Four interesting NFOs expected in July

New fund offerings (NFOs) are a regular offering from various mutual fund houses. In the last few months, the practice of companies tapping the Indian investors through NFOs has picked up once again with collections also picking up. While most of the NFOs typically focus on index funds or on thematic funds, there are also the regular large cap, mid cap, small cap, and flexi cap funds tapping investor monies via the NFO route. Here we look at 4 very interesting NFOs that are likely to hit the market in the month of July 2023, from different fund houses and targeting different sets of investors.

1) Bajaj Finserv Flexi Cap Fund

Bajaj Finserv has just recently launched its AMC business post the SEBI approval. It is planning to go aggressive and leverage its existing retail franchise in the lending business and the insurance business quite effectively. It started off with a slew of short term liquid and debt funds and is now starting its foray into equity funds with the Bajaj Finserv Flexi Cap Fund.

The Bajaj Finserv Flex Cap Fund seeks to generate long term capital appreciation by investing predominantly in equity and equity related instruments across market capitalisation. The flexi cap fund is a more discretionary form of a multi-cap fund. In a multi-cap fund, there is a restriction that the fund must mandatorily allocate at least 25% of the corpus to large caps, mid-caps, and small caps each. However, the flexi cap fund offers discretion on the percentage allocation. The definition of small caps, mid-caps, and large caps will be as per the AMFI based ranking definition. Being a pure equity driven fund, it will be subject to market volatility risk.

The fund manager for the Bajaj Finserv Flex Cap Fund will be Nimesh Chandan. Prior to joining Bajaj Finserv AMC Ltd, Nimesh Chandan managed equity portfolios at leading fund houses like ICICI Prudential MF, SBI MF, Aditya Birla Sun Life MF and Canara Robeco MF. He also worked at Stratcap Securities and Darashaw on the sell side.
The NFO of Bajaj Finserv Flex Cap Fund opens on 24-July-2023 and closes for subscription on 07-August-2023. It is an open ended fund so the fund will be available for NAV related fund purchase and redemption on a regular basis once the NFO allocation is completed. Being an equity flexi-cap fund, it is high on the risk scale as there is the risk of equities as well as of cap allocation and stock selection.

The Bajaj Finserv Flex Cap Fund will offer growth and IDCW (income distribution cum capital withdrawal) options to the investors. In addition, investors can either opt for the regular plan or the Direct Plan, which has a relatively lower expense ratio. As is the norm, there is no entry load in the fund but an exit load of 1% will be levied if the fund is redeemed or switched out before a period of 180 days from the date of purchase. This will only apply to units in excess of 10% of the investment. The minimum investment in the fund is ₹500 and the performance of the fund will be benchmarked to the S&P BSE 500 TRI index. Here TRI refers to the total returns index, which is more representative.

2) Bandhan Financial Services Fund

The Bandhan Financial Services Fund comes from the house of Bandhan Bank AMC, which recently took over IDFC Mutual Fund business from IDFC Ltd. This has positioned Bandhan Bank AMC among the top funds in terms of AUM in India. The Bandhan Financial Services Fund is targeted at investing in select financial services companies in India, especially considering that these companies have the highest weightage of 36% in the Nifty.

The Scheme seeks to generate long-term capital appreciation by investing predominantly in equity and equity related instruments of companies engaged in financial services. This will broadly include banks, NBFCs, insurance companies, mutual fund AMCs, fintech players, financial support services, microfinance companies etc. The focus will be not just on growth but also on possibility of disruption in the segment through unique and innovative models. 

The fund manager for the Bandhan Financial Services Fund will be Manish Gunwani who holds a B-Tech and PGDM. Prior to joining Bandhan Bank AMC, Manish Gunwani has worked with marquee names like Nippon India Mutual Fund, ICICI Prudential Mutual Fund, as well as an analyst at BRICS, Lehman and SSKI Securities. Apart from Manish Gunwani, Sumit Agarwal and Harshal Joshi will also be part of the fund management team.

The NFO of Bandhan Financial Services Fund opens on 10-July-2023 and closes for subscription on 24-July 2023. It is an open ended fund so the fund will be available for NAV related fund purchase and redemption on a regular basis once the NFO allocation is completed. Being an equity oriented sectoral fund, it is high on the risk scale as there is the risk of equities as well as of a thematic or sectoral approach. The fund will be classified as a sectoral fund for the purpose of AMFI classification, since if is focused on the BFSI sector.

The Bandhan Financial Services Fund will offer growth and IDCW (income distribution cum capital withdrawal) options to the investors. In addition, investors can either opt for the regular plan or the Direct Plan, which has a relatively lower expense ratio as they are exempted the marketing expenses allocation. As is the norm, there is no entry load in the fund but an exit load of 1% will be levied if the fund is redeemed or switched out before a period of 365 days from the date of purchase. The minimum investment in the fund is ₹1,000 and the performance of the fund will be benchmarked to the Nifty Financial Services TRI index. Here TRI refers to the total returns index, which is more representative as it factors dividend, apart from the price based returns.

3) Kotak Quant Fund

The Kotak Quant Fund comes from the house of Kotak Mahindra AMC which is among the largest players in the mutual funds space and ranks among the top 10 in terms of AUM. It offers the complete array of active funds and passive funds with a spread across equity, debt, and hybrids. The AMC has grown its AUM very aggressively in the last couple of years after Nilesh Shah took over as the CEO of Kotak Mahindra AMC. 

The Kotak Quant fund seeks to generate long term capital appreciation by investing predominantly in equity and equity related securities selected based on quant model theme. Quant models are normally mathematical models based on long term data analysis where patterns are identified and investments made. Quant strategies are very stringently back-tested to see how they work under different simulated market conditions. The quant funds are still a new concept in the Indian market but the concept is picking up fast. With the ability to trade in algorithms with high frequency and low latency, it is possible to run such funds with a quant bias. There are not too many competing funds to evaluate as a benchmark at this point of time. Harish Krishnan will be the fund manager for the Kotak Quant Fund. Prior to this assignment, Harish was handling Kotak’s offshore funds out of Singapore and Dubai.

The NFO of Kotak Quant Fund opens on 12-July-2023 and closes for subscription on 26-July 2023. It is an open ended fund so the fund will be available for NAV related fund purchase and redemption on a regular basis once the NFO allocation is completed. It has been classified as a thematic or style based fund for the purpose of classification. Being an equity oriented thematic and style based fund, it is high on the risk scale as there is risk of equities as well as of a thematic approach, apart from style assumptions implicit in the quant models. Investors have to take a longer term approach and also have a higher risk appetite for participation in this fund, with a perspective of at least 5 years.

The Kotak Quant Fund will offer only growth and IDCW (income distribution cum capital withdrawal) options to investors. In addition, investors can either opt for the regular plan or the Direct Plan, which has a relatively lower expense ratio as they are exempted the marketing expenses allocation. There is no entry load in the fund but an exit load of 0.5% will be levied if the fund is redeemed or switched out before a period of 90 days from the date of purchase. The minimum investment in the fund is ₹5,000 and the performance of the fund will be benchmarked to the Nifty 200 TRI index.

4) Mirae Asset Multi-Cap Fund

The Mirae Asset Multi Cap Fund comes from the house of Mirae Asset, which is one of the fastest growing equity franchises in India. The fund ranks in the top 10 in India in terms of equity AUM and is one of the few pure fund management houses without the benefit of a bank backing. Its funds across various equity categories rank among the top performers in their respective categories. The Mirae Asset Multi Cap Fund seeks to provide long-term capital appreciation from a portfolio investing predominantly in Indian equity and equity related securities of large cap, mid cap, and small cap companies. However, unlike the flexi-cap funds, the multi-cap fund has restrictions on allocation. The multi-cap has to be at least 75% invested in equities. In addition, at least, 25% of the corpus should be divided between large caps, mid-caps, and small caps, with fund manager discretion in the last 25%.

The NFO of Mirae Asset Multi Cap Fund opens on 26-July-2023 and closes for subscription on 09-August-2023. It is an open ended fund so the fund will be available for NAV related fund purchase and redemption on a regular basis once the NFO allocation is completed. It has been classified as a multi-cap fund for the purpose of classification. Being an equity oriented fund, it is high on the risk scale as there is the risk of equities, risk of small stocks, as well as of a stratified allocation requirement. Investors have to take a longer term approach and also have a higher risk appetite for participation in this fund.

The Mirae Asset Multi Cap Fund will offer only the growth option and also IDCW (income distribution cum capital withdrawal) option to investors. In addition, investors can either opt for the regular plan or the Direct Plan, which has a relatively lower expense ratio as they are exempted the marketing expenses allocation. As is the norm, there is no entry load in the fund but an exit load of 1% will be levied if the fund is redeemed or switched out before a period of 365 days from the date of purchase. The minimum investment in the fund is ₹5,000 and the performance of the fund will be benchmarked to the Nifty 500 Multicap 50:25:25 TRI index.