In recent times, AMCs have been filing NFOs for numerous thematic funds that aim to invest in new age technologies like electric vehicles and cryptocurrencies.
Navi and Mirae Asset have sought SEBI's permission to launch funds in the electric and autonomous vehicle space while Invesco has filed papers for a blockchain fund of funds. Then there are other AMCs like Motilal Oswal, IDFC and Nippon India, which have come out with plans to launch funds focused on US IPO, Asia Pacific tech companies and Taiwan, respectively.
What are the factors nudging AMCs to venture into new spaces and is there a demand for such funds? More importantly, are distributors in favour of recommending these funds to their clients?
We spoke to a few distributors and wealth management professionals to find out the answers. And what we gathered is that while distributors are mostly cold about these launches, investors are likely to get attracted to these new varieties of mutual funds.
"There's demand for thematic tech funds as investors see future in them. People know that future belongs to EVs as they are the answer to global warming. Themes like these will attract investors as they are in trend and are very simple to understand," said Anupam Guha, Head – Private Wealth Management, ICICI Securities.
"A lot of people especially millennials want to invest in international equities and new-age technology funds," says Rahul Jain of GR Finvisors.
However, many in the industry are sceptical about these funds as many thematic funds have delivered not so good returns in the past. "It is unfortunate that we are moving from sectors to themes now. Investing in these funds is acceptable for seasoned investors but not for regular investors. I hope the right set of investors is getting into these products," a senior official of a top AMC said on condition of anonymity.
"Thematic funds are like flavours, sometimes its international, sometime infrastructure and now may be blockchain and cryptocurrency will emerge. Many AMCs had to merge their thematic funds with broader funds in the past due to low inflow and underperformance," said Husaini Kanchwala, Product Head - Mutual Funds, NJ India.
"I do not recommend any thematic fund. Every few years there's a craze for such themes like it was technology in the early 2000s and then it was infra in 2007. Clients do demand these funds but I do my best to explain to them about the high risk associated with such funds," said Mumbai MFD Sadashiv Arvind Phene.
