The Hindu Business Line : MFs collection thru NFOs may touch Rs 10,000 cr in Jan

THE Sensex is just short of the 10,000-point mark. And the retail money continues to pour into the market through the mutual fund route, thanks to the huge amounts collected by the fund houses led by SBI Mutual Fund and UTI Mutual Funds through their equity-oriented new fund offers (NFOs).

Industry watchers put the mobilisation amount for the NFOs at Rs 8,000 crore to Rs 10,000 crore in January alone in comparison with Rs 34,000 crore collected during the entire 2005 calendar. "On a conservative level, we estimate the collections (by NFOs) to be Rs 8,000 crore. It can even touch Rs 10,000 crore," said Mr Dhirendra Kumar, Managing Director of Value Research, a firm that closely monitors the mutual fund industry.

A handful of NFOs hit the market in this month and this includes SBI MF's Blue Chip Fund, UTI MF's Leadership Equity Fund, HSBC's Advantage India Fund, HDFC MF's Long-term Equity Fund, Kotak MF's Lifestyle Fund, Principal PNB's ` Infrastructure & services industries fund', besides the tax-saving equity-linked saving schemes (ELSS) from Fidelity MF, Deutsche MF and Chola Mutual Fund. Others such as ICICI Prudential (Fusion Fund) have lined up their NFOs for February.

A senior official of SBI Mutual Fund told Business Line that its Blue Chip Fund, which closed on January 20, has collected Rs 2,200-2,500 crore. "We are yet to get the final figures. But, it will be more than what we had collected in our previous NFO — Magnum MulticapFund (Rs 2,100 crore)."

The UTI Mutual Fund, which is running a high-decibel marketing campaign for its NFO, Leadership Equity Fund, is also expected to garner about Rs 2,000 crore, says Mr Kumar. This is the first scheme from the fund house after its restructuring which culminated in the transfer of stakes to four PSUs — State Bank of India, Bank of Baroda, Life Insurance Corporation of India and Punjab National Bank.

Without revealing the latest collection amount, Mr D.S.R. Murthy, Executive Director, UTI Asset Management Company, said that there has been an encouraging response from investors across the country for its NFO. "Investors are flocking to all our collection centres," Mr Murthy said.

According to Mr Kumar of Value Research, investors typically wait for the last day before applying for the NFOs. The NFOs by HSBC and HDFC, which closed on January 27, have also collected significant amounts of money, according to industry officials.

Mr Kumar said the huge money from NFOs in a single month are "worrisome" and "dangerous" signs. He said a steady and sustained flow of money was better compared with huge amounts at one go.

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