A few fund houses have filed draft documents with SEBI seeking approval to launch 14 new schemes in the financial year 2018-19.
Many fund houses are planning to launch funds to complete their products basket. Multi-cap, hybrid, money market and corporate bonds are some of the categories that fund houses are looking to launch.
Equity funds
In equity fund category, two large fund houses, Franklin Templeton Mutual Fund and UTI Mutual Fund, have sought approval to launch equity savings funds.
Equity savings funds are popular among risk-averse investors due to tax benefits.
R Raja, Head - Products, UTI Mutual Fund believes that equity savings funds are suitable for first time investors as they comparatively less volatile than equity funds and offer better returns than debt funds.
Other fund houses that sought SEBI’s approval are Tata Mutual Fund and Essel Mutual Fund – to launch Tata Balanced Advantage Fund and Essel Multi Cap.
Rajiv Shastri, CEO, Essel Mutual Fund believes that SEBI’s circular on scheme rationalisation has made it easier for emerging fund houses to fill their products basket. “Now, fund houses are aware of the categories where they don’t have a presence and accordingly launch funds. Also, with the SEBI circular, industry participants will have a clear picture of the AUM and the number of funds that exist within each category. Depending on our competitive advantage and market conditions, we are looking to launch few more funds in the coming months,” said Rajiv.
He further added that the fund house has already got the regulator’s approval to launch Essel Multi Cap Fund and they are likely to launch it in the second half of June.
Similarly, Sundaram Mutual Fund approached SEBI for a thematic fund, Sundaram Services Fund. The fund will invest at least 80 per cent of its corpus in equity-related instruments of services sector. ICICI Prudential Mutual Fund, the largest fund house in terms of assets had sought SEBI approval to launch ICICI Prudential Bharat 22 FOF, a fund of funds offer that will invest in Bharat 22 ETF.
Debt funds
Two mutual funds – UTI Mutual Fund and Union Mutual Fund – have sought approval to launch UTI Corporate Bond Fund and Union Corporate Bond Fund. In fact, Union Corporate Bond Fund closed their NFO subscription on 18 May.
G. Pradeepkumar, CEO, Union Mutual Fund said that the current market scenario provides good opportunity for investors to invest in corporate bond fund. “The yields have moved up quite a bit in the last few months. In this scenario, a corporate fund with highly rated securities can offer attractive yields to investors if investors remain invested for three years. The scheme is more tax efficient as compared to most traditional investments offering fixed rate of interest,” said Pradeepkumar.
R. Raja of UTI said that there is a good demand for corporate bond funds among institutional clients.
The SEBI circular on categorisation and rationalisation of mutual fund schemes has classified debt funds into 16 categories. Among these categories are long duration funds, floater funds and money market funds.
Reliance Mutual Fund has sought the regulator’s nod to launch Reliance Nivesh Lakshya Fund, a long duration fund while UTI Mutual Fund plans to launch UTI Floater Fund.
“We have changed our UTI Floating Rate Fund into ultra short-term fund as we realised that we won’t be able to have 65% of the assets in floating rate instruments given the limited availability of such instruments. We will launch it once we feel that there are enough opportunities,” said Raja.
Some other open-ended debt schemes that are awaiting SEBI’s approval are Sundaram Money Market Fund and Baroda Pioneer Ultra Short Duration Fund.
Passive funds
Among those awaiting approval are two ETFs – SBI ETF Momentum and HDFC Next 50 ETF.