NFO NEST - February 2008

NFO Nest

Fence-sitters to Go-getters!

In a month when stocks crashed by more than 19 per cent from their highest levels, new fund offers by mutual funds attracted decent inflows. According to data from AMFI, NFOs garnered Rs 12,079 crore in January 2008 as against Rs 10,273 crore in December 2007. Past data, however, show that mutual funds suffer after every market crash. For instance, during May 2006, when the Sensex fell by 13.6 per cent, fresh inflows into mutual funds were just Rs 8,635 crore. The figure dropped a whopping 14 per cent to Rs 7,421 crore in June. However, it has been different this time. For example, the Reliance Natural Resources Fund, which closed on January 30, collected Rs 5,660 crore — the second largest collection by any new fund offer. Even during the market crash this year, most of the mutual funds were fully invested. Mutual Funds are now being considered as the best investment tool for retail investors and with savings rate in India at 32.4 per cent, this money is being channelised into the equity markets. The growth of the industry should also be seen in the light of steps taken by market regulator SEBI to make mutual fund investing easier and the industry's efforts to launch innovative schemes, develop strong distribution network to help proliferate the Mutual Funds concept to semi-urban and rural masses. A strategic shift indeed!

The following funds find their place in the NFO nest in February, 2008.

HSBC Emerging Markets Fund Opens: 28 Jan , 2008 Closes: 25 Feb, 2008

HSBC Emerging Markets Fund is an open-ended scheme that seeks to provide long-term capital growth by investing in emerging economies the world over. The fund would invest both within and outside India. It can invest up to 100 per cent of its assets in overseas markets. The fund may also invest a limited proportion in domestic debt and money market instruments in case equity markets are considered unfavourable.

Birla Sun Life Pure Value Fund Opens: 17 Jan , 2008 Closes: 1 Mar, 2008

The three-year close-ended fund seeks to generate consistent long-term capital appreciation by investing predominantly in equity and equity related securities by following value investing strategy. The fund would target companies having excellent business performance, high earnings potential and good management. The fund would invest 85% in equity and 15% in debt. Benchmarked against BSE 200, the fund would make investment in about 40-45 stocks across half a dozen sectors.

HSBC Small Cap Fund Opens: 19 Jan , 2008 Closes: 3 Mar, 2008

A three-year close-ended diversified equity scheme with automatic conversion into open-ended equity scheme at the end of the stated period, the fund aims at providing long-term capital appreciation primarily from a diversified portfolio of equity and equity related instruments of small cap companies. The scheme may invest 65-100% in equity and equity related instruments of small cap companies. It may have investment of 0-35% in equity and equity related instruments of other than small cap companies. The scheme will invest 0-35% in debt and money market instruments.

Morgan Stanley A.C.E. Fund Opens: 11 Feb , 2008 Closes: 10 Mar, 2008

An open-ended equity scheme, Morgan Stanley A.C.E (Across Capitalisation Equity) Fund aims at generating long-term capital growth from an actively managed portfolio of equity and equity-related securities, including equity derivatives. The fund will seek both value and growth and will not be restricted in terms of sector, themes or market capitalisations.

Mirae Asset India Opportunities Fund Opens: 11 Feb , 2008 Closes: 10 Mar, 2008

Mirae Asset Global Investment Management (India) has launched its first equity fund, the Mirae Asset India Opportunities Fund. This open-ended diversified equity fund would invest between 65 per cent and 100 per cent in equity and equity related securities and up to 35 per cent in money market instruments or debt securities, which includes up to 25 per cent of corpus in securitised debt. The fund would seek to deliver returns by focusing on select high performance sectors or industries. It also offers complete flexibility to diversify across sectors, market caps and investment styles and thus seeks to minimise the risks during market volatility.The fund would be benchmarked against BSE 200.

Tata Growing Economies Infra Fund Opens:18 Feb,2008 Closes:18Mar,2008

It is an open-ended diversified equity fund with the investment objective of generating capital appreciation / income by investing predominantly in equities of companies in infrastructure and other related sectors in India and other growing economies of the world. The investment focus would be guided by the growth potential and other economic factors of the countries.

Franklin Build India Fund, DSP Merrill Lynch Green World Fund, Sahara Power Fund, Standard Chartered Small and Mid cap Equity Fund, Benchmark S & P CNX 500 Fund, Kotak Banking and Financial Sector Fund, LIC Banking & Financial Sector Fund, Principal Infrastructure Fund, Standard Chartered Ancillary Companies Fund, HSBC Agri and Natural Resources Fund and HSBC Infrastructure and Real Estate Fund are expected to be launched in the coming months.