Investors have had a break from a flurry of new fund offers (NFO), the past few months. This may, however, come to an end. Last week, five asset management companies (AMCs) filed draft documents for new fund offers with the securities market regulator, SEBI.
Axis MF has filed for a long bond fund, Franklin Templeton MF for a balanced advantage fund, LIC MF for a multi cap fund, Baroda BNP Paribas MF for a floater fund and Sundaram MF for a flexi cap fund.
SEBI had barred AMCs from launching new funds after it extended the deadline for stopping of pooling of funds and MF units by three months to July 1, 2022. Originally, AMCs were to comply with the SEBI circular on pooling of funds and MF units by April 1, 2022. As per the updated deadline, stock brokers, mutual fund distributors, investment advisors and other service providers involved in mutual fund transactions for their clients have to stop pooling of funds and / or mutual fund units by July 1, 2022. Several other measures such as the requirement for two-factor authentication for online redemption requests, which too formed part of the SEBI circular, have to be implemented from July.
Going by the Axis Long Bond Fund draft scheme information document, the scheme will invest in debt securities such that the Macaulay duration of the portfolio is greater than 7 years. The scheme has been labelled ‘moderate risk’ on the Riskometer with relatively low credit risk and relatively high interest rate risk. As per the Franklin India Balanced Advantage Fund draft documents, the fund will dynamically manage its equity and fixed income portfolio. The scheme is labelled ‘very high risk’ on the Riskometer. It will use a mix of qualitative and quantitative factors to determine the asset allocation. In terms of quantitative parameters, the scheme will use the month-end weighted average P/E ratio and P/B ratio of the Nifty 500 Index, combined in a 50:50 ratio. The Baroda BNP Paribas Floater Fund, as the name suggests will invest at least 65% of its net assets in floating rate debt instruments (including fixed rate debt instruments swapped for floating rate returns). The scheme is labelled ‘moderate risk’ on the Riskometer.