10 New Fund Offers open; What’s hot, what’s not
Equity mutual funds are attracting investors’ interest. So, fund-houses have been launching equity fund NFOs, and we pick the top 10 offers open currently. The funds range from thematic schemes, to index funds, to multi-cap funds, to international products. Here is a lowdown on what’s hot and what’s not.
1 Aditya Birla Sun Life Business Cycle Fund
NFO close: Nov. 29, 2021
This is a thematic fund. Its focus is to ride business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy. Thematic funds should be allocated maximum 10-15% of your entire equity investments, depending on risk-profile. Riding business cycles can be a profitable venture if the timing and stock selection is good.
2 Axis Nifty 50 Index Fund
NFO close: Nov. 29, 2021
This is a pure play passive investment option. The index fund will aim to provide returns before expenses that closely correspond to the total returns of the NIFTY 50 subject to tracking errors. Passive funds are a suitable alternative for investors who want market-like returns and at a lower cost. The Nifty 50 index is essentially giant-cap/large-cap barometer.
3 Edelweiss Large & Midcap Index Fund
NFO close: Nov. 26, 2021
This is also a passive investment option, but the index is a large & mid-cap benchmark. The investment objective of the scheme is to provide returns before expenses that closely correspond to the total returns of the Nifty Large Midcap 250 Index subject to tracking errors. In terms of risk profile, large & mid-cap funds come a notch below large-cap index funds. The large-cap allocation will form the foundation, while mid-caps can help generate extra return, but at extra risk.
4 ICICI Prudential S&P BSE 500 ETF FOF
NFO close: Nov. 26, 2021
One of the complaints investors have about passive investing is that they cannot do SIPs or Systematic Investment Plans when it comes to exchange traded funds (ETFs). As you know, ETFs trade like a stock on the exchange. A fund of fund (FoF) structure for an ETF helps investors do SIPs. ICICI Prudential S&P BSE 500 ETF FOF will aim to generate returns by investing in units of underlying scheme – ICICI Prudential S&P BSE 500 ETF. Do note the index S&P BSE 500 index is a multi-cap benchmark with large-cap, mid-cap and small-cap allocation. So, this fund will be a proxy for a multi-cap investing approach. Multi-caps are less riskier than standalone mid-cap and small-cap exposure, but a lot of it depends on how much large-cap is in the portfolio.
5 IDFC Multi Cap Fund
NFO close: Nov. 26, 2021
In case your heart yearns for an actively-managed multi-cap fund, go for this new fund. IDFC Multi Cap Fund seeks to generate long term capital appreciation by investing in a diversified portfolio of equity & equity related instruments across large cap, mid cap, small cap stocks. Being an actively managed fund, the scheme’s fortunes will be tied to stock selection and fund manager temperament, besides the AMC investing approach. Given the multi-cap definition by SEBI, the funds in this category have to keep some allocation in large-, mid- and small-cap buckets always.
HDFC MF is also launching HDFC Multi Cap Fund soon.
6 ITI Banking and Financial Services Fund
NFO close: Nov. 29, 2021
A sector-focussed fund, ITI Banking and Financial Services Fund will invest predominantly in equity and equity related securities of companies engaged in banking and financial services. Usually, such sector funds cast a wide net and buy not just shares of banks, but insurers, AMCs, brokers, NBFCs etc. Sector funds especially focussing on BFSI space are highly volatile and should be part of the thematic allocation of your equity portfolio. Profitable sector entry and exits are time-specific and so there should be extra caution taken while taking pure-play BFSI exposure.
7 Motilal Oswal MSCI EAFE Top 100 Select Index Fund
NFO close: Nov. 25, 2021
This is an international fund, but a passive one. The investment objective is to generate long term capital appreciation by investing in securities of MSCI EAFE Top 100 Select Index subject to tracking error. For those wondering what EAFE is, its an acronym for Europe, Australasia and Far East. Being an international equities fund, the risk is considerably higher and also because there are many geographies involved. The saving grace is that this happens to be an index fund, which means fund manager discretion will not be there in terms of stock selection. Returns of international funds can be influenced by cross-currency movements.
8 PGIM India Global Select Real Estate Securities Fund of Fund
NFO close: Nov. 29, 2021
This is also an international passive fund, given its FoF structure. The primary investment objective of the Scheme is to generate long term capital appreciation from investing in the units of PGIM Global Select Real Estate Securities Fund, which primarily invests in REITs and equity and equity related securities of real estate companies located throughout the world. The focus is on global real estate exposure, especially North American REITs. REITs offer good diversification, lower correlation with equities & annual income yields. In this space, we have previously seen the launch of Kotak REIT FoF, focussed on Asia Pacific REITs.
9 Quant Value Fund
NFO close: Nov. 24, 2021
If you are looking to invest in an off-beat idea, consider this NFO. Growth investing has been witnessing massive successes. But, value investing has often showed its brilliance during volatile phases. The primary investment objective of the scheme is to seek to achieve capital appreciation in the long-term by primarily investing in a well-diversified portfolio of value stocks. The AMC will have the discretion to completely or partially invest in any of the type of securities stated above with a view to maximize the returns or on defensive considerations. Value funds are a niche segment on account of the expertise required from the fund manager. Allso, value funds can take time to deliver due to the time taken to change market perception. However, they have the ability to out-perform and create serious wealth over the long-term.
10 IIFL Quant Fund
NFO close: Nov. 22, 2021
Read our detailed coverage on IIFL Quant Fund NFO, here: https://www.wealthzi.com/blog/iifl-quant-fund-nfo-how-different-is-it-from-other-quant-funds/
