With all stock market indices, even the sectoral ones, on the rise to new highs, making even the die-hard risk-averse individuals eye buying into shares, mutual funds are looking to make a killing of their own, by unveiling their equity-oriented NFOs.
However, MFs are not too much into buying lately. The Sensex and Nifty have climbed into a rarefied space, recording highs in intra-day trading of 15,683 and 4,601 birthing billions of rupees in profits. While most of the bull frenzy is being fuelled on the back of huge investments by foreign institutional investors, mutual funds have not been net buyers of equity. They have instead been more willing to book profits, as they have emerged as net sellers in recent times. However, returns by most mutual funds have been good with banking funds in the vanguard of profit delivery, and the growth is seen in the rise of BSE Bankex by as much as 60% over the year.
But that is an aside, what rising markets bring with it is investor confidence and optimism. That means they are willing to put their money on the stock markets expecting fancy returns. The retail investor, dragged in by the irresistible lure of quick profits, has also funneled increasing amounts into equity, mostly via mutual funds.
FII & MF Investments In Equity during days of last week:
| (Rs m) | MFs | FIIs | Total |
| 13-Jul | 2,958 | 23,464 | 26,422 |
| 16-Jul | (3,719) | 16,601 | 12,882 |
| 17-Jul | (1,030) | 9,464 | 8,434 |
| 18-Jul | (1,748) | 12,337 | 10,589 |
| 19-Jul | 1,116 | 8,831 | 9,947 |
| Total | (2,423) | 70,697 | 68,274 |
Source: Equity Master
FII investments since January 2007:
| Date | Purchase (Rs cr) | Sale (Rs cr) | Net (Rs cr) |
| July1 | 58791.1 | 37340 | 21451.1 |
| June | 49249.5 | 47606.8 | 1642.7 |
| May | 47254.2 | 43155.4 | 4098.8 |
| April | 48141.2 | 41462.1 | 6679.1 |
| March | 50678.5 | 51760.3 | -1081.8 |
| Feb | 55803.9 | 48564.2 | 7239.7 |
| January | 45052.2 | 44560.1 | 492.1 |
1Up to July 20
Retail investors just love Mutual Fund NFOs, something they may be associating with new listings by companies post-IPOs, some of which have a tendency to gain hugely, like Vishal Retail, but many do not script a dream run (Read All About It: IPOs: the marker itself is below the mark).
However, many NFOs may be looking at new opportunities that have been revealed lately, but by now there are some 170 diversified equity schemes and so many other categories that one wonders if new ones are required. Well, the requirement is by MFs—for your money. They need new collections and the easiest way is through NFOs.
Of course, the basic premise for investment in MFs is that you derive long-term gain, and that short-term profits should not really be eyed as there is usually an early exit load payable and it is very, very difficult to predict where the markets will be even one month down the line, even though over the long-term, there is uniformity of opinion that the Sensex and the rest will be virtually doubling, or more, in valuation in the years to come. Nevertheless, in an environment of rising markets, Indian and foreign, it will be very difficult for investors to stop themselves from plopping down their money in MF accounts.
As such, July has seen a number of asset management companies launch their NFOs. Among them are UTI MF, SBI MF, Reliance MF, and JM MF.
| Scheme | NFO Opens | NFO closes |
| UTI India Lifestyle Fund | 2-Jul-07 | 25-Jul-07 |
| Sundaram Capital Protection Oriented Fund (Series 1-3 yrs) | 9-Jul-07 | 7-Aug-07 |
| Sundaram Global Advantage | 16-Jul-07 | 31-Jul-07 |
| JM Contra | 16-Jul-07 | 14-Aug-07 |
| SBI Short Horizon - Short Term - RP | 19-Jul-07 | 26-Jul-07 |
Before you take out that cheque book and sign on the line with a flourish, be sure you understand what you want, when you want and whether it will meet your requirements.
All the NFOs of 2007:
| Schem-e Name | Close Date | Structure | Category | Nature |
| ABN AMRO Sustainable Development - Dividend | 05/04/2007 | Close Ended | Diversified | Equity |
| AIG India Equity Fund - Institutional – Dividend | 31/05/2007 | Open Ended | Diversified | Equity |
| AIG India Equity Fund - Regular – Dividend | 31/05/2007 | Open Ended | Diversified | Equity |
| Birla Sunlife LongTermAdvantage-S1-Dividend | 18/05/2007 | Close Ended | Diversified | Equity |
| Can Multicap Fund – Dividend | 04/01/2007 | Close Ended | Diversified | Equity |
| DBS Chola Hedged Equity Fund – Dividend | 30/03/2007 | Open Ended | Diversified | Equity |
| Fidelity International Opportunities - Dividend | 30/04/2007 | Open Ended | Diversified | Equity |
| Franklin India High Growth Companies-Dividend | 29/06/2007 | Open Ended | Diversified | Equity |
| HDFC Mid-Cap Opportunities Fund - Dividend | 08/06/2007 | Close Ended | Diversified | Equity |
| HSBC Unique Opportunities Fund - Dividend | 26/02/2007 | Close Ended | Diversified | Equity |
| ICICI Prudential Fusion -Series II - Dividend | 16/03/2007 | Close Ended | Diversified | Equity |
| ICICI Prudential Fusion-Series II-Institutional - D | 16/03/2007 | Close Ended | Diversified | Equity |
| JM Small & Mid-Cap Fund-Institutional-Dividend | 07/04/2007 | Open Ended | Diversified | Equity |
| JM Small & Mid-Cap Fund - Regular - Dividend | 07/04/2007 | Open Ended | Diversified | Equity |
| JPMorgan India Equity Fund – Dividend | 18/05/2007 | Open Ended | Diversified | Equity |
| Kotak Emerging Equity Scheme - Dividend | 16/03/2007 | Close Ended | Diversified | Equity |
| Lotus India Arbitrage Fund – Dividend | 20/04/2007 | Interval | Diversified | Equity |
| Lotus India Contra Fund – Dividend | 15/03/2007 | Open Ended | Diversified | Equity |
| Lotus India Mid Cap Fund – Dividend | 30/03/2007 | Close Ended | Diversified | Equity |
| OptiMix Multi Manager Equity Fund - Dividend | 30/03/2007 | Open Ended | Diversified | Equity |
| Principal PNB Long Term-3 Year Plan - Series I | 21/02/2007 | Close Ended | Diversified | Equity |
| Principal PNB Long Term-3 Year Plan - Series I | 21/02/2007 | Close Ended | Diversified | Equity |
| Reliance Equity Advantage– Retail-Dividend | 10/07/2007 | Open Ended | Diversified | Equity |
| SBI Infrastructure Fund - Series I - Dividend | 11/06/2007 | Close Ended | Diversified | Equity |
| Sundaram BNP Paribas Multiplier - Dividend | 31/01/2007 | Close Ended | Diversified | Equity |
| Sundaram BNP ParibasSelectSmallCap | 24/01/2007 | Close Ended | Diversified | Equity |
| Taurus INFRA TIPS – Dividend | 05/03/2007 | Open Ended | Diversified | Equity |
| Source: www.mutualfundsindia.com | ||||
