New fund offers can signal mutual fund turnaround

Can a few new fund offers (NFOs) from reputed fund houses help the mutual fund industry regain its lost ground? According to industry players, NFOs from reputed players such as SBI MF, Birla Sun Life, DSP BlackRock among others would definitely generate a positive buzz about the industry and it may help bring some of the mutual fund sellers, who have vanished since the entry load ban by Sebi in August, back to the fold.

"DSP is one of the most respected fund houses in the country. When they come out with an NFO, that too a totally different proposition of a heavily concentrated portfolio of 25 stocks, it generates a lot of buzz," says a mutual fund distributor, who doesn't want to be named. According to market sources, DSP BlackRock NFO, which closed for initial subscription on Friday, had collected around Rs 700 crore. The figures couldn't be officially confirmed. The fund house was hoping to collect around Rs 2,000 crore.

"The SBI Mutual Fund NFO is also expected to do well because SBI would back it strongly. Birla and others would also do reasonably well," says Uday Merchant, a mutual fund distributor. However, he is quick to add that mega NFOs collecting Rs 5,000 core or so is now history.

"I don't think people are really interested in NFOs these days. The complete distribution network has collapsed after the entry load ban in August. Earlier, we just had to distribute the NFO form with newspapers and there would be good response from investors. But that is not the case any longer."

"It is a good sign that fund houses are not coming up with pure vanilla schemes to complete their portfolio. DSP is offering a concentrated portfolio; SBI is banking on the PSU theme and Birla on the reform story," says Y Jawahar, VP — head, distribution, Mata Securities.

Source: http://timesofindia.indiatimes.com/biz/india-business/New-fund-offers-can-signal-mutual-fund-turnaround-/articleshow/6005284.cms