Mutual funds bet on recovery

Mutual funds bet on recovery

Industry experts believe that the newfound confidence in the recovery of the market is the reason for this positive turn of events. 

Axis Mutual Fund is the first one to get back to the market and has filed four new schemes. These include two international funds, a Fixed Maturity Plan (FMP) and an Exchange Traded Fund (ETF). The fund house is taking this as an opportunity to build a long-term initiative in global investing. These funds are a part of their approach to systematically broaden their global product suite. These will also allow investors to enter the global investing market simply. 

Mahindra Mutual Fund has also filed drafts for two new fund offers. It is in the process of launching focused equity and an arbitrage fund.

MD & CEO of Mahindra Mutual Fund, Ashutosh Bishnoi, stated how they have already seen a high-quality business in the global context; and he sees no reason as to why high risk-taking will initially lead the recovery. It thus makes sense for an investor to build a portfolio that has high-quality stocks available at attractive valuations.

A lot of fund houses had stopped launches of their new product since the Covid-19 pandemic threat and the consequent nation-wide lockdown. Several fund houses had even shelved their plans to launch new products due to the pandemic.

Only three open-ended schemes had hit the market in April. All of these were ETFs that managed to collect INR 158 crores in their NFO period. The total accumulation by these three ETFs and two fixed-term plans stood at INR 214 crores. Five schemes had been launched in March, and the amount of money collected was INR 2,027 crores. On the other hand, the five schemes that were launched in February had collected a whopping INR 19,168 crores.

However, mutual fund advisors are not impressed by the extravaganza of the NFOs that are flooding the market. In times when established schemes are seeing redemption and investors are troubled by salary cuts, NFOs do not make much sense. A lot of industry experts are not in favor of investing in new funds unless they offer something that is not available in the market.

Thus, investors should focus on their current portfolio and add to their existing schemes, if they want to bet on the recovery.