While Goldman Sachs and IDBI have launched their actively managed products, Motilal Oswal too has filed its first offer document for an actively managed equity fund.
The new fund houses which were so far just focused on passive funds seem to be rethinking their approach. They are now trying to create a space for themselves in the crowded actively managed equity funds space.
Recently, Goldman Sachs Mutual Fund launched its first actively managed equity fund called Goldman Sachs India Equity Fund. As our readers are well aware, Goldman had bought out Benchmark Mutual Fund which was completely focused on ETFs.
Motilal Oswal which entered the industry during late 2009 with a series of ETFs has also filed an offer document with SEBI to launch its maiden actively managed equity fund called Motilal Oswal MOSt Prime Equity Fund. IDBI Mutual Fund which had set up its business two years back had initially only launched passive funds. It launched IDBI Top 100 Equity Fund in May 2012.
New AMCs in the recent past have largely launched passive funds to mark their entry in the Indian mutual fund industry. IIFL AMC, set up last year, has also tried the same approach.
Passive funds are relatively low margin products for AMCs as compared to equity schemes which are able to charge a higher fee. Investor’s appetite for passive funds has not picked off in a big way as India remains largely an alpha market. The Indian fund manager’s ability to outperform indices traditionally has been another reason for slow take off of passive funds in India. Moreover, commissions offered to distributors are lower as compared to those offered in equity funds.
The only category in ETF space which is gathering momentum is Gold ETFs. AUM in Gold ETFs has steadily increased from Rs 736 crore in March 2009 to Rs 11477 crore as on September 2012, shows AMFI data. Equity indices based ETFs on the other hand only manage Rs 1715 crore as on September. 1% fee on Rs 1715 crore would translate into revenue of just Rs 17 crore for the industry.
While buying ETFs require investors to have a demat account, index funds can be bought physically. However, index funds also as a category have not been able to gather substantial assets.
