Contrary to the belief that most distributors sell NFOs for higher upfront commission, the MF industry continues to get healthy inflows in equity NFO even in all trail era.
Between January and July 2019, the MF industry witnessed inflows worth Rs.8,232 crore from 32 open end equity NFOs. In the corresponding period last year, 9 open-ended equity scheme NFOs had accumulated assets worth Rs.2,835 crore, shows AMFI data.
Open-ended equity schemes include pure equity schemes, ELSS schemes and balanced funds.
The rise in flows come despite a ban on upfront commission. There was scepticism that the ban on upfront commission could discourage advisors from recommending NFOs. Last year, SEBI had asked AMCs to ban upfront commission and move to an all trail model of commission in all schemes.
Manish Mehta, National Head - Sales and Distribution Alliances, Kotak Mutual Fund said, “It is not correct to assume that distributors would stop recommending good NFOs just because they do not get upfront commission. If a fund suits an investor’s portfolio, they would recommend it to the investor without any hesitation.”
Kotak Focussed Equity Fund was one of the most favoured new schemes this year. It raised Rs.1,159 crore during its NFO period.
Seconding his views, Anthony Heredia, CEO, Baroda MF said that distributors would continue to recommend NFOs if the schemes make sense for their clients. Baroda Equity Savings Fund collected Rs.449 crore during its NFO period. Heredia attributed this to the support from distributors who played a crucial role in raising a considerable amount for them.
Another reason for NFOs attracting good inflows could be a slew of new schemes. Post SEBI’s new categorization of MF schemes in October 2017, fund houses have identified the gaps in their product basket. As a result, launch of new schemes has picked up pace and inflows to MF industry through NFOs have risen.
Sunil Subramaniam, MD, Sundaram Mutual Fund pointed out at the launch of Sundaram Equity Fund recently that the SEBI is more willing to allow the launch of new schemes, if it is distinct in terms of asset allocation and investment strategy.
Top NFOs in Jan-July 2019
|
Scheme |
Month |
Amount accumulated (in Rs crore) |
|
ICICI Prudential India Opportunities Fund |
January |
1309 |
|
Kotak Focused Equity Fund |
July |
1159 |
|
ICICI Prudential Bharat Consumption Fund |
April |
621 |
|
Mirae Asset Mid Cap Fund |
July |
612 |
|
Tata Balanced Advantage Fund |
January |
599 |
|
Baroda Equity Savings Fund |
July |
449 |
