NFO NEST
October 2010

Mutual Funds had launched 26 new fund offers in the equity segment between November 2007 and January 2008. Today, the NAVs of half these schemes are below the face value of Rs 10 per unit. And, no scheme has an NAV of more than Rs 20. Given the huge rush at that time to participate in the equity market, these NFOs garnered a significant amount of money – Rs 21,205.40 crore. Reliance Natural Resource Retail mopped up Rs 5,660 crore, UTI Infrastructure Advantage Rs 3,500 crore, and HDFC Infrastructure Rs 1,720 crore. However, the combined assets under management of these schemes had dipped 32% to Rs 14,456.5 crore as on September 27, 2010. It could be because of redemption by investors and due to the inability of the stocks held to reach their previous highs.

Many fund houses seem to have learnt a lesson and are reluctant to launch new schemes. From the statistics available with the Association of Mutual Funds in India, between April and August 2010 the mutual fund industry witnessed the launch of only 10 equity NFOs. The collections were also not impressive at less than Rs 2,000 crore. The reluctance of the houses is also due to the fact that distributors are no longer pushing their products. Moreover, stricter guidelines introduced by the Securities and Exchange Board of India have tied their hands. To garner Rs 700-800 crore assets in a single scheme involves an expense of Rs 20-25 crore on promotional activities. If the fund house cannot recover this cost in two to three years, it will rather not launch a scheme. But Baroda Pioneer PSU Equity Fund - an open ended equity scheme – chooses to differ. It has received a favorable response from its investors and collected over Rs 1 billion during the NFO period.

IDFC Savings Scheme – Series I
Opens: October 15, 2010
Closes: October 29, 2010

IDFC Savings Scheme - Series I, a close ended debt scheme with the duration of 36 months, will mature on Nov.7, 2013. The scheme endeavours to generate income by investing in high quality fixed income securities as the primary objective and generate capital appreciation by investing in equity and equity related instruments as a secondary objective. The scheme will allocate 75% to 100% of assets in debt and money market instruments with medium risk profile. It will further allocate upto 25% of assets in equity and equity related instruments with high risk profile. Investment in securitised debt will be nil. Investments in foreign securities will be upto 50% of the net assets of the scheme. Investments in derivatives will be upto 50% of the net assets of the scheme. Benchmark Index for the scheme is CRISIL MIP Blended Index. The scheme will be managed by Ashwin Patni.

JPMorgan EEMEA Equity Off-shore Fund
Opens: October 18, 2010
Closes: October 29, 2010

JPMorgan EEMEA Equity Off-shore Fund, an open-ended fund of funds scheme, aims primarily at providing long term capital appreciation by investing in JPMorgan Funds – Emerging Europe, Middle East, and Africa Equity Fund, an equity fund which invests primarily in a diversified portfolio of companies incorporated or which have their registered office located in, or derive the predominant part of their economic activity from, an emerging market in Central, Eastern, and Southern Europe, Middle East, or Africa. The scheme will allocate 80% to 100% of assets in units/shares of JPMorgan Funds - Emerging Europe, Middle East & Africa Equity Fund with medium to high risk profile. It will further allocate upto 20% of assets in money market instruments and/or units of liquid schemes with low to medium risk profile. The scheme will be benchmarked against MSCI EMEA (Total Return Net). The scheme will be managed by Namdev Chougule.

AXIS Gold Exchange Traded Fund
Opens: October 20, 2010
Closes: November 3, 2010

Axis Gold ETF, an open ended Gold Exchange Traded Fund, aims at generating returns that are in line with the performance of gold. The new fund offer price for the scheme is Rs 100 per unit plus premium equivalent to the difference between the allotment price and the face value of Rs 100. The scheme will allocate 90% to 100% of assets in physical gold (includes investments in gold related instruments (including derivatives related to gold) which will be made as and when SEBI permits mutual funds to invest in gold related instruments). The scheme may also invest upto 10% in money market instruments. The scheme will be benchmarked against domestic price of physical Gold. Anurag Mittal will manage the fund.

JPMorgan Global Natural Resources Equity Off-shore Fund, Pramerica Short Term Floating Rate Fund, Birla Sun Life Gold ETF, and Canara Suraksha Fund-Series 1 are expected to be launched in the coming months.