New fund offers mop up a record ₹94,600 cr

Suresh P. Iyengar | | Updated on: Apr 05, 2022

Bullish market sentiment aid MFs to achieve higher collection

Total amount mopped by mutual funds through new fund offer has touched a new high of ₹94,621 crore in the first 11 months of the last fiscal against ₹42,018 crore logged in the whole of FY21, largely due to the ‘historic’ bull run in the secondary market.

The number of NFO launched jumped 145 against 84 logged last fiscal keeping the mutual funds busy to tap the every possible opportunity, according to data sourced from Association of Mutual Funds in India.

Equity flow doubles

Fresh funds raised through equity issues more than doubled to ₹86,650 crore against ₹37,980 crore registered last fiscal, while that of debt funds increased to ₹8,061 crore (₹4,058 crore) despite the debt market remaining lacklustre.

NFOs have been a big draw for mutual funds last fiscal with SBI Mutual Fund and ICICI MF attracting biggest inflows. Last August, SBI MF collected a whopping ₹14,500 crore through its Balanced Advantage Fund and another ₹8,200 crore through its multi-cap fund NFO last month.

While ICICI MF’s flexi-cap NFO mopped up ₹9,500 crore last July, Nippon India MF and Aditya Birla MF also had a few successful NFOs last year. The latest entrant in the MF space, NJ India’s Balanced Advantage attracted ₹5,200 crore investment last September.

Floater funds in demand

The fear of interest rate hike kept fixed term plan and floater funds in demand. Twenty four new offers of fixed rate fund and two floater funds attracted investment of ₹4,387 crore (₹1,176 crore) and ₹1,221 crore (₹1,302 crore) respectively.

Saugata Chatterjee, Chief Business Officer, Nippon India Mutual Fund, said domestic mutual fund investors’ investment choices are based on diversification, differentiated themes, low-cost passive offerings, rule-based investment options and hence NFOs across some of these categories have attracted maximum investor interest.

New themes get attraction

“Newer investment ideas catering to goal planning and diversification will attract reasonable investor interest. We expect differentiated theme-based ideas along with simplified low-cost offerings to garner sizeable allocations,” said Chatterjee.

Interestingly, the record fund raise through NFOs may taper off in the this fiscal, as SEBI banned mutual funds from launching new offers till July so that the industry finds time to meet its recent regulations.

Ujjwal Jain, CEO, Founder, WealthDesk, said the trend of retail investors investing in direct equities along with investing in MFs for equities’ exposure is fast emerging.

They are also testing out curated portfolio and ETFs of SEBI-registered research and advisory professionals through stock-broking platforms to get a nuanced exposure to direct equity, he added.

Published on April 05, 2022
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