MFs beat pandemic blues to raise ₹14,100 cr via NFOs in 5 months

Suresh P Iyengar Mumbai | Updated on August 31, 2020

Going digital saves costs on various counts, trend likely to continue, say industry leaders

Notwithstanding the pandemic and subsequent lockdown, mutual funds have gone ahead with new fund offers (NFOs) to raise ₹14,193 crore over the past five months.

Interestingly, for the first time ever, fund houses have taken the online route to launch NFOs, not printing a single application form. This has not only saved them form distribution costs but also allied expenses such as travel cost of executives and holding investors meet.

Swarup Mohanty, CEO , Mirae Asst Investment Managers, said the development goes to show how quickly markets have adapted to the changing environment. “We launched the Arbitrage Fund and the Bank and PSU Debt Fund in the digital environment and the response we got was pleasantly surprising. It has strengthened our resolve to continue with our future launches as well,” he said.

Mirae Mutual Fund has raised over ₹300 crore through its two NFOs in the five-month period.

Exchange traded funds

Of the overall investments in mutual funds, a major chunk has come through other exchange traded funds, which cumulatively raised ₹11,193 crore. The two sets of Bharat Bond ETF launched by the government through Edelweiss Asset Management Company alone raised about ₹10,000 crore in July.

Despite upheavals in the equity markets and disruption in mutual fund distributor networks due to the lockdown, MFs got ₹718 crore through equity NFOs of one each — multicap, mid-cap and focussed funds.

Sundeep Sikka​, Chief Executive Officer, Nippon Life India Asset Management, said distributors have done well to adopt the online mode of transactions and this has not only widened market reach but also proven the digital capability of the industry. Nippon India Mutual Fund raised ₹720 crore through a new multi-cap fund in August.

Three hybrid funds — including arbitrage, multi asset allocation, dynamic asset allocation and balanced funds — have garnered ₹1,000 crore. Similarly, seven close ended fixed term plans have mopped up ₹747 crore of the ₹1,194 crore of the 11 debt schemes launched.

Kaustubh Belapurkar, Director Manager Research, Morningstar India, said most of the fixed term plan flows have come in during March. Typically, investors buy into fixed term funds in March, just before the financial year end close, as it helps them with an additional year of indexation benefits for LTCG (long-term capital gain) tax calculations.

Despite markets being fairly dynamic in the last few months, the fund house felt it prudent to stick to the business plans, said Mohanty.

Published on August 31, 2020

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