Insights on the trends of NFO in 2019

Whilst the year gone by has not been the most stirring of years, it was not too bad in terms of New Fund Offering in the Indian mutual fund space. Putting the year in perspective. Total NFO launched: 139 Ex FMP & Cap Guarantee: 104 Clearly the appetite for FMPs is coming down sharply and with the continued turmoil in the debt segment, the low appetite from the fund houses to launch such schemes is really not surprising.
Month-wise NFO
May has been the most active month for NFOs launched, accounting for nearly 15% of annual activities, closely followed by February with nearly 10% of activity. Apart from these two months, January, August and December were also the high activity months. Overall five months account for 60% of NFO activity.
NFO Break-up
In terms of NFO type launched, the year past has clearly been the year for equity and equity linked funds. With nearly 80% in the equity category, there is no doubt on the direction the market for mutual funds is taking.
Most active NFO launchers
Surprisingly, ICICI Prudential MF has been the most active fund launcher with 6 new offerings. Surprising because they are an old fund house with enough number of schemes in their kitty and I would expect a consolidation. It is closely followed by 4 fund houses each with 5 new schemes, where again Reliance Nippon is the only old established house. JM MF is another surprise with market activity associated with the fund house is nearly zero. Perhaps this is a step towards a new chapter. ITI MF and Motilal Oswal, especially the former , are new fund houses and are expected to complete the basic kitty, so it’s completely acceptable that these two launch a slew of schemes.
Popular Categories
Of the 78 equity funds launched during the year, as many as 33, comprising nearly 40% of the total were of three categories only. Surprisingly, none of the popular categories have been popular so far but it in only in recent past that these investment strategies, and thereby categories have gained traction. It is difficult to say if these are outcomes from the “very difficult to beat” market conditions or if they are resultants of genuine demand from customers. However, it is a fact that these have gained traction and are here to stay.

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