In the last few months, investors have been flooded with new fund offers (NFOs). However, it may come to an end. Last week, five asset management companies (AMCs) filed draft documents for fresh fund proposals with the securities market regulator, SEBI.
Axis MF has applied for Long Bond Fund, Franklin Templeton MF for Balanced Advantage Fund, LIC MF for Multi Cap Fund, Baroda BNP Paribas MF for Floater Fund and Sundaram MF for Flexi Cap Fund.
SEBI had barred AMCs from launching new funds after it had extended the deadline for stopping pooling of funds and MF units by three months to July 1, 2022. Originally, AMCs were to comply with SEBI’s circular on pooling of funds and MF units by April. 1, 2022. As per the updated deadline, stock brokers, mutual fund distributors, investment advisors and other service providers involved in mutual fund transactions for their clients will have to stop pooling of funds and/or mutual fund units by July 1, 2022. Other measures like the requirement of two-factor authentication for multiple online redemption requests, which were also part of the Sebi circular, are to be implemented from July.
As per the Axis Long Bond Fund Draft Scheme Information Document, the scheme will invest in debt securities in such a way that the Macaulay tenure of the portfolio is more than 7 years. The scheme is labeled ‘moderate risk’ on the riskometer with relatively low credit risk and relatively high interest rate risk. As per the draft documents of Franklin India Balanced Advantage Fund, the fund will dynamically manage its equity and fixed income portfolio. The plan is labeled ‘Very High Risk’ on the riskometer. It will use a mix of qualitative and quantitative factors to determine asset allocation. In terms of quantitative parameters, the scheme will use month-end weighted average P/E ratio and P/B ratio of Nifty 500 index in the ratio of 50:50. Baroda BNP Paribas Floater Fund, as the name suggests, will invest at least 65% of its net assets in floating rate debt instruments (including swapped fixed rate debt instruments for floating rate returns). The plan is labeled ‘moderate risk’ on the riskometer.