AMCs to launch new MF schemes from next month

New Delhi: After a temporary pause, asset management companies are gearing up to launch new mutual fund schemes from the next month as capital markets regulator Sebi's three-month ban on the introduction of new fund offerings nears its end.

Moreover, asset management companies (AMCs) have a line-up of passive funds on the fixed income and equity side as well as selective launches in certain categories to fill product gaps.

The Securities and Exchange Board of India (Sebi) had discontinued the launch of NFOs until the new systems concerning pool accounts were determined and the regulator had set July 1 as the deadline for the implementation of the new system.

So far this month, at least six AMCs — including PGIM India Mutual Fund (MF), Sundaram MF, Baroda BNP Paribas MF, LIC MF and Franklin India MF — have filed offer documents with Sebi seeking its approval to launch new schemes.

Apart from these, draft papers were submitted with the regulator for 15 schemes during April-May by a dozen fund houses.

"It seems the NFO launch season is going to be back starting next quarter. For two quarters, the bandwidth of AMCs got consumed in making the relevant changes in the movement of customers' money as Sebi directed them to discontinue the use of pool accounts. Further, at the same time, markets also became very volatile," Swapnil Bhaskar, Head of Strategy, Niyo - neo-banking platform for millennials, said.

Going forward, some AMCs will start launching new fund offerings (NFOs) as new processes are in place and they are seeing value in the market due to the correction, he added.

Kaustubh Belapurkar, Director Manager Research, Morningstar Investment Adviser India, said that given the temporary pause on new fund launches over the past few months, asset managers will look to launch these funds as the scenario returns to normal.

"Asset managers have a line-up of passives both on the fixed income and equity side as well as selective launches in certain categories to fill product gaps," he added.

Pooling of investor's funds and units by stockbrokers and clearing members in any manner and by the mutual fund investment advisors or distributors (wherever it was taking place) for mutual fund transactions was to be discontinued from April 1.

However, after mutual discussion and agreement, Sebi gave the mutual fund industry extended timelines until July 1 to enable the industry to bring a high level of operational efficiency in the interest of investors and efficient functioning of mutual fund subscriptions and redemption.

According to Sandeep Bagla, CEO of Trust MF, most intermediaries have re-engineered their processes to take care of Sebi's concerns on pool accounts. Mutual funds are looking forward to launching NFOs in July.

NFOs lead to good participation from investors and also increased activity from distributors as well.