After several months of drought, new equity schemes are surfacing again from the stables of old fund houses. Last week, LIC Nomura and Canara Robeco filed offer documents for open-ended equity-oriented schemes with the Securities and Exchange Board of India (Sebi).
These are the first such scheme documents filed for pure-play equity schemes by experienced fund houses in more than a year. According to the Sebi website, the last such scheme document was filed 15 months ago, in September 2010, when IDFC MF had filed for a small cap fund.
Sebi began to discourage look-alike schemes towards the later half of 2009, soon after it enacted the game-changing rules on ban of entry loads. After it tightened approvals for new schemes, only new fund houses filed and got approvals for launching plain open-ended equity schemes.
| DOWN TO A TRICKLE New fund offer (Open-ended equity) | ||||
| Month | 2010 | Amount raised (Rs cr) | 2011 | Amount raised (Rs cr) |
| January | 3 | 1,590 | 0 | 0 |
| February | 0 | 0 | 2 | 178 |
| March | 1 | 41 | 2 | 93 |
| April | 1 | 4 | 0 | 0 |
| May | 0 | 0 | 1 | 134 |
| June | 6 | 1,068 | 1 | 167 |
| July | 2 | 706 | 0 | 0 |
| August | 1 | 178 | 1 | 6 |
| September | 4 | 877 | 1 | 24 |
| October | 2 | 106 | 0 | 0 |
| November | 0 | 0 | - |
- |
Keeping out the experienced fund houses which have well-oiled distribution machinery has hit inflows coming into the industry significantly, say distributors. Though many new fund houses have launched new schemes, they neither enjoy confidence of investors nor have built the necessary distribution muscle to sell these new funds. Therefore, collections have gone from bad to worse.
According to figures by the Association of Mutual Funds in India, just eight equity schemes were launched in the first 10 months of 2011. They collected Rs 602 crore, at an average collection of Rs 60 crore a month. In four of these months, not even a single new equity scheme was launched. In comparison, 20 schemes were launched in the first 10 months of 2010 raising Rs 4,570 crore.
Average collection was much higher at Rs 457 crore a month. This was aided by some of the more experienced fund houses such as Birla Sunlife, DSP BlackRock and Reliance which raised new equity funds in 2010. To put things in perspective, in the first 10 months of this year, 565 closed ended debt schemes, most of which were fixed maturity plans, raised Rs 99,450 crore.
Axis, Pramerica, Union KBC, Peerless and Daiwa are some of the new fund houses that filed offer document for open ended equity schemes. Other new fund houses like Motilal Oswal and IDBI concentrated purely on passive schemes like Index funds and exchange-traded funds (ETFs).
Older fund houses tried new product structures to make sure their new offer does not resemble existing ones. For example, DSP BlackRock MF filed scheme documents for several funds that invested in foreign securities. Reliance MF filed for Indonesia opportunities fund. Some of these funds were never launched in the market.
Fund houses also experimented with open-ended gold funds that invested in gold ETFs. These were a hit, riding on the rallying gold prices. Others like Tata and Fidelity tried life stage funds. While Tata MF launched retirement savings fund, Fidelity launched children plans. The volatile equity market played its role in pushing fund houses away from launching pure equity funds. Some fund houses were happy with launching capital protection funds, which played on the investors psyche to protect capital.
