Fund Radar: What's up with NFOs?

Has your bank's relationship manager ever urged you to invest in the latest NFO (new fund offer), calling it a 'must-have' for your portfolio? It's no surprise, then that fund houses backed by banks have dominated NFO collections. ICICI Prudential AMC tops this list, raking in nearly Rs 39,000 crore across 53 funds since FY19. Among these, its flexi-cap fundhas been particularly popular. Since the mutual fund industry was re-categorised in FY18, we've witnessed a surge in sectoral, thematic and passive funds. That's because, since the re-categorisation, fund houses are allowed to launch only one active fund per equity category but unlimited funds in the 'other schemes' and sectoral/thematic category. NFO over the years Over the past two decades, India's mutual fund landscape has mirrored the market sentiment. NFOs have acted as a barometer for investor confidence, with their popularity fluctuating depending on market sentiment. During the bull run of 2004-06, NFOs mobilised more than one-third of the gross equity inflows and over 100 per cent of equity net flows, riding the wave of market optimism (indicating a large chunk of the investors sold their holdings to su