Volatile landscapes take NFOs down south

New Delhi With a wide array of existing mutual fund schemes, asset management companies are going slow on launching new ones in a highly competitive landscape as they filed draft documents for 59 new fund offerings (NFOs) in the first seven months of the year.

In comparison, draft papers for 70 NFOs were filed in the year-ago period. In 2022, a total of 228 new schemes were floated against 140 in 2021, industry data showed. Moreover, the remaining months of 2023 are not expected to see NFO numbers anywhere close to those of 2022 or 2021, SAS Online founder and CEO Shrey Jain said. The reasons behind the decline in NFOs could be a combination of the factors as the mutual fund industry’s dynamics are influenced by various internal and external factors. “AMCs may be concentrating on managing and promoting their existing schemes, rather than launching new ones. This strategy allows them to maximise the returns for existing investors and maintain stable assets under management,” Jain said. Also, the current market reaching an all-time high could be another reason for AMCs showing caution in launching NFOs. During such periods of elevated market levels, AMCs might anticipate the possibility of a market correction or downturn, he added. Trust MF President and CBO Ajaykumar Gupta said that AMCs have no restrictions on the number of passive products they can launch, whereas there are limits on other types of funds they can manufacture after the categorisation and rationalisation of mutual fund schemes by Sebi.