Fintotal News Analysis | Flood of New Mutual Fund Offers
Flood of New Mutual Fund Offers
Ruby Jacob, 26 May 2010

What's happening?

If you are being pestered by an agent to buy some new mutual fund or the other, you are not alone. There is a flood of such schemes in the market, accompanied by large hoardings, media ads and shrill sales efforts. To name a few, Birla Sun Life India Reforms Fund, SBI PSU Fund, Canara Robeco Indigo Fund, Franklin Fixed Tenure Fund and IDBI Index Fund are in the market. Several others are coming up in June.

What does it mean for me?

Not much, really - simply stay away from these offers.

We suspect the flood right now is to escape the reduction in new fund offer period from 30 days to 15 days, which SEBI plans to impose from 1 July 2010. Industry and distributors are wary of how this will impact collections, and are hence trying to push through as much as they can before that. Absolutely no reason you as an investor should play ball!

We have a low opinion of most such new offers - they are too often copycat schemes, not very different in philosophy or portfolio from existing schemes with good track record. A fruit basket with a different coloured packaging is not preferable to the tried and tested one that is known to have good, fresh fruits. So we would rather not behave like small children who get attracted by the colour of the packaging and want a purchase decision.

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