Motilal Oswal launched a multicap fund and JM Financial has started a small-cap fund to complete their product basket in the diversified fund space. Many fund houses are launching thematic funds that include the likes of financial services, manufacturing and special opportunities.
Mahindra Manulife and Baroda BNP Paribas are launching manufacturing funds.
“We are seeing strong interest from investors. Most investors from a sentiment and intent standpoint seem to be looking beyond the upcoming events and focusing on the long-term opportunity,” says Anthony Heredia, MD, Mahindra Manulife Mutual Fund.
Heredia believes the manufacturing space has an integral role to play in the long-term India growth story and hence they have come with NFOs. Distributors point out that most large fund houses have completed their diversified equity mutual fund basket where regulations specify that they can have only one scheme in a category.Given the high growth expected in the mutual fund industry, fund houses are looking to expand their product offerings in both the active and passive categories.With no restriction on the number of sectoral and thematic funds, they are now coming up with new schemes. Given that there is high interest from investors for mutual funds, fund houses are launching products which help attract investors.
Distributors point out that even though there is awareness created that net asset value (NAV) of a scheme is not important, in choosing a fund, a set of investors still prefer a NFO just because its priced at Rs 10.
However, wealth managers believe investors should examine NFOs carefully and add them only if it helps them diversify portfolios or if it has something different to offer.
“Opt for a new fund offer only if it has something that is currently not available in the existing funds universe,” says Nirav Krkera, head of research at Fisdom. Investors could check for performance of existing schemes in the same theme and their performance before investing or wait for the new fund to build a track record. There are many multi- cap, small-cap funds already existing and there are many funds that offer themes like banking, manufacturing and business cycles.
“Investors could check funds that have a track record or wait for the fund house to declare its portfolio before considering an investment,” says Karkera.