As markets touch new high, fund houses are back with closed end equity funds to cash in on the positive sentiment surrounding the market.
Betting on the recovery in the Indian economy, Birla Sun Life has come out with its 3.5 year closed end fund called Birla Sun Life Resurgent India Fund - Series 1. The fund closes for subscription tomorrow. In a press release, A. Balasubramanian, CEO, Birla Sun Life Asset Management Company said, “The Indian economy in on the cusp of revival. Macro indicators are favourably poised. Government spending on the back of reforms coupled with interest rate easing, strong monsoon and Seventh Pay Commission are among the key drivers of consumption. There are a host of sectors which stand to benefit from this buoyancy. Our NFO looks to provide investors a good opportunity to make the most of this growth phase over the 3.5-year horizon.”
Meanwhile, ICICI Pru and HDFC are also planning to launch their version of closed end equity funds. While HDFC has filed offer document with SEBI to launch its HDFC Equity Opportunities Fund, ICICI Pru plans to launch four additional series of ICICI Prudential Value Fund. Sundaram MF, which launched a series of closed end funds in FY 2014-15 has launched a 10 year (lock in of three years) close ended ELSS focused on micro-cap stocks.
While fund houses are preparing to come out with closed fund to attract investors, opinion is divided between advisors on whether closed end funds are suitable for their clients.
The industry had mobilized Rs. 15,400 crore from 84 equity fund NFOs in FY 2014-15. Of this, a major chunk of money came in close end equity funds.
