New fund offers (NFOs) by mutual fund (MF) houses this financial year (2022-23) have managed to amass only a fraction of what they did in 2021-22 (FY22), a report by Business Standard stated.
49 NFOs launched between April and August have mopped up ₹12,671 crore, at an average of nearly ₹260 crore. By comparison, 176 NFOs were launched in FY22, collecting ₹1.08 lakh crore, translating into ₹613 crore per offering, the report pointed out.
Experts attribute this dip in the collection to fewer launches in popular categories by top fund houses — and their weak performance last year, moreover, concerns around expensive valuations and issues bunching up after the end of a three-month embargo encumbered collections, noted the BS report.
Data released by the Association of Mutual Funds in India shows that only five of the 49 new schemes launched this year were by active equity funds and one was a balanced advantage fund (BAF), the report informed, adding that only one of these six NFOs came from a premium fund house.
“The collections are low since launches are mostly in passive and debt categories. Fund houses are just completing their product basket through these NFOs,” Mumbai-based MF distributor Sadashiv Phene told the market daily.
“The NFO frenzy has ended for now. Last year, NFOs accumulated record sums on the back of a strong market rally. Now that the returns from these schemes are frail, the money isn’t flowing into NFOs like it used to,” Ranjit Dani, co-founder, Think Consultants stated.
Last year, five blockbuster NFOs gathered in excess of ₹5,000 crore each and one BAF by SBI MF, the country’s largest fund house, mopping up a record ₹14,551 crore, the report mentioned. ICICI Prudential MF’s Flexi-cap NFO was the second-highest grosser, with a ₹9,800-crore collection.
The report noted that the dominance of top fund houses over the list of highest-grossing NFOs last year shows that the familiarity of the brand and a well-established distribution network contribute to the success.
With markets turning choppy this year, experts told BS that investors are opting for schemes with a proven track record.