Mutual funds ride bull market with NFOs, mop-up rises multi-fold

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Mutual funds have made the most of the bull run in the capital market by not only delivering better returns but also flooding the market with new fund offers to attract good inflow.

Thanks to the digital evolution, fund houses have mopped-up ₹7,540 crore through launch of 25 NFOs in the June quarter against raising just ₹429 crore via nine NFOs in same period last year.

Interestingly, riding bullish market sentiments seven equity schemes raised ₹3,537 crore in June quarter against one scheme raising just ₹32 crore last year.

With investors taking fancy to passive funds, mutual funds attracted investment of ₹2,622 crore in 12 schemes with two fund of funds investing overseas alone getting ₹1,704 crore in June quarter. Last June quarter, mutual funds could raise only ₹169 crore through four new schemes.

Funds raised through NFOs this June quarter was up 15 per cent when compared to the pre-Covid June quarter of 2019.

Aditya Birla Sun Life AMC had garnered ₹1,900 crore with the launch its multi-cap fund in May while new entrant ITI Mutual Fund raised ₹877 crore through NFOs.

With the launch new funds and digital push, the industry has managed to add about two lakh new investors as of June-end taking unique investors count based on PAN number to 2.39 crore against 2.27 lakh in March quarter.

NS Venkatesh, CEO, Association of Mutual Funds in India, said the industry has established a strong digital connect with investors during the Covid pandemic and this has not only widen the reach but also attracted new investors.

Kavitha Krishnan, Senior Analyst Manager Research, Morningstar India, said with SEBI tightening norms on fund categories and stocks investment option based on market capitalisation, a lot of fund houses are running out of categories to launch NFOs and taken the passive fund route.

“Given the number of new fund launches, investors should use their investment discretion carefully as not all NFOs make a good fit,” she said.

George Heber Joseph, CEO, ITI Mutual Fund, said money raised through online channels of BSE, NSE, MF Utilities and the fund house’s own platforms account for 55-60 per cent of collections during NFOs compared to 15-20 per cent during pre-pandemic.

Swarup Mohanty, CEO, Mirae Asset investment Managers, said launching new products using the digital platform during the pandemic lockdown was far easier than the normal situation.

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