Date:30/01/2006 URL: http://www.thehindubusinessline.com/2006/01/30/stories/2006013001570400.htm

Back Buoyant sentiment spawns a record number of new fund offers — Many of them are diversified equity products in nature

Nilanjan Dey

Kolkata , Jan. 29

RARELY in the history of mutual funds in India have so many options come up for initial subscription simultaneously. About 10 of them are in the market at the moment, some nearing close. And, a few more are waiting to be launched next month.

Almost all are diversified equity products in nature, and three are tax-savers - Fidelity, Deutsche and Tata - trying to gauge investors' sentiments with respect to Section 80C of the I-T Act.

The funds have been mooted by a cross-section of the country's asset management industry, ranging from dominant player UTI Mutual Fund's Leadership Equity Fund to relative newcomer HSBC Mutual Fund's Advantage India Fund.

Thrown in between are the likes of Principal Mutual Fund's Infrastructure & Services Fund and Cholamandalam Mutual Fund's Contra Fund.

Fund sources offered various explanations for the situation, pointing towards a combination of factors that have helped the latest deluge of new fund offers (NFOs).

Most refer to the rising equity market and the accompanying buoyant sentiment that their marketing departments want to make the most of.

Others, such as Mr Rajan Krishnan, Vice-President (Sales and Marketing) of Principal Mutual Fund, are justifying the trend in a more stolid manner. "New offers serve as the basis of growth for the industry."

Principal Mutual Fund, incidentally, has extended the initial subscription period by seven days and plans to keep the NFO open till February 7.

Mr Sandeep Dasgupta, CEO of Deutsche MF, virtually echoes this when he says: "NFOs are in a way helping fund houses to raise awareness among new investors."

Deutsche Mutual Fund's tax-saver will remain open till the third week of February.

The situation has naturally become a big talking point among fund distributors.

"While there is considerable activity on the ground, it makes our job more difficult as our clients are faced with many competing options," said Mr Naresh Pachisia, Managing Director of SKP Securities.

As some intermediaries point out, a few options seem to stand out in terms of their style and positioning.

The reference is to Tata Mutual Fund's Tax Advantage Fund, which is actually a closed-end scheme with 10-year duration.

The other, rather distinctively named product is ING Mutual Fund's A.T.M. Fund. The acronym stands for `Against The Market'.

Both NFOs will remain open till about February 20.

The emerging scenario (read too many choices at the same time) may also spawn yet another issue, according to Mr Shailesh Haribhakti, who heads Financial Planning Standards Board.

"The market needs higher professional planning standards and greater financial literacy. In our efforts to maximise returns, these should not be sacrificed."