Equity NFOs collect over Rs 40,000 cr in 1 year. How are they performing?

ICICI Prudential Flexicap new fund offer created history by mopping up the largest fund-raise ever, as investors keep on investing in NFOs to ride the buoyant stock market

Staff Writer   /   August 20, 2021

Over the last 12 months, stock markets have been on a roll. The Sensex is up 46 per cent. This has helped fund-houses launch a blitzkrieg of new fund offers (NFOs). About 50 equity NFOs have already raised money in 2021.

ICICI Prudential Flexicap new fund offer created history by mopping up about Rs 10,000 crore — the largest fund-raise ever. MF investors keep on investing in NFOs to ride the buoyant stock market. Here is a look at some of the NFO fund-raisings and, more importantly, how they have performed so far.

Few big NFOs

ICICI Prudential Flexicap happened in July, but NFO street has been buzzing for a long time. As per data, equity NFOs have raised over a whopping Rs 40,000 crore in last 12 months alone.

Some of the interestin NFOs that caught investor attention include Kotak Global Innovation FoF, Axis Quant, HDFC Banking & Financial Services, Axis Global Innovation FoF, ABSL Multi-Cap, Mirae Asset NYSE FANG+ ETF, ICICI Prudential Business Cycle, ABSL ESG, Axis Special Situations, HDFC Dividend Yield, UTI Smallcap, Kotak ESG Opportunities.

Thematic NFOs have been a big draw for MF investors. It is also partially true that since SEBI has made one-category one-fund rule, thematic funds are the only space AMCs can tap into regularly to raise fresh money.

Here is a table of equity NFO fund-raisings over the past few months.

MonthEquity NFO collections Rs Cr
Jul-202115446
Jun-2021358
May-20215056
Apr-202187
Mar-20212515
Feb-2021317
Jan-20214185
Dec-20208028
Nov-2020169
Oct-20202764
Sep-20202343
Aug-2020146
Includes equity, index ETFs and FoFs

NFO performance tracker

Though looking at equity funds with a less than 3 year timeframe is not ideal, for the sake of measuring NFO performance we divide funds into 3 buckets. About a dozen equity NFOs are still to operate for 3 months.

* The first bucket is 3 months. This is a short time period but it does give funds enough time to allocate the NFO money across stocks.

In the 14 equity NFOs with only 3 month track record, the best returns have been generated by Kotak IT ETF (29%), followed by Invesco India ESG Equity (17%), ABSL Multi-Cap (15.4%), and Nippon India Nifty 50 Value 20 (13%).

The lowest 3-month returns in this bucket were generated by Axis Healthcare ETF (7.7%), ICICI Pru Healthcare ETF (8.7%) and Kotak Nifty Next 50 (8.8%).

* In the second bucket, we take a look at NFOs with only 6-month return. There are 26 funds in this space.

Among the 26 equity NFOs here, the 5 best returns have been generated by SBI ETF IT (32%), Quant ESG (32%), Nippon India Nifty Smallcap 250 (27%), UTI Small Cap (26%) and HDFC Dividend Yield (20%).

The top laggards equity NFOs with only 6-month return are SBI ETF Nifty Private Bank (-4.8%), HDFC Banking ETF (-2.6%), UTI Bank ETF (-2.5%), Axis Banking Nifty (-2.3%) and Mirae Asset Banking & Financial Services (+2.7%). Notice how most of the poor performers are from the BFSI focussed fund space.

* There are just 2 funds in the last 1 year period. ICICI Pru IT ETF has generated a whopping 86% funds in this period vs. benchmark return of 86% only.

Also, HSBC Focussed Equity has generated 49% return in this period compared to its benchmark return of 50%.

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