The Hindu Business Line : New fund offers keenly watched

Kolkata March 14 A shaky equity market has led mutual fund circles to closely watch developments on the new fund offer front, particularly with regard to the collections notched up by new funds. While at least three equity funds are set to wrap up their initial offers by the end of March or early April, quite a few are expected to hit the market in the next two months or so.

A declining trend may dissuade some sections from making large commitments for the time being, prompting them instead to wait and watch till conditions become easier. In the interim, sufficient fresh money may not enter new funds as it would under normal circumstances, says sources tracking the funds sector.

The equity market has tumbled in recent days, especially after the Budget, a decline reflected markedly in the indices. The Nifty, which was at about 4,050 points a month ago (mid-February) closed at 3,770 points on Tuesday and even lower on Wednesday.

NAVs of equity funds have followed suit, the descent more evident in certain sector funds. Diversified funds have lost roughly 7 per cent over a month (ending March 13). The trend may continue if sentiments remain negative, it is felt.

There will be a close watch on mobilisations by the current crop of NFOs such as JM Small and Mid Cap Fund, DBS Chola Hedged Equity Fund and OptiMix Multi Manager Equity Fund.

One head of marketing who did not want to be named said: "Some investors may be thinking twice before putting in their money. But, we want to remind them that the valuations retracted substantially and NFOs will be in a position to capture the low valuation".

It may be mentioned that a few schemes have extended their NFO period, which according to distributors is not a very positive sign. MF observers say that the extension of period could be due to lack of enough enthusiasm by investors.

The JM fund will close early April, while the other two will close on March 23 and March 30 respectively. Incidentally, collection data for Pru ICICI MF's Fusion II, a close-end product, will also be available soon.

Distributors point out that they will keenly track maiden offers by two well-known overseas fund houses — AIG and JP Morgan. Both have worked out equity funds. Some recent proposals include Lotus India Growth Fund and DSP Merrill Lynch Focus 25 Fund.

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