Mutual funds (MFs) have ratcheted up ₹53,700 crore through new fund offers (NFOs) in 2022 until November, against ₹1 trillion in Calendar 2021, even as the number of launches this year was more than the 2021 tally, a report by Business Standard stated.
Industry insiders told BS that the absence of launches in popular categories is the key reason behind lower collections this year. Typically, only NFOs in popular categories from major fund houses rake in the moolah, they added.
For example, three of the top five highest-grossing NFOs in 2021 were from the top two fund houses - SBI MF and ICICI Prudential MF. These three launches were in popular categories like balanced advantage, flexi-cap, and multi-cap, the report informed.
However, this year, the maximum launches were in the passive debt fund space as fund houses queued up to launch target maturity funds (TMFs) in a bid to become an established player in the emerging category, it pointed out.
Data from the Association of Mutual Funds in India (Amfi) shows that fund houses launched close to 40 TMFs this year until November. The second highest number of launches was also in the debt space: close to 30 fixed maturity plans, noted the report.
MF distributors caution that the NFO collections will remain subdued unless a new category in the equity space catches the fancy of investors.
This year, MFs were also hit by a three-month ban on new launches. In March, the Securities and Exchange Board of India (Sebi) restricted fund houses from launching NFOs in the April-June period, said the report.
Further, the market sentiment was also completely different in 2022, compared with the preceding year. With interest rates starting to rise across the globe, the markets turned volatile in 2022 on concern that higher interest rates, sticky inflation, and growth concerns, added BS.