Fund houses have sought approval to launch 17 open-ended schemes since November 2017.
Many fund houses are planning to launch funds to complete their product basket. Multi-cap and balanced funds are some of the categories that fund houses are looking to launch.
Tata Mutual Fund, for example, has filed the draft offer document for three schemes. It has sought SEBI’s approval for Tata Multi Cap Fund, Tata Credit Risk Fund and Tata Arbitrage Funds.
Balanced funds
Two emerging fund houses, Mahindra Mutual Fund and Indiabulls Mutual Fund, have sought approval to launch balanced funds. The two filed draft offer documents to launch Mahindra Prudence Bachat Yojana and Indiabulls Prudence Fund respectively. Balanced funds have seen rapid growth in the past two years largely on account of their tax advantage and attractive returns.
Thematic funds
Fund houses have also sought approval to launch sectoral/thematic funds. Another fund Mahindra Mutual Fund filed is Mahindra Rural Bharat Yojana. The scheme plans to invest in stocks of companies that will benefit from the growth story of rural India.
Ashutosh Bishnoi, CEO, Mahindra Mutual Fund, said the fund house is looking to complete its product basket. “We are a new fund house and we have only three equity funds. We are, therefore, looking to fill the product basket by adding a balanced fund in our portfolio,” he said.
Speaking on the soon-to-be-launched rural theme fund, the CEO added “It is in line with the focus of our parent company, Mahindras, on rural and semi-urban areas. We believe that the rural economy will grow in the coming years. A rural-based fund could also distinguish us from the rest.”
The theme Mirae Asset Mutual Fund has chosen is healthcare. Mirae Asset Healthcare Fund will invest in stocks related directly or indirectly to healthcare and allied sectors in India.
Swarup Mohanty, CEO, Mirae Asset Mutual Fund, is upbeat about the healthcare sector’s potential. “If you see our product basket, we do not have focussed or arbitrage funds. We do not think that a focussed fund is superior to diversified funds. Healthcare is not just pharmaceutical stocks anymore. It is a broad category and even insurance companies can be part of our portfolio. We are convinced that this theme can give good returns from a 5-10 year horizon. Currently, the sector is undervalued, which allows us to pick up stocks at an attractive valuation,” he said.
The Mirae CEO emphasised that Mirae Asset Mutual Fund plans to launch only those categories of funds in which they have a strong conviction. “We launch new funds in sectors or categories only if we are fully convinced. Also, our other thematic fund, the consumer fund, delivered attractive returns, which boosted our confidence to launch another sectoral fund,” he said.
Swarup Mohanty added that the fund house is not looking to complete its product basket.
Passive funds
Among those awaiting approval are four passive funds.
The bigger fund houses, whose product basket of the actively managed fund is already in place, have sought the regulator’s permission to launch passive funds. These fund houses believe that passive investment will be the future of asset management in India. Their rationale is that as the economy progresses, the potential for generating higher alpha will diminish over time.
Others
The other draft offer documents filed relate to DHFL Pramerica Focused Equity Fund, DHFL Pramerica Money Market Fund, Shriram Multicap Fund, Axis Ultra Short Term Fund and Parag Parikh Liquid Fund.
