A lot has changed in the last couple of years for new fund offers (NFOs). Recently, one of India’s largest fund houses, ICICI Prudential, collected around Rs 10,000 crore in its NFO, ICICI Prudential Flexi-Cap Fund. To give you a perspective on this number, out of 400 odd equity dedicated mutual fund schemes, only 29 funds have asset under management (AUM) of greater than Rs 10,000 crore. Even within 30 flexi-cap funds that we have now, only seven of them have AUM greater than Rs 10,000 crore. This is probably the biggest collection by any single mutual fund scheme in India. Compare this with the start of the year 2019 when the fund houses had to extend the issue dates to collect a respectable amount in NFOs.
This highlights the euphoria around the NFOs. The last one year has been quite hectic in terms of launch of NFOs. According to a report by Morningstar, in FY21 the industry launched 110 funds which have collectively raised Rs 48,988 crore. Out of this, 45 funds were from the equity category that garnered around Rs 30,000 crore. Historically, we have seen that a lot of NFOs come when the equity market is doing well. The equity market from the lows of March 2020 has seen an impressive rise. This is also reflected in most of the equity dedicated funds that have delivered spectacular returns. Many categories of funds have generated returns in triple digits over the last 15 months. The last time we saw such a performance from equity-dedicated mutual funds was in 2017. Again in that year we saw 32 open-ended, equity-oriented NFOs getting launched.
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