes. Also, the amount of money pumped in by foreign institutional investors (FIIs) in the past two months is a proof that the Indian capital markets can absorb larger amount of funds. Even in the past three months, there have been 19 NFOs which have raised about Rs 5,500 crore.
However, the trend is raising concerns about whether asset management companies (AMCs) would be left with a surfeit of cash and without adequate buying opportunities. There is a good chance that with so much money being raised, AMCs may be saddled with too much of cash and there may not be that many good buying opportunities,” said Dhirendra Kumar, CEO ValueResearch.
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But SBI MF, head (equity), Sanjay Sinha, believes that fund houses will get buying opportunities. “There will be a few breaks in the bull run and these will present buying opportunities for fund houses. The current fall in the market is one such instance of a mild correction that will help fund houses,” he said.Though there are many schemes that are getting launched in the market, experts say a high percentage of them will have similar features. While this also has a lot to do with the mindset of Indian investors who continue to equate lower NAVs with larger earnings, as more units of the scheme can be bought, some also blame distributors for the deluge of similar NFOs.
“Distributors convince investors that schemes that are being launched are better than the existing ones and perpetuate the deluge of NFOs,” said Prithvi Haldea, MD, Prime Database.
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