The Hindu Business Line : New fund offers flood the market

The new fund offer bazaar has suddenly turned very lively with about a dozen offers, some of them close-end funds, vying for investors' attention and distributors stepping up their efforts to tap clients, old and new.

HSBC Mutual Fund and newcomer Lotus India Mutual Fund have in recent days rolled out tax-saving products (officially called Equity Linked Savings Schemes), while Reliance Mutual Fund, SBI Mutual Fund and LIC Mutual Fund have come up with fixed-duration funds that have been named Long Term Equity Fund, One India Fund and India Vision Fund, respectively.

These and other NFOs are mostly set to close for initial subscription in the next few weeks, point out mutual fund sources, adding that distribution outfits are currently working overtime to garner as much as possible from clients.

Among the fund houses that have NFOs going are Prudential ICICI Mutual Fund (Equity & Derivatives Fund) and Kotak Mahindra Mutual Fund (Dynamic Asset Allocation Fund). The former comes bundled with two plans, named income optimiser and wealth optimiser. The latter has been positioned as a balanced fund (with 36-months maturity) that will allow redemptions on the 25th of each month. Both will close by the first week of December.

One or two, like Standard Chartered MF's Arbitrage Fund, are expected wrap up their NFOs in the next few days. These will follow the likes of JM MF's financial services sector fund and telecom sector fund that have just been closed.

Guesstimates vary

As for the kind of collections these will notch up, guesstimates vary widely. However, a section of the distribution community expects the current crop of equity NFOs to collect about a couple of thousand crores, an expectation that is being attributed to two fundamental reasons.

The first stems from the buoyant equity market, which has now gone well beyond 13,500 points. The situation is said to have whetted investors' appetite for more, despite the greater risks that have come into being.

The second is derived from the belief that a larger number of investors, having seen in recent years what longer term holdings can do for them, are now planning to stay committed for three-to-five years. This is also the factor behind MFs' recent inclination to come out with close-end funds, it is felt.

More proposals with SEBI

A clutch of fund houses have lined up equity products, offer documents for which have been sent to the securities regulator, SEBI.

These include an infrastructure sector fund mooted by Escort Mutual Fund, a tax-saving fund worked out by JM MF and a mid-cap fund proposed by Lotus Mutual Fund.

Besides these, there is a host of fixed-maturity plans expected to be introduced by fund houses such as HDFC, Birla Sun Life, Principal and Kotak Mahindra.

Tata Mutual Fund for its part has come up with a capital protection oriented proposal.

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