Mutual Funds: NFO Collections Touch Rs 22,000 Crore Mark in Q2

Mutual funds experienced an almost fourfold jump to Rs 22,000 crore in the July-September period of the current fiscal year compared to the previous quarter. The launch of 48 new schemes in the market has resulted in this spike in mutual funds. 

Analysts anticipate a continued influx of New Fund Offerings (NFOs) in the forthcoming quarters, considering more Asset Management Companies (AMCs) become operational and unveil various products to address the demands of equity and debt investors. 

Buoyed by the optimism among investors, which is related to the economy’s growth and the rising interest in organised sectors, leading companies are expected to continue to gather funds via primary and secondary market offerings. 

The quarter ending in September 2023 witnessed the launch of 48 schemes, collectively generating Rs 22,049 crore during the NFO period, a considerable rise from the 25 NFOs that raised Rs 5,539 crore in the June quarter. 

Typically, NFOs emerge when markets tend to experience bullish phases while capitalising on positive investor sentiments.

Experts attribute the considerable NFO inflow to the overall positive sentiment toward equities, which is suitably highlighted by the rise in Systematic Investment Plan (SIP) inflows and total mutual fund inflows touching Rs 80,000 crore since the beginning of 2023.

In addition, the heightened risk appetite for financial assets, particularly equities, prompts AMCs to unveil fresh offerings. The consolidation of existing AMCs and the entry of new ones further contribute to expanded product offerings. 

Retail investors are driven towards sectoral funds, thematic or sector funds, and multi-asset allocation funds, which hold the potential to generate high returns during phases of economic growth. 

With the launch of 13 schemes, the sectoral category experienced the highest number of launches. This was closely followed by 12 other Exchange-Traded Funds (ETFs). When it comes to fund collection, the sectoral category was at the top with Rs 5,725 crore, followed by multi-asset allocation funds at Rs 4,791 crore. 

Similarly, multi-cap funds and liquid funds stood at Rs 3,277 crore and Rs 3,083 crore, respectively. 

It is important to note that investors should act with due diligence and avoid being carried away by new NFO launches, especially those without a track record. Also, the newly launched funds do not have a performance history and provide no additional benefits during the waiting period.

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