Three Interesting NFOs expected in June

New fund offerings (NFOs) are a regular offering from the various mutual fund houses. In the last few months, the practice of companies tapping the Indian investors through NFOs has picked up once again. 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 the investor monies through the NFO route. Here we look at three very interesting NFOs that are likely to hit the market in the month of June 2023 from 3 different fund houses.

1. 360-One Flexi Cap Fund

This 360-One Flexi Cap fund comes from the house of India Infoline Wealth. It may be recollected that IIFL Wealth was rechristened as 360-One and hence the asset management company has also taken the new name.

The 360-One Flexi Cap Fund seeks to generate long-term capital appreciation by primarily investing in equity and equity related securities. However, as the name suggests, the fund would invest across the  entire market capitalization range. This would include investments in small cap stocks, mid-cap stocks and large cap stocks. However, being a flexi-cap fund, the fund is not bound by any restrictions on the allocation and the fund manager has the discretion to decided how they allocate to large cap, mid cap and small cap stocks based on their outlook. A small portion of the fund would also be allocated to debt and money market instruments.

The fund manager for the 360-One Flexi Cap Fund will be Mayur Patel who is a qualified chartered accountant and also a CFA. Prior to joining IIFL Asset Management Limited, Mayur Patel managed equity portfolios of DSP BlackRock Equity Savings Fund and MIP Fund. Prior to that he also worked with Spark Capital, Tata Motors and CRISIL.

The NFO of 360-One Flexi Cap Fund opens on 12-June-2023 and closes for subscription on 26-June 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 360-One Flexi 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 1 year from the date of purchase. The minimum investment in the fund is Rs1,000 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. HDFC Non-Cyclical Consumer Fund

The HDFC Non-Cyclical Consumer Fund comes from the house of HDFC AMC, which is the third largest AMC in India in terms of assets under management. HDFC AMC offers a wide range of equity, debt and hybrid products and is equally strong in active and passive offerings in debt and also in equity.

The HDFC Non-Cyclical Consumer Fund seeks to generate long-term capital appreciation by investing predominantly in equity and equity related securities of companies with a focus on non-cyclical consumer theme. The fund would not be too focused on the market capitalization but focus more on a bottom up approach to investing. The focus here is on the non-cyclical sectors that are less vulnerable to the regular business cycles and tend to have a more perennial demand in the Indian context. A small portion of the fund would also be allocated to debt and money market instruments.

The fund manager for the HDFC Non-Cyclical Consumer Fund will be Amit Sinha who has done B-Tech (IIT Roorkee) and PGDBM (XLRI, Jamshedpur). Prior to joining HDFC Mutual Fund, Amit Sinha has worked Macquarie Capital Securities (India) Pvt. Ltd. HDFC AMC is current headed by former SBI Mutual Fund CIO, Navneet Munoth. He is currently the CEO of HDFC AMC.

The NFO of HDFC Non-Cyclical Consumer Fund opens on 23-June-2023 and closes for subscription on 07-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 non-cyclical fund, it is high on the risk scale as there is the risk of equities as well as of a thematic approach. The fund will be classified as a thematic fund for the purpose of AMFI classification.

The HDFC Non-Cyclical Consumer 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 1 year from the date of purchase. The minimum investment in the fund is Rs100 and the performance of the fund will be benchmarked to the Nifty India Consumption 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. SAMCO Active Momentum Fund

The SAMCO Active Momentum Fund comes from the house of SAMCO which is among the recent entrants into the mutual fund space in India. The fund house brings it with a lot of empirical understanding of market trends, which are being applied to momentum investing in the mutual funds space too.

The SAMCO Active Momentum Fund seeks to generate long-term capital appreciation by investing in stocks showing strong momentum, as the very name of the fund suggests. Momentum stocks are the ones that exhibit positive price momentum - based on the phenomenon that stocks which have performed well in the past relative to other stocks (winners) continue to perform well in the future. Conversely, this approach also believes that stocks that have performed relatively poorly (losers) continue to perform poorly. The strategy is based on empirical research and back testing, but can be a fairly risky approach. A small portion of the fund would also be allocated to debt and money market instruments. The fund will be managed by Paras Matalia, who will act as the fund manager.

The NFO of SAMCO Active Momentum Fund opens on 15-June-2023 and closes for subscription on 29-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 the risk of equities as well as of a thematic approach, apart from style assumptions. Investors have to take a longer term approach and also have a higher risk appetite for participation in this fund.

The SAMCO Active Momentum Fund will offer only the growth option and not the IDCW (income distribution cum capital withdrawal) options to investors, which is logical considering its rather high risk approach to stock selection. 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 2% will be levied if the fund is redeemed or switched out before a period of 365 days and 1% exit load if such exit happens within 730 days. Overall lock-in for exit load exemption is 2 years from the date of purchase. The minimum investment in the fund is Rs5,000 and the performance of the fund will be benchmarked to the Nifty 500 TRI index.