NFOs ON LOW GEAR

New fund offers (NFOs) seem to be moving in a low gear as fund houses have launched only 340 new schemes in April-September of 2015 following Sebi's direction to rationalise and consolidate offerings with similar goals.
In comparison, mutual funds had come out with 1,059 NFOs for the whole of 2014-15.
The numbers stood at 1,023 and 1,168 in 2013-14 and 2012-13, respectively.
"Over the past few years, there has been a declining trend in the issuance of NFOs. This trend has been partly due to the regulator's direction to rationalise and consolidate mutual fund schemes with similar objectives," a report titled 'Indian Mutual Fund Industry- The Road Ahead' from Assocham today said.
"The requirement from the regulator to demonstrate the differentiation in investment style and attributes of a potential new fund has also impacted the pace of approvals."
Furthermore, the requirement of disclosing details and number of funds managed by each fund manager has also led to more circumspection.
Most of the new schemes launched in April-September have been aimed at investment in equity and equity-related securities.
Besides, the products have been focused on diversified funds, exchange-traded funds, tax-saving instruments and arbitrage schemes.
Overall, a total of 120 draft documents have been filed with capital markets regulator Sebi to roll out new NFOs in the current fiscal so far.
Speaking at the Assocham event, Sebi executive director (Investment Management Department) Ananta Barua said: "Mutual Funds should come out with simple products so that more people can invest in such schemes. Currently, only two per cent people in India invest in mutual funds."

Barua said Sebi will soon come out with measures to further strengthen investors' confidence in mutual fund sector. "Recently we have been discussing with industry and investor associations on how to increase more transparency so that industry becomes much more robust and we will come out with many more things which will further strengthen the structures where investors will have more confidence," he said. As a regulator, Sebi wants to increase accountability of asset management companies (AMCs) and also enhance the confidence of retail investors. "As far as penetration is concerned, we are also seeing how this product can reach every nook and corner of India," he said. On the issue of sale of MF on e-commerce platforms, Barua said: "We want a system where even though we may allow e-commerce, there will be same requirements which we are debating should be applicable because if they sale a product then there are executive who is an employee, he needs to be certified and he should sell those products that are suitable and all three routes - distributor route, only distribution route and all through advisor route are being debated."