Mutual Funds plan to capitalise on novel concepts

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Mutual funds are coming out with a variety of equity themes to attract investors even as investor-interest is shifting into newer concepts and themes.. For instance, Mirae Asset Management Company (Mirae AMC) has filed a scheme information document with markets regulator SEBI for Mirae Asset Electric Autonomus Vehicle ETF Fund of Fund.

As electric vehicles seem to be the flavour of the season, fund houses are rushing to file applications for electric vehicle funds with SEBI. Others that want to dabble into the theme are Navi Electric Vehicles and Driving Technology Fund of Fund and Nippon India S&P EV Index Fund.

Similarly, as most countries are opening up and real estate is doing well post Covid, PGIM India has launched Global Select Real Estate Securities Fund of Fund while Tata MF has filed for Real Estate Opportunities Fund.

With demand for semi-conductors rising, Nippon AMC is trying to attract investors through the Nippon India Taiwan Equity Fund. Mirae AMC, through Mirae Asset Hang Seng Tech ETF Fund of Fund and Mirae Asset Hang Seng Tech ETF, is trying to offer some of the world’s top companies such as Xiaomi, Meituan Dianping, Alibaba Group and Tencent Holdings to investors.

Betting on SPAC theme

Motilal Oswal is also not lagging behind when it comes to offering new themes. It recently filed two SIDs: Motilal Oswal S&P US IPO & Spinoff Fund of Funds, the concept that is attracting global investors with strong returns, and Motilal Oswal MSCI EAFE Top 100 Select Index Fund, picking top companies from Europe, Australasia and Far East.

Besides, fund houses are coming out with traditional themes such as midcap, flexicap, Nifty50, Nifty 100, make-in- India, India growth sectors, quant etc.

According to market experts, investors are not hesitant to take risks outside India and on new themes. To cater to their needs, fund houses are also launching themes that are likely to benefit in the current situation.

‘Yes for diversification’

Vidya Bala, Co-Founder, Primeinvestor.in, said that global funds provide diversification only if they are less co-related with Indian markets. Investors should be aware that these global funds have country, currency and the specific theme’s risks. “So, a global fund that is highly co-related with Indian markets will not act as a hedge to their Indian portfolio. As far as thematic funds are concerned, they have concentration risk too and investors should know when to enter and exit the theme,” she added.

According to AK Narayan, founder of AK Narayan Associates, a financial advisory firm, for those who are looking for diversification in their portfolios, these are all good bets. “However, new investors should not look into this, he cautioned, adding that “these products are for experienced investors, who can understand tax implications and risks involved.” For them, the new concept product MFs are a must in a limited way in their overall portfolio, he said.

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