Nine documents filed with the regulator as Sensex rally continues.

Sharvari Patwa

Mumbai, Oct. 6

Nearly a dozen equity-based fund offer documents were filed with the Securities and Exchange Board of India during September, according to the regulator’s Web site.

This sudden spurt in the number of fund offers is despite the equity funds turning less attractive for distributors to sell after the scrapping of the entry load.

According to the Value Research data, three fund offer documents were filed with the regulator in July, four in August, while 11 of them have been filed in September. Of these 11, two are gold-based funds.

Retail interest

With the equity market on the upswing, mutual funds expect revival of g retail interest in the coming months, said the Taurus Mutual Fund Chief Executive Officer, Mr Waqar Naqvi.

Another attraction for retail investors is the Rs 10 face value for the new funds. For the existing funds, investors might have to pay the market price, which is higher, said fund managers.

Conducive environment

The current environment is conducive for equity investments, fund managers said.

Mutual funds are dependent on market conditions when it comes to pushing their schemes, said a fund manager with a foreign fund house. Now, with markets in a bullish phase, it is easier to convince investors about equity products, he added.

Also, the previous rally of the Sensex, when it touched the 17,000 mark, was a very sharp rally and not many investors were able to ride that rally, said another fund manager.

Now, with the market momentum still in the upswing, analysts feel that investors would want to ride the next rally. The benchmark index Sensex rose by almost nine per cent in September.

While new fund houses would launch more plain vanilla funds , existing fund houses could go in for more of theme-based and more structured equity offerings, said Ms Lakshmi Iyer, Head of Products at Kotak AMC.

Even as there is a general positive feeling about the equity market, a section of fund managers feels that investors are still sceptical about investing at such high levels.

“The market is already at a peak and these levels may seem high for retail investors,” a fund manager said. Also the market has already priced in growth for the next 6-8 months, and there is not much scope for an uptrend for some time, he added.

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(This article was published in the Business Line print edition dated October 7, 2009)
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