Mutual fund houses to launch several NFOs soon

Mumbai: Mutual funds are preparing to launch new fund offers (NFOs) after a three-month pause that the Securities and Exchange Board of India imposed on them to comply with a new rule.

While a few asset managers have already lined up equity, hybrid, index and debt funds, many more are expected to join later in July and in August.

“The industry has complied with the regulator’s circular on discontinuing pooling client money for mutual fund transactions. The regulator will now permit new fund offers,” Association of Mutual Funds in India (AMFI) chairman A Balasubramanian said.

Since the industry could not meet the deadline by April 1 of discontinuing pool account usage for mutual funds due to operational hassles, Sebi extended the deadline to July 1. However, it barred mutual funds from launching NFOs till the time the industry complied with the rule. It also sought tighter authentication requirements when redeeming mutual funds with the objective of reducing the likelihood of fund houses misusing investor money.

“We have given an undertaking to the regulator and industry body AMFI that all our distribution partners are compliant with the Sebi circular on pooling,” said the business head at a domestic fund house.

Whiteoak Capital will be launching its maiden Whiteoak Capital Flexicap Fund, which will remain open for subscription July 12-26, while

MF will be offering Edelweiss Focused Fund July 12-25. Among others, Mutual Fund, the largest asset manager, has lined up a debt index fund and fixed maturity plan, and Mirae Asset Managers plans to launch the Mirae Asset Balanced Advantage Fund in the second half of July.

“After the sharp drawdown in the market, we find many good businesses available at attractive valuations. Money coming in will give us a chance to construct a solid portfolio for our first equity mutual fund offering,” said Prateek Pant, chief business officer, Whiteoak Capital Mutual Fund.

Distributors believe there is a lot of interest among investors and they expect those who suffered big losses in crypto assets and direct equities to shift to mutual funds, especially through the NFO route. Fund houses also spend money on advertising during an NFO.

“NFOs help attract new investors and are often a trigger for them to come to mutual funds. Many new investors like allocating lump sum money through NFOs,” said Anup Bhaiya, managing director of Money Honey Financial Services.

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