Mutual fund new offers: Asset management companies are working to capitalize on the current enthusiasm by introducing unique and innovative investment options. These companies, particularly mutual funds, are expanding their range of fund offerings by introducing a variety of new fund options, known as New Fund Offerings (NFOs), focusing on specific themes and sectors, ranging from tourism to business opportunities.
This week, we are focussing on three NFOs:
1. Kotak BSE PSU Index Fund
a. Kotak Mutual Fund has launched Kotak BSE PSU Index Fund, an open-ended scheme replicating or tracking the BSE PSU Index.
b. The scheme has already opened for public subscription on July 10, 2024, and will close on July 24, 2024.
c. The fund will reopen for continuous sale and repurchase on August 6.
d. The investment objective of the scheme is to provide returns that, before expenses, correspond to the total returns of the securities as represented by the underlying index, subject to tracking errors.
e. The scheme will be benchmarked against BSE PSU Index (Total Return Index). BSE PSU Index currently comprises of56PSU stocks selected from the BSE 500 Index.
f. The scheme will be managed by Devender Singhal, Satish Dondapati, and Abhishek Bisen.
g. The minimum application amount for SIP and lumpsum is Rs 100 and any amount thereafter.
h. The scheme will allocate 95-100% in equity and equity related securities covered by BSE PSU Index and 0-5% in debt and money market instruments.
“At Kotak Mutual Fund, we continually strive to provide our investors with diverse investment solutions. The launch of the Kotak BSE PSU Index Fundis aligned with our commitment to offer products that cater to different risk appetites and investment horizons.While PSU stocks present a mixed landscape with varying opportunities across sectors, this index fund allows investors to gain broad exposure to the PSU segment. This fund provides a structured approach to PSU investing, allowing investors to participate in the potential of this segment passively while managing risksthrough diversification,” said Nilesh Shah, Managing Director of KMAMC.
“The Kotak BSE PSU Index Fund represents an important addition to our product lineup, catering to investors interested in India’s public sector enterprises. PSUs play a crucial role in key sectors of our economy, from energy and finance to defense and infrastructure. While individual PSU stocks may exhibit varying performance, this index-based approach allows investors to potentially benefit from the overall growth and reforms in the public sector,” said Devender Singhal, Executive Vice President & Fund Manager, Kotak Mahindra AMC.
2. Edelweiss Business Cycle Fund
a. Edelweiss Mutual Fund has launched the Edelweiss Business Cycle Fund, an open-ended equity scheme following the business cycles-based investing theme.
b. The scheme is available for public subscription from July 9, 2024, and will close on July 23, 2024.
c. The scheme will reopen for continuous sale and repurchase on August 06, 2024.
d. The Edelweiss Business Cycle Fund uses a factor investing approach to create three baskets representing quality, growth, and value stocks. By diversifying across these baskets, the fund minimises the cyclicality of any single factor. Within each basket, the fund selects the highest momentum stocks, resulting in a diversified portfolio of 50-60 stocks. The fund aims to dynamically rotate between sectors over different time periods, seamlessly combining momentum with fundamentals to enter and exit sectors, thereby generating better alpha.
e. The investment objective of the scheme is to generate long-term capital appreciation by investing with a focus on riding business cycles through allocation between sectors and stocks at different stages of business cycles in the economy.
f. Investors can invest under the scheme with a minimum investment of Rs 1,000 per plan/option and in multiples of Re 1. There is no upper limit for investment.
g. The fund will be managed by Bharat Lahoti Co-Head – Factor Investing and Bhavesh Jain Co-Head – Factor Investing.
“The Edelweiss Business Cycle Fund provides investors with a convenient and unique solution by implementing dynamic sector rotations. This strategy effectively addresses the common challenge of timing sector entries and exits, which investors often struggle with. Momentum has been the bestperforming factor in India for many years, and when combined with other fundamental factors, it proves highly effective in generating long-term alpha. Investing across various sectors and market caps, this fund offers a robust solution for core allocation with a long-term focus,” said Radhika Gupta, MD & CEO, Edelweiss Mutual Fund.
3. Canara Robeco Balanced Advantage Fund
a. Canara Robeco Balanced Advantage Fund is an open-ended dynamic asset allocation fund, which has been launched to generate alpha when markets are doing well and reduce downside risk in times of bad market periods.
b. The Canara Robeco Balanced Advantage Fund will be benchmarked against CRISIL Hybrid 50+50 – Moderate Index.
c. The New Fund Offer (NFO) opened for subscription on July 12 and will close on July 26, 2024.
d. The gross allocation of the fund will be 65% or more towards equities, which will ensure equity taxation for investors. Rest will be invested in debt and money market instruments.
e. In its allocation to debt segment, the fund will predominantly invest in government bonds and AAA-rated corporate papers with an aim to maintain stability and liquidity.
f. The scheme will be managed by Shridatta Bhandwaldar, Ennette Fernandes, Suman Prasad and Amit Kadam.
g. The minimum investment amount is Rs 1000.
h. This NFO offers 2 special features – Auto Switch which allow investors to invest in select debt schemes during the NFO period wherein the entire amount is switched to the NFO on the last day of NFO. Also, investors who are looking at staggered investment in NFO can invest through 4 equal investments in staggered manner through Smart STP.
“Canara Robeco Balanced Advantage Fund will dynamically alter the exposure to equities and debt aiming for long term capital appreciation with income generation. The fund may be suitable for mutual fund investors seeking a method for dynamically altering their exposure to equity. The fund may also be suitable for those investors who are trying to moderate their participation in market rallies while mitigating potential losses,” said Rajnish Narula, CEO, Canara Robeco Mutual Fund.
In the monthly Association of Mutual Funds in India (AMFI) report released for the first half of the year 2024, it has been noted that there were 30 active equity schemes that were launched during this period. This is in comparison to the 51 schemes that were launched throughout the entirety of the year 2023.
Furthermore, the data indicates that the New Fund Offer (NFO) collections by active equity schemes in 2024 have exceeded the total collections in 2023. Specifically, the equity NFOs managed to garner an impressive amount of Rs 37,885 crore by June 2024, surpassing the Rs 36,657 crore accumulated in the previous year.
The Lok Sabha elections concluded recently, marking the end of the election period. The stock market has been experiencing a continued upturn, creating a positive momentum for NFOs in both active and passive equity sectors. In the month of June, mutual fund houses have launched a total of 29 new products in these categories. This number represents almost half of the new launches introduced in the first five months of the year 2024.