Summer training project report

“NFO in Mutual Fund”

BY
Monika Sharma
Roll No. 25

Submitted To

RAJASTHAN TECHNICAL UNIVERSITY

In partial fulfilment of the requirements for the award of the degree
of MASTER OF BUSINESS ADMINISTRATION
Under the guidance of

INTERNAL GUIDE

Dr. Meenal Sukhlecha

(Assistant Professor)

S S Jain Subodh Management Institute,

Mansarovar (2020-22)
ACKNOWLEDGEMENT

It is my proud privilege to express my sincere gratitude to all those who helped me directly or
indirectly in completion of this project report. I am greatly thankful to Prof. (Dr.) Raju
Agrawal(Director) Dr. Meenal Sukhlecha (Assistant professor) and MS Dr. Parul Bhargava
(placement officer) for his/her support, guidance and valuable suggestion by which this work has
been completed effectively and efficiently. I also very thankful to MR. Bhavesh Manchandia,
Mr. Vinit Khedwal and all other Baroda mutual fund relationship managers whose continuous
cooperation throughout the study was fabulous . Their charismatic attitude made this study joyful
and interesting.

Monika Sharma
MBA 3RD Sem
DECLARETION

I “Monika Sharma ” student of “S S Jain Subodh Management Institution” hereby declare that
this project “New fund offer in Mutual Fund” is original task performed by me under the able
guidance of Dr. Meenal Sukhlecha This is after undergoing training program in partial
fulfillment of MBA degree. And I also declare that this has not been submitted by any other
student.

Monika Sharma
MBA 3rd sem
COMPANY CERTIFICATE
Sr no. Topic Pg no.
1 Mutual Fund

2 Company Profile (Baroda Mutual Fund)

3 New Fund Offer(NFO)

4 Data analysis of NFO

5 Questionnair

6 Suggestions and recommendation

7 Findings and conclusion

8 Bibliography
Executive summary

I started my training from 15th July 2021 the concept of my topic is about mutual fund and New
fund offer . At very first day we just given classroom training there we learned about the mutual
fund from the day fifth we were in the market. In few years Mutual Fund has emerged for ensuring
one of the best return tools. Mutual Funds have not only contributed to the India growth story but
have also helped families to achieve their success of Indian Industry.
As information and awareness is rising more and more people are enjoying the benefits of investing
in mutual funds.

The main reason the number of retail mutual fund investors remains small is that nine in ten people
with incomes in India do not know that mutual funds exist, but once people are aware of mutual
fund investment opportunities, the number who decide to invest in mutual funds increases to as
many as one in five people.

The trick for converting a person with no knowledge of mutual funds to a new Mutual Fund
customer is to understand which of the potential investors are more likely to buy mutual funds and
to use the right things in the sales process that customers will accept as important and relevant to
their decision.

There is popular saying’’ sold only that attributes which consumer want’’. The topic of the project
has been given by project guide Ms. Parul Bhargava(Placement officer). As per our discussion the
topic has been found very important as far as in Baroda mutual fund. So being a summer trainee
of Baroda mutual fund Niwaru Road Jaipur branch, it was a great opportunity for me to take up
this topic as a challenge, because the result of this project or survey will be very much beneficial
for me as well as company too. They will get to know about their strength and they will know that
how much of market they have captured.

I used to go out to the market for selling interaction the products of the BOB and Due to this I
grab great experience to communicate with different types of customers, which was really good
experience and will help me in my future course of life. The major part of my training is I went to
business people, doctor’s and many more. .During the selling I found some difficulties like the
customers had no time or they were too busy with their works and in most of the cases they were
not available at their places.

This Project gave me a great learning experience and at the same time it gave me enough scope to
implement my analytical ability. The analysis and advice presented in this Project Report is based
on market research on the saving and investment practices of the investors and preferences of the
investors for investment in Mutual Funds.

This Report will help to know about the investors’ Preferences in Mutual Fund means why they
prefer any particular Asset Management Company (AMC), Which type of Product they prefer,
Which Option (Growth or Dividend) they prefer or Which Investment Strategy they follow
(Systematic Investment Plan or One time Plan). This program especially designed for bankers we
took part into that as a provisionary concept they used in program was mind blowing. It was our
great pleasure that we also attended training programmed in this session we learned money market
instrument and debt composition funds.

There is one thing that I have found that the peoples working at Baroda mutual fund are very much
helpful in all areas. Every time they came to me and told me that they are available at any time for
us for anything, which really boost me and motivated me towards my goal and objectives. The
culture of Baroda mutual fund is very much friendly and cool to work there. The boss or cluster
head as well as Branch relationship manager together play a vital role to boost their colleagues.
MUTUAL FUND
❖ Concept:-

A mutual fund is an investment vehicle which allows investors with similar (one could say mutual)
investment objectives, to pool their resources and thereby achieve economies of scale and
diversification in their investing.

"“mutual fund” means a fund established in the form of a trust to raise monies through the sale of
units to the public or a section of the pubic under one or more schemes for investing in securities,
money market instruments, gold or gold related instruments, real estate assets and such other assets
and instruments as may be specified by the Board from time to time.

In simple terms, a mutual fund is essentially a common pool of money in which investors put in
their contribution. This collective amount is then invested according to the investment objective
of the fund.

The money could be invested in stocks, bonds, money market instruments, gold, real estate and
other similar assets. These funds are operated by money managers or fund managers, who by
investing in line with the specified investment objective attempt to create growth or appreciation
of the amount for investors.
For example, a debt fund will have its specified objective to invest in fixed income instruments or
products like bonds, government securities, debentures, etc. Similarly, an equity fund will invest
in equity related instruments which include convertible debentures, convertible preference shares,
warrants carrying the right to obtain equity shares, equity derivatives and such other instrument as
may be specified by the Board from time to time.

❖ History:
A mutual fund is a financial intermediary that pools the savings of investors for collective
investment in a diversified portfolio of securities. A fund is “mutual” as all of its returns, minus its
expenses, are shared by the fund’s investors.

The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 defines a mutual
fund as a ‘a fund established in the form of a trust to raise money through the sale of
units to the public or a section of the public under one or more schemes for investing in securities,
including money market instruments’.
According to the above definition, a mutual fund in India can raise resources through sale of units
to the public. It can be set up in the form of a Trust under the Indian Trust Act. The
definition has been further extended by allowing mutual funds to diversify their activities in the
following areas:
· Portfolio management services
· Management of offshore funds
· Providing advice to offshore funds
· Management of pension or provident funds
· Management of venture capital funds
· Management of money market funds
· Management of real estate funds
A mutual fund serves as a link between the investor and the securities market by mobilising savings
from the investors and investing them in the securities market to generate returns.
Thus, a mutual fund is akin to portfolio management services (PMS). Although, both are
conceptually same, they are different from each other. Portfolio management services are offered
to high net worth individuals; taking into account their risk profile, their investments are managed
separately. In the case of mutual funds, savings of small investors are pooled under a scheme and
the returns are distributed in the same proportion in which the investments are made by the
investors/unit-holders.
Mutual fund is a collective savings scheme. Mutual funds play an important role in mobilising the
savings of small investors and channelising the same for productive ventures in the Indian
economy.

The history of mutual funds, dates back to 19th century Europe, in particular, Great Britain. Robert
Fleming set up in 1868 the first investment trust called Foreign and Colonial Investment Trust
which promised to manage the finances of the moneyed classes of Scotland by spreading the
investment over a number of different stocks. This investment trust and other investment trusts
which were subsequently set up in Britain and the US, resembled today’s close-ended mutual
funds. The first mutual fund in the US, Massachusetts Investors’
Trust, was setup in March 1924. This was the first open-ended mutual fund.
The stock market crash in 1929, the Great Depression, and the outbreak of the Second World War
slackened the pace of growth of the mutual fund industry. Innovations in products
and services increased the popularity of mutual funds in the 1950s and 1960s. The first
international stock mutual fund was introduced in the US in 1940. In 1976, the first tax-exempt
municipal bond funds emerged and in 1979, the first money market mutual funds were created.
The latest additions are the international bond fund in 1986 and arm funds in 1990. This industry
witnessed substantial growth in the eighties and nineties when there was a significant increase in
the number of mutual funds, schemes, assets, and shareholders. In the US, the mutual fund industry
registered a ten fold growth in the eighties (1980-89) only, with 25% of the household sector’s
investment in financial assets made through them. Fund assets
increased from less than $150 billion in 1980 to over $4 trillion by the end of 1997. Since 1996,
mutual fund assets have exceeded bank deposits. The mutual fund industry and the
banking industry virtually rival each other in size.

❖ Benefits of Mutual Funds

An investor can invest directly in individual securities or indirectly through a financial
intermediary. Globally, mutual funds have established themselves as the means of investment
for the retail investor.
1. Professional management: An average investor lacks the knowledge of capital market
operations and does not have large resources to reap the benefits of investment. Hence, he
requires the help of an expert. It, is not only expensive to ‘hire the services’ of an expert but it is
more difficult to identify a real expert. Mutual funds are managed by professional managers who
have the requisite skills and experience to analyse the performance and prospects of companies.
They make possible an organised investment strategy, which is hardly possible for an individual
investor.

2. Portfolio diversification: An investor undertakes risk if he invests all his funds in a single scrip.
Mutual funds invest in a number of companies across various industries and sectors. This
diversification reduces the riskiness of the investments.
3. Reduction in transaction costs: Compared to direct investing in the capital market, investing
through the funds is relatively less expensive as the benefit of economies of
scale is passed on to the investors.

4. Liquidity: Often, investors cannot sell the securities held easily, while in case of mutual funds,
they can easily encash their investment by selling their units to the fund if it is an
open-ended scheme or selling them on a stock exchange if it is a close-ended scheme.

5. Convenience: Investing in mutual fund reduces paperwork, saves time and makes investment
easy.

6. Flexibility: Mutual funds offer a family of schemes, and investors have the option of
transferring their holdings from one scheme to the other.

7. Tax benefits Mutual fund investors now enjoy income-tax benefits. Dividends received from
mutual funds’ debt schemes are tax exempt to the overall limit of Rs 9,000 allowed under section
80L of the Income Tax Act.

8. Transparency Mutual funds transparently declare their portfolio every month. Thus an investor
knows where his/her money is being deployed and in case they are not happy with the portfolio
they can withdraw at a short notice.

9. Stability to the stock market Mutual funds have a large amount of funds which provide them
economies of scale by which they can absorb any losses in the stock market and continue investing
in the stock market. In addition, mutual funds increase liquidity in the money and capital market.

10. Equity research Mutual funds can afford information and data required for investments as they
have large amount of funds and equity research teams available with them.
❖ Why do people buy mutual funds?

Mutual funds are a popular choice among investors because they generally offer the
following features:

❖ Professional Management. The fund managers do the research for you. They select the
securities and monitor the performance.
❖ Diversification or “Don’t put all your eggs in one basket.” Mutual funds typically invest
in a range of companies and industries. This helps to lower your risk if one company
fails.
❖ Affordability. Most mutual funds set a relatively low dollar amount for initial investment
and subsequent purchases.
❖ Liquidity. Mutual fund investors can easily redeem their shares at any time, for the
current net asset value (NAV) plus any redemption fees.

❖ Advantages of Investing in Best Mutual Funds

i. Expert Money Management

Since mutual funds are managed by a fund manager, the chances of making profits are on
the higher side. Every fund manager is backed by a team of analysts and experts who do
the research and choose the best-performing instruments to include in the fund’s portfolio.
Therefore, you don’t have to possess market knowledge

ii. Option to invest small amounts regularly

One of the most significant advantages of investing in mutual funds is that you can stagger
your investments over time by taking the SIP or systematic investment plan route. Through
an SIP, you can invest a fixed sum as low as Rs 100 on a regular basis. This alleviates the
need to arrange for a lump sum to get started with your investment journey.

iii. Diversification

On investing in mutual funds, you automatically diversify your portfolio across several
instruments. Every mutual fund invests in various securities, thereby providing investors
with the benefit of exposure to a diversified portfolio.

iv. Can redeem at any time

Most mutual fund schemes are open-ended. Therefore, you can redeem your mutual fund
units at any time. This ensures that investors are provided with the benefit of liquidity and
hassle-free withdrawal at all times.

v. Well regulated

All mutual fund houses are under the purview of the Securities and Exchange Board of
India (SEBI) and the Reserve Bank of India (RBI). Apart from these, the Association of
Mutual Funds in India (AMFI), a self-regulatory formed by the fund houses, also keeps an
eye on fund plans. Therefore, investments made in mutual funds are safe.

vi. Tax-efficient

If you are looking to save taxes under the provisions of Section 80C of the Income Tax
Act, 1961, then you can invest in the equity-linked saving scheme (ELSS) or tax-saving
mutual funds. These mutual funds provide tax deductions of up to Rs 1,50,000 a year,
which helps you save up to Rs 46,800 a year in taxes.
❖ Risk Possessed by Best Mutual Funds

As mentioned before, the risk level of mutual funds varies across types. Equity funds carry the
highest levels of risk since they mostly invest in the equity shares of companies across market
capitalisations. These funds are easily influenced by market movements.

The following are the types of risks that come attached with equity funds:

1. Market Risk

Market risk is the risk which can result in losses due to the underperformance of the market.
Several factors affect market movements. To name a few; natural disasters, viral outbreaks,
political unrest, and so on.

2. Concentration Risk

Concentration generally refers to emphasising on one particular thing. Concentrating your

investments towards a particular company is never advisable. No doubt that having your
investments concentrated on one sector proves to be beneficial at times when that sector
performs well, but if there is any adverse development, then your losses will be magnified.

3. Interest Rate Risk

The interest rates fluctuate on the basis of the availability of credit with lenders and the
demand from borrowers. The rise in the interest rates during the investment tenure can
result in a drop in the price of securities.

4. Liquidity Risk

Liquidity risk refers to the difficulty in exiting the holding of a security at a loss. This
generally happens when the fund manager fails to find buyers.

5. Credit Risk
Credit risk refers to the possibility of a scenario wherein the issuer of the security fails to
pay the interest that was promised at the time of issuing the securities. You can gauge the
credit risk by looking at the credit ratings given by various credit rating agencies.

The following are the types of risks that come attached with equity funds:

1. Interest Risk

It is the possibility of the rate of interest varying. This may happen due to a variety of
factors. A change in the rate of interest has a direct impact on the returns offered by the
underlying securities.

2. Credit Risk

It is the possibility of the issuer of the securities defaulting on the repayment of principal
and the payment of interest at the rate agreed upon at the time of issuing the securities.

3. Liquidity Risk

It is the possibility that the underlying securities may turn illiquid and the fund manager
may find it difficult to sell the securities held under the portfolio.

❖ Taxation of Best Mutual Funds

The dividends provided by all mutual funds are added to your overall income and taxed as per the
income tax slab you fall under. The rate of taxation of capital gains realised on selling mutual fund
units varies across mutual funds and holding period.

Here’s how equity funds are taxed:

If you sell your equity fund units within a holding period of one year from the date of purchase,
then you realise short-term capital gains. These gains are taxed at a flat rate of 15%, regardless of
your income tax slab. You realise long-term capital gains on redeeming your equity fund units
after a holding period of one year. Long-term capital gains (LTCG) of up to Rs 1 lakh a year are
made tax-exempt. Any LTCG above Rs 1 lakh a year are taxed at a flat rate of 10%, and there is
no benefit of indexation provided.
Here’s how debt funds are taxed:

Gains realised on selling debt fund units within a holding period of three years are termed short-
term capital gains. These gains are added to your overall income and taxed as per your income tax
slab. You make long-term capital gains on selling your debt fund units after a holding period of
three years. These gains are taxed at a flat rate of 20% after indexation.

Here’s how balanced funds are taxed:

The rate of taxation of gains realised on selling units of balanced funds depends on their equity
exposure. If the equity exposure of a balanced fund is in excess of 65%, then it is taxed like an
equity fund. If not, then the rules of taxation of debt funds apply. Therefore, when you are investing
in a hybrid fund, you should necessarily know its equity exposure.

❖ Mutual Fund Investors

Mutual funds in India are open to investment by
o Residents including:-
• Resident Indian Individuals, including high net worthindividuals and the retail or small
investors. Indian Companies
• Indian Trusts/Charitable Institutions
• Banks
• Non-Banking Finance Companies
• Insurance Companies
• Provident Funds
o Non-Residents, including
• Non-Resident Indians
• Other Corporate Bodies (OCBs)
c. Foreign entities, namely, Foreign Institutional Investors (FIIs) registered with SEBI. Foreign
citizens/ entities are however not allowed to invest in mutual funds in India.
Market survey plays a vital role in understanding the investment pattern of the customer and the
level of satisfaction. It is very important for the company to perform such activities like market
research and surveys at regular intervals and accordingly further plans and policies can be
formulated. By studying the investment pattern of the customers, the company can plan the
strategies to capture the more market share by providing the better services and customized plans.

❖ FD vs Mutual Fund

Fixed Deposits are the traditional investment choice for most Indian households. As per RBI
research released in June 2020, 53% of average household financial assets are invested in Bank
FDs (as on March 2020). Though mutual funds have a long history in India with setting up of Unit
Trust of India in 1963, popularity of mutual funds among retail investors have grown only in the
last 20 – 25 years. As per AMFI data, AUM of mutual funds in India has grown at CAGR of nearly
17% over the last 20 years. Despite the rapid growth, RBI research suggests that mutual funds
comprise only 7% of household savings. We will compare FD vs mutual fund so that investors can
make informed decision on whether to invest in FD or mutual funds.

What are Fixed Deposits?

As the name suggests, FDs offer fixed interest rate to investors for fixed tenures. FD tenures can
range from 7 days to 10 years. Bank FD interest is compounded, i.e. you get interest on accrued
interest. For example, let us assume a bank pays 6% interest (compounding annually) for 3 year
FD. If you deposit Rs 100, after 1 year your account will have Rs 106. In year 2, you will get 6%
interest on principal plus interest, i.e. 6% on Rs 106 or Rs 6.4. The additional 40 paisa is due to
compounding.

A cause of concern especially for senior citizens who invest their savings primarily in FDs is the
declining interest rates. FD interest rate has seen secular decline over the past 25 years (see the
chart below). With RBI cutting interest rates aggressively in the wake of COVID-19 outbreak,
banks have also reduced FD interest rates. On a post-tax basis, FD interest rates are now barely
able to beat inflation. FD interest is taxed as per income tax slab of depositors. Since the FD interest
rate is fixed over the FD tenure, there is no indexation benefit in taxation if FD vs mutual fund
comparison is done. Therefore, there is no protection from inflation, especially when FD interest
rates are so low.

What are Mutual Funds?

Mutual funds are financial instruments formed by pooling money from many investors and
managed by Asset Management Companies. Mutual funds are portfolios of stocks or bonds of
which unit-holders have ownership. mutual funds offer a variety of investment options based on
investors’ financial needs. Equity mutual funds invest primarily in the stock market whereas debt
funds invest in money and bond markets. The primary investment objective of equity funds is
capital appreciation and for debt the objective is to generate income.

While investing you should choose schemes whose fund managers have good long term
performance track record. The table below shows 3, 5 and 10 year annualized returns of top
performing equity and debt mutual funds.

Average performance of top quartile mutual funds

Mutual funds 3 year returns 5 year returns 10 year returns

Equity 5% 6 – 7% 11 – 13%

Debt 8 – 9% 8 – 9% L8 – 9%

One major advantage of mutual fund vs fixed deposit is taxation. Mutual funds are among the most
tax efficient investments. Short term capital gains in equity funds (held for less than 12 months)
are taxed at 15% and long term capital gains (held for more than 12 months) of up to Rs 1 lakh are
tax exempt and taxed at 10% thereafter.

In debt funds, short term capital gains (held for less than 36 months) are taxed as per the income
tax slab of the investor and long term capital gains (held for more than 36 months) are taxed at
20% after allowing indexation benefits. Therefore, in debt fund vs fixed deposit comparison, debt
funds scores high.

Key difference between fd and mutual funds’ which has a S.V of 90.
Parameters FD Mutual Funds

Very safe (subject to Mutual funds are subject to market risks. Different types
Safety financial strength of the of schemes have different risk profiles. Invest according
bank). to your risk appetite.

Medium to Highly
Open ended funds are highly liquid. Exit load may apply
liquid. Penalties may
Liquidity for withdrawals within a certain period from the date of
apply on premature
investment
withdrawals

Market linked. Historical returns track record of top

Returns Assured returns
performing funds across categories is strong
Parameters FD Mutual Funds

Long term capital gains tax advantage. If you compare

As per income tax slab debt fund vs fixed deposit, Indexation benefits in debt
Taxation
of investors funds makes it more tax friendly for investors in higher
income tax slabs

Investor
interest Regulated by RBI Regulated by SEBI
protection

10 best-performing mutual funds in the last 5 years

We have put together the 10 best-performing mutual funds in the last five years to make it
easier to choose the right one best suited to your financial capacity and risk appetite.

While there are several investment options out there, mutual funds are one of the best and
simplest avenues that offer sizable returns.
It’s often said that “While saving money is wise, investing it is profitable”, and for good reason.
Investing your money helps multiply it and build wealth rather than leaving it sitting idle in your
bank accounts. While there are several investment options out there, mutual funds are one of the
best and simplest avenues that offer sizable returns.
While most people are aware of mutual funds, the challenge and confusion often ensue when
those new to the mutual fund space realize that there are several different mutual funds. There
are multiple parameters such as expense ratio, performance against a benchmark, fund manager’s
experience, etc, to consider before investing. Understanding that doing extensive research on this
can be tedious and time-consuming, we’ve put together the 10 best-performing mutual funds in
the last five years to make it easier to choose the right one best suited to your financial capacity
and risk appetite.
However, before delving into the best-performing mutual funds, it’s necessary to understand
their classification. Mutual funds are often categorized as large-cap funds, mid-cap funds, small-
cap funds, flexi cap funds, and ELSS (Equity-Linked Savings Scheme) funds.
1. Axis Bluechip Fund (Large-Cap)
Launched by Axis Mutual Fund, the Axis Bluechip Fund currently has an AUM of INR 29,160.6
crore and invests in blue-chip stocks or stocks of large organizations that are financially stable
and established. While they are less volatile than mid-cap or small-cap stocks and have sufficient
liquidity, they are rated high risk and the minimum SIP is set to INR 500 with the minimum
lump sum investment set to INR 5000. The Axis Bluechip Fund aims to generate long-term
capital growth through investment in a diverse portfolio and is suitable for investors who are
looking for long-term capital appreciation. The 5-year CAGR for the fund is 18.50%.

2. Canara Robeco Bluechip Equity Fund (Large-Cap)

An equity mutual fund scheme launched by Canara Robeco Mutual Fund, this scheme has been
available since 2013 and seeks to provide capital appreciation by mainly investing in companies
having large market capitalization. With a current Asset Under Management (AUM) of INR
3,691.25 cr, the fund is rated extremely high risk and the minimum SIP (Systematic Investment
Plan) is set to 1000. While the returns are taxed at 15% if the fund is redeemed before one year,
customers are required to pay 10% along with an LTCG tax on the returns of INR 1 lakh+ in a
financial year. The fund offers a 5-year CAGR of 18.08%.
3. PGIM India Mid-Cap Opportunities Fund
With an expense ratio of 0.37% and a minimum SIP amount of INR 1000, the PGIM India
Midcap Opportunities fund currently has an AUM of INR 2383.38 cr. While the minimum lump
sum amount is INR 5000, for units crossing 10% of the investment, 0.5% will be the levied
charges for redemption within 90 days. Classified as very high risk, the PGIM India Midcap
Opportunities Fund is best suited for investors who aim to invest for at least 3-4 years and are
seeking high returns, and have a 5-year CAGR of 21.23%.

4. Axis Mid-Cap Fund

Having an AUM of INR 13,834.27 cr, the companies chosen for the portfolio of this fund are the
ones with high growth prospects to assist the investment goal of quick wealth creation. While the
Axis Midcap Fund is a moderately high risk, it’s suitable for those looking to invest for 3-4 years
and wish to receive high returns. However, being a high-risk fund, investors also need to be
prepared for the possibility of moderate losses in their investments. The fund has a 5-year CAGR
of 21.13% and is ideal for long-term goals such as education, retirement, etc.

5. Nippon India Small-Cap Fund

Looking to focus on small-cap companies across sectors, the Nippon India Small-cap Fund is
extremely high risk with minimum SIP investments set to INR 100 while the lump sum
investment is 5000 with an exit load of 1% if redeemed within a month. Made available to
investors in 2013, the fund is ideal for those with greater risk appetite and are expecting higher
returns although investors need to be ready for moderate losses owing to the risk factor. The fund
offers a 5-year CAGR of 23.61%.

6. SBI Small-Cap Fund

With a Net Asset Value (NAV) of INR 102.68 as of 16th Aug 2021, the SBI small-cap fund has
an AUM of INR 9,620.21 cr with an expense ratio of 0.84%. Being extremely high risk, the fund
has a minimum SIP of INR 500. The stock selection strategy includes both growth and value
investing. Providing a 5-year CAGR of 23.31%, the fund aims to provide investors with
opportunities for long-term wealth growth.
7. Parag Parikh Flexi-Cap Fund
Rated extremely high risk, the Parag Parikh Flexi-cap fund has an AUM of INR 13,186.70 cr but
has a lower expense ratio of 0.89%. With a minimum lump sum investment amount of INR
5000, the fund comes with an exit load of 2% if redeemed within 365 days and 1% if redeemed
between 366-730 days. Aiming to achieve long-term capital appreciation by investing primarily
in equity and equity-related instruments, the fund is suitable for those looking to invest for 3-4
years and offers a 5-year CAGR of 21.51%.

8. PGIM India Flexi-Cap Fund

Aiming to generate income by investing in an actively managed diversified portfolio, the PGIM
India Flexi-cap fund is extremely high risk and has an AUM of INR 1,688.70 cr. Having been
made available to investors in March 2015, the fund offers high returns but investors need to be
wary of experiencing moderate losses due to its high-risk nature. The PGIM India Flexi-cap fund
offers a 5-year CAGR of 20.79%.
9. Quant Tax Plan (ELSS)
With an AUM of INR 327.45 cr, the Quant Tax Plan seeks to generate capital appreciation by
investing in equity shares that display growth potential. Rated extremely high risk, the fund has a
minimum SIP investment and a minimum lump sum investment of INR 500. Under Section 80C,
up to INR 1.5 lakh on the returns will be exempted from tax but the fund requires a lock-in
period of 3 years. Returns over INR 1.5 lakh will be taxed at 10%. The fund offers a 5-year
CAGR of 23.92%.

10. Mirae Asset Tax Saver Fund (ELSS)

Having a low expense ratio of just 0.48%, the Mirae Asset Tax Saver Fund has a zero exit load
with higher returns than the category average. Being an open-ended ELSS, the fund comes with
a lock-in period of 3 years and is open to investing across market capitalizations. Its flexible
approach offers a diversified portfolio containing stable, established companies and shows high
growth potential. With a 5-year CAGR of 22.45%, the Mirae Asset Tax Saver fund is best suited
for investors looking to place their money in an investment for 3 years. The fund serves a dual
purpose – tax-saving and long-term wealth creation.
COMPANY PROFILE
❖ Bank of Baroda (BOB) is an Indian nationalised banking and financial services company.
It is under the ownership of the Ministry of Finance of the government of India. It is the fourth
largest nationalised bank in India, with 132 million customers, a total business of US$218
billion, and a global presence of 100 overseas offices. Based on 2019 data, it is ranked 1145
on Forbes Global 2000 list.

The Maharaja of Baroda, Maharaja Sayajirao Gaekwad III, founded the bank on 20 July 1908 in
the Princely State of Baroda, in Gujarat. The government of India nationalized the bank, along
with 13 other major commercial banks of India on 19 July 1969; the bank has been designated as
a profit-making public sector undertaking (PSU).

❖ History
Maharaja Sayajirao Gaekwad III, the founder of Bank of Baroda

In 1908, Maharaja Sayajirao Gaekwad III, set up the Bank of Baroda (BOB), with other stalwarts
of industry such as Sampatrao Gaekwad, Ralph Whitenack, Vithaldas Thakersey, Tulsidas
Kilachand and NM Chokshi. Two years later, BOB established its first branch in Ahmedabad. The
bank grew domestically until after World War II. Then in 1953 it crossed the Indian Ocean to serve
the communities of Indians in Kenya and Indians in Uganda by establishing a branch each
in Mombasa and Kampala. The next year it opened a second branch in Kenya, in Nairobi, and in
1956 it opened a branch in Tanzania at Dar-es-Salaam. Then in 1957, BOB took a big step abroad
by establishing a branch in London. London was the center of the British Commonwealth and the
most important international banking center. In 1958 BOB acquired Hind Bank (Calcutta; est.
1943), which became BOB's first domestic acquisition.

1960s

In 1961, BOB acquired New Citizen Bank of India. This merger helped it increase its branch
network in Maharashtra. BOB also opened a branch in Fiji. The next year it opened a branch in
Mauritius

In 1963, BOB acquired Surat Banking Corporation in Surat, Gujarat. The next year BOB acquired
two banks: Umbergaon People's Bank in southern Gujarat and Tamil Nadu Central Bank in Tamil
Nadu state.
In 1965, BOB opened a branch in Guyana. That same year BOB lost its branch
in Narayanganj (East Pakistan) due to the Indo-Pakistani War of 1965. It is unclear when BOB
had opened the branch. In 1967 it suffered a second loss of branches when the Tanzanian
government nationalised BOB's three branches there at (Dar es Salaam, Mwanga, and Moshi), and
transferred their operations to the Tanzanian government-owned National Banking Corporation.

In 1969, the Indian government nationalised 14 top banks including BOB. BOB incorporated its
operations in Uganda as a 51% subsidiary, with the government owning the rest.

1970s

In 1972, BOB acquired Bank of India's operations in Uganda. Two years later, BOB opened a
branch each in Dubai and Abu Dhabi.

Back in India, in 1975, BOB acquired the majority shareholding and management control of
Bareilly Corporation Bank (est. 1954) and Nainital Bank (est. in 1922), both in Uttar Pradesh and
Uttarakhand respectively. Since then, Nainital Bank has expanded to Uttarakhand, Uttar Pradesh,
Haryana, Rajasthan and Delhi state. Right now BOB have 99% shareholding in Nainital Bank.

International expansion continued in 1976 with the opening of a branch in Oman and another
in Brussels. The Brussels branch was aimed at Indian firms from Mumbai (Bombay) engaged in
diamond cutting and jewellery having business in Antwerp, a major center for diamond cutting.

Two years later, BOB opened a branch in New York and another in the Seychelles. Then in 1979,
BOB opened a branch in Nassau, the Bahamas.

1980s

In 1980, BOB opened a branch in Bahrain and a representative office in Sydney, Australia.
BOB, Union Bank of India and Indian Bank established IUB International Finance, a licensed
deposit taker, in Hong Kong. Each of the three banks took an equal share. Eventually (in 1999),
BOB would buy out its partners.

A second consortium or joint-venture bank followed in 1985. BOB (20%), Bank of

India (20%), Central Bank of India (20%) and ZIMCO (Zambian government; 40%)
established Indo-Zambia Bank in Lusaka. That same year BOB also opened an Offshore Banking
Unit (OBU) in Bahrain (Gulf).
Back in India, in 1988, BOB acquired Traders Bank, which had a network of 34 branches in Delhi.

1990s

In 1992, BOB opened an OBU in Mauritius, but closed its representative office in Sydney. The
next year BOB took over the London branches of Union Bank of India and Punjab & Sind
Bank (P&S). P&S's branch had been established before 1970 and Union Bank's after 1980.
The Reserve Bank of India ordered the takeover of the two following the banks' involvement in
the Sethia fraud in 1987 and subsequent losses.

Then in 1992 BOB incorporated its operations in Kenya into a local subsidiary. The next year,
BOB closed its OBU in Bahrain.

In 1996, BOB Bank entered the capital market in December with an initial public offering (IPO).
The government of India is still the largest shareholder, owning 66% of the bank's equity.

In 1997, BOB opened a branch in Durban. The next year BOB bought out its partners in IUB
International Finance in Hong Kong. Apparently this was a response to regulatory changes
following Hong Kong's reversion to the People's Republic of China. The now wholly owned
subsidiary became Bank of Baroda (Hong Kong), a restricted license bank. BOB also acquired
Punjab Cooperative Bank in a rescue. BOB incorporate a wholly–owned subsidiary, BOB Capital
Markets, for broking business.

In 1999, BOB merged in Bareilly Corporation Bank in another rescue. At the time, Bareilly had
64 branches, including four in Delhi. In Guyana, BOB incorporated its branch as a subsidiary,
Bank of Baroda Guyana. BOB added a branch in Mauritius and closed its Harrow Branch in
London.

2000s

In 2000 BOB established Bank of Baroda (Botswana). The bank has three banking offices, two in
Gaborone and one in Francistown. In 2002, BOB converted its subsidiary in Hong Kong from
deposit taking company to a Restricted License Bank

In 2002 BOB acquired Benares State Bank (BSB) at the Reserve Bank of India's request. BSB had
been established in 1946 but traced its origins back to 1871 and its function as the treasury office
of the Benares state. In 1964 BSB had acquired Bareilly Bank (est. 1934), with seven branches in
western districts of Uttar Pradesh; BSB also had taken over Lucknow Bank in 1968. The
acquisition of BSB brought BOB 105 new branches. Lucknow Bank, a unit bank with its only
office in Aminabad, had been established in 1913. Also in 2002, BOB listed Bank of Baroda
(Uganda) on the Uganda Securities Exchange (USE). The next year BOB opened an OBU
in Mumbai.

In 2004 BOB acquired the failed south Gujarat Local Area Bank. BOB also returned to Tanzania
by establishing a subsidiary in Dar-es-Salaam. BOB also opened a representative office each
in Kuala Lumpur, Malaysia, and Guangdong, China

In 2005 BOB built a Global Data Centre (DC) in Mumbai for running its centralised banking
solution (CBS) and other applications in more than 1,900 branches across India and 20 other
counties where the bank operates. BOB also opened a representative office in Thailand

In 2006 BOB established an Offshore Banking Unit (OBU) in Singapore.

In 2007, its centenary year, BOB's total business crossed 2.09 trillion (short scale), its branches
crossed 2000, and its global customer base 29 million people. In Hong Kong, Bank got Full
Fledged Banking license and business of its Restricted License Banking subsidiary was taken over
Bank of Baroda branch in Hong Kong w.e.f.01.04.2007.

In 2008 BOB opened a branch in Guangzhou, China (02/08/2008) and in Kenton, Harrow United
Kingdom. BOB opened a joint venture life insurance company with Andhra Bank and Legal &
General (UK) called IndiaFirst Life Insurance Company.

In 2009 Bank of Baroda (New Zealand) was registered. As of 2017 BOB (NZ) has 3 branches: two
in Auckland, one in Wellington.

2010s

In 2010 Malaysia awarded a commercial banking licence to a locally incorporated bank to be

jointly owned by Bank of Baroda, Indian Overseas Bank and Andhra Bank.

In 2011 BOB opened an Electronic Banking Service Unit (EBSU) at Hamriya Free Zone, Sharjah
(UAE). It also opened four new branches in existing operations in Uganda, Kenya (2), and Guyana.
BOB closed its representative office in Malaysia in anticipation of the opening of its consortium
bank there. BOB received 'In Principle' approval for the upgrading of its representative office in
Australia to a branch. BOB also acquired Mumbai-based Memon Cooperative Bank, which had
225 employees and 15 branches in Maharashtra and three in Gujarat. It had to suspend operations
in May 2009 due to its precarious financial condition.

The Malaysian consortium bank, India International Bank Malaysia (IIBM), finally opened in
Kuala Lumpur, which has a large population of Indians. BOB owns 40%, Andhra Bank owns 25%,
and IOB the remaining 35% of the share capital. IIBM seeks to open five branches within its first
year of operations in Malaysia, and intends to grow to 15 branches within the next three years.

On 17 September 2018, the government of India proposed the merger of Dena Bank and Vijaya
Bank with the Bank of Baroda, pending approval from the boards of the three banks, effectively
creating the third largest lender in the country.[10] The merger was approved by the Union Cabinet
and the boards of the banks on 2 January 2019. Under the terms of the merger, Dena Bank and
Vijaya Bank shareholders received 110 and 402 equity shares of the Bank of Baroda, respectively,
of face value ₹2 for every 1,000 shares they held. The merger came into effect on 1 April
2019. Post-merger, the Bank of Baroda is the third largest bank in India, after State Bank of
India and HDFC Bank. The consolidated entity has over 9,500 branches,13,400 ATMs, 85,000
employees and serves 120 million customers. The amalgamation is the first-ever three-way
consolidation of banks in the country, with a combined business of Rs14.82 trillion (short scale),
making it the third largest bank after State Bank of India (SBI) and ICICI Bank. Post-merger
effective 1 April 2019, the bank has become the India's third largest lender behind SBI and ICICI
Bank.

Bank of Baroda announced in May 2019 that it would either close or rationalise 800–900 branches
to increase operational efficiency and reduce duplication post-merger. The regional and zonal
offices of the merged companies would also be closed. PTI quoted an unnamed senior bank official
as stating that Bank of Baroda would look to expand in eastern India as it already had a strong
presence in the other regions.

TRUSTEES: Trustees are like internal regulators in a mutual fund, and their job is to protect the
interest of unitholders. Sponsors appoint trustees. Trustees appoint the AMC, which, subsequently
seek their approval for the work it does, and reports periodically to them on how the business is
being run. Trustees float and market schemes, and secure necessary approvals. They check if the
AMC’s investments are within defined limits and whether the fund’s assets are protected. Trustees
can be held accountable for financial irregularities in the mutual fund.
CUSTODIAN: A custodian handles the investment back office of a mutual fund. Its
responsibilities include receipt and delivery of securities, collection of income, distribution of
dividends, and segregation of assets between schemes. The sponsor of a mutual fund mutual fund
cannot act as a custodian to the fund. This condition, formulated in the interest of investors, ensures
that the assets of mutual fund are not in the hands of its sponsor.
REGISTRAR : Registrars, also known as transfer agents, handle all investor-related services.
This includes issuing and redeeming units, sending fact sheet and annual reports. Some fund
houses handle such functions in-house.
The main objectives of the Trust are:
• To carry on the activity of a Mutual Fund as may be permitted at law and formulate and
devise various collective Schemes of savings and investments for people in India and
abroad and also ensure liquidity of investments for the Unit holders;
• To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on
their savings
• To take such steps as may be necessary from time to time to realize the effects without any
limitation

❖ Vision, Mission & Market Strategy:-

o Vision statement –
• “Empowering everyone to live their dream”

o Mission statement-
• “To offer unparalleled value by providing the customer transparent, convenient and
effective anytime-anywhere integrated financial transaction capability”

o Marketing strategy- to provide

• Simple, easy-to-understand, safe and secure trading platform/software
• Uncomplicated, easy-to-understand brokerage/trading cost structure without any riders
• Easy access to the financial market through convenient modes of distribution
• Sound, genuine, unbiased advise individual investments.

❖ Detail Study about the company

About Baroda Asset Management India Limited.

Baroda Asset Management India Limited (“AMC”), investment manager to Baroda Mutual Fund
(“Mutual Fund”), is a wholly owned subsidiary of Bank of Baroda and is positioned to serve the
varied asset management needs of investors in India through a range of equity, debt and money
market offerings.
With a focus on enhancing the overall customer experience, the AMC is working towards:

1. Enhancing the existing product range to include products that will provide investors with
a much wider choice suited to their diverse needs and risk profiles

2. Providing consistent investment performance through sound investment management

3. Creating an increasing number of access points for investors through the vast branch
network of Bank of Baroda

4. Bringing in the high levels of compliance and corporate governance

5. Introducing increasingly innovative and useful service features on an ongoing basis

6. Making it easier for investors to receive prompt and effective levels of customer service

Brief history of the company : In 2008, Pioneer Global Asset Management SpA (“PGAM”)
acquired 51% stake in the AMC, which was renamed as Baroda Pioneer Asset Management
Company Ltd. and PGAM became a co-sponsor of the Mutual Fund. The joint venture had Rs. 30
crores in AAuM in June 2008 which grew to Rs. 12,044 crores in July 2019. The AMC
continues its path of success as it grew to become a serious player in the mutual fund industry.
Our sponsor for 10 years, Pioneer Investments, with their merger worldwide with another asset
management company, have moved out of the joint venture and Bank of Baroda, India’s 2nd
largest PSU Bank has now become the sole sponsor for the Mutual Fund.

On September 28, 2018, Bank of Baroda acquired the entire shareholding of UniCredit S.p.A.
(erstwhile PGAM, which merged into its holding company viz. UniCredit S.p.A. effective
November 1, 2017) held in the AMC and Baroda Pioneer Trustee Company Private Limited
(“Trustee”). Subsequently, the names of the AMC and Trustee have been changed to Baroda
Asset Management India Limited and Baroda Trustee India Private Limited respectively, and
the name of our Mutual Fund has been changed to Baroda Mutual Fund.
Sponsors

Baroda Asset Management India Ltd (BAML) is a wholly owned subsidiary of Bank of Baroda

On September 28, 2018, Bank of Baroda acquired the entire shareholding of UniCredit S.p.A. held
in Baroda Pioneer Asset Management Company Limited (“AMC”) and Baroda Pioneer Trustee
Company Private Limited (“Trustee”). Subsequently, the names of the AMC and Trustee have
been changed to Baroda Asset Management India Limited and Baroda Trustee India Private
Limited respectively, and the name of our mutual fund has been changed to Baroda Mutual Fund.

Bank of Baroda: In the Indian banking universe, Bank of Baroda occupies a distinct position.
Bank of Baroda is a state owned bank with more than 109 years of successful existence. The
biggest strength is its uninterrupted profit performance and consistent record in dividend payments.
The name inspires confidence among its customers. A consistent track-record, sound financials
and its contribution to social sectors and policy-making have given Bank of Baroda a unique place
in the Indian banking universe.

Baroda Pioneer Mutual Fund Updated on December 1, 2021 , 10360 views Baroda Pioneer

Asset Management Company Ltd. is a joint endeavour of Bank of Baroda and Pioneer
Investment. This joint venture was formed in the year 2008. Over the years, the company has
created a strong base in India and today it operates over 40 cities across the country. Baroda
Pioneer Mutual Fund aims to cater the needs of its customers by offering a wide range of mutual
fund products such as Debt fund, Money market funds, Equity Funds, etc.

AMC Baroda Pioneer Mutual Fund

Date of Setup November 24, 1994

AUM INR 12240.30 crore (Jun-30-2018)

CEO/MD Mr. Anthony Heredia

CIO Mr. Sanjay Chawla

Compliance Officer Ms. Farhana Mansoor investor

Service Officer Mr. Amitabh Ambastha

Customer Care Number 022-4219 7999

Telephone +91 22 30741000

Fax +91 22 30741001

E-mail info [AT]barodapioneer.in

Website www.barodapioneer.in. Read more at: https://www.fincash.com/l/baroda-pioneer-

mutual-fund

❖ Type of Mutual Funds Offered by Baroda

Mutual Fund Top Equity Mutual Funds
These are the Mutual Fund schemes that invest their corpus predominantly in equity and equity-
related instruments of various companies. The returns offered by equity schemes are not constant.
Equity funds can be considered as a long-term investment option. Baroda Pioneer Mutual Fund
offers equity plans to ensure long-term growth of the investors. Minimum 65 percent funds of the
corpus are put into equity or securities related to equity. It makes the investors the partial owners
of the equity securities in the investors’ fund portfolio. Baroda Pioneer Equity Fund is ideal for
investors who have a high-risk appetite and are seeking for long-term returns. The Best equity
funds offered by Baroda Pioneer Mutual Funds are as follows.
• Baroda Pioneer Mid-Cap Fund Growth
• Baroda Pioneer Multi Cap Fund Growth
• Baroda Pioneer ELSS 96 Growth
• Baroda Pioneer Large Cap Fund Growth
• Baroda Pioneer Banking And Financial Services Fund Growth.

Top Debt Mutual Funds

In case of debt funds, the accumulated money is invested in fixed income instruments like
government and corporate Bonds. People having low risk appetite can choose debt funds as one
of the investment options and can also choose the tenure. Debt funds generally offer constant
returns. The best and Best Debt Funds offered by Baroda Pioneer Mutual Fund are as follows.
• Baroda Pioneer Treasury Advantage Fund Growth
• Baroda Pioneer Liquid Fund Growth
• Baroda Pioneer Short Term Bond Fund Growth
• Baroda Pioneer Credit Risk Fund Growth
• Baroda Pioneer Dynamic Bond Fund Growth.

Top Hybrid Mutual Funds

Hybrid or Balanced Fund refer to the scheme that invests the fund money in a combination of both
equity and fixed income instruments. This mutual fund scheme is good for people having medium
risk-appetite. Some of the best schemes offered Baroda Mutual Funds under the hybrid funds
category are below as follows.
• Baroda Pioneer Hybrid Equity Fund Growth
• Baroda Pioneer Conservative Hybrid Fund Growth.

Top ELSS Funds Mutual Funds

Baroda Pioneer Mutual Fund offers Tax Saving Scheme like ELSS'96 to provide investors long-
term capital growth and also tax benefit under Section 80C of income tax Act,1961. The risk level
associated with it is moderate.
• Baroda Pioneer ELSS 96 Growth.

1. Baroda Pioneer Liquid Fund

To generate income with a high level of liquidity by investing in a portfolio of money market and
debt securities.
Baroda Pioneer Liquid Fund is a Debt - Liquid Fund fund was launched on 5 Feb 09. It is a fund
with Low risk and has given a CAGR/Annualized return of 7.1% since its launch. Ranked 22 in
Liquid Fund category. Return for 2020 was 4.1% , 2019 was 6.6% and 2018 was 7.5% .
Below is the key information for Baroda Pioneer Liquid Fund:-
Baroda Pioneer Liquid Fund Growth
Launch Date 5 Feb 09
NAV (04 Dec 21) ₹2,403.54 ↑ 0.21 (0.01 %)
Net Assets (Cr) ₹5,944 on 31 Oct 21 Category
Debt - Liquid Fund
AMC Baroda Pioneer Asset Management Co. Ltd. Rating
☆☆☆☆
Risk Low
Expense Ratio 0.31
Sharpe Ratio -4.62
Information Ratio -2.17
Alpha Ratio -0.3
Min Investment 5,000 Min
SIP Investment 500
Exit Load NIL
Yield to Maturity 3.62%
Effective Maturity 18 Days
Modified Duration 18 Days.

❖ Comparison of Baroda mutual fund with compititors:-

Name Last Price Market Cap. Net Interest Net Profit Total Assets
(Rs. cr.) Income
SBI 488.65 436,101.14 265,150.63 20,410.47 4,534,429.63
Bank of Baroda 92.25 47,705.82 70,495.06 828.95 1,155,364.78
PNB 39.50 43,493.51 80,749.77 2,021.62 1,260,632.62
IOB 21.75 41,112.75 16,965.53 831.47 274,010.34
Canara Bank 215.00 39,003.80 69,239.79 2,557.58 1,153,675.03
Union Bank 47.10 32,191.66 68,767.34 2,905.97 1,071,705.85
Bank of India 54.85 22,508.06 40,599.44 2,160.30 725,856.45
Central Bank 22.60 19,618.92 22,730.23 -887.58 369,214.99
Indian Bank 153.40 19,105.07 39,105.79 3,004.68 626,005.03
UCO Bank 13.40 16,020.98 14,446.16 167.04 253,336.10
Bank of Mah 19.95 13,427.34 11,868.54 550.23 196,665.01
Punjab & Sind 16.85 6,828.75 6,973.91 -2,732.90 110,481.88
Vijaya Bank 46.05 6,005.60 12,589.84 727.02 177,632.05
Oriental Bank 43.45 5,953.56 17,867.69 54.99 271,909.55
Corporation Bk 9.80 5,874.30 15,622.63 -6,332.98 213,577.86
United Bank 4.50 4,081.18 8,559.88 -2,315.92 151,529.93
Syndicate Bank 15.15 4,065.84 21,725.40 -2,588.30 311,278.86
Allahabad Bank 7.60 3,440.89 16,864.29 -8,333.96 248,575.76
Dena Bank 12.65 2,857.69 8,932.23 -1,923.15 120,859.80
Andhra Bank 9.10 2,816.94 18,932.22 -2,786.13 249,311.41
INTRODUCTION OF TOPIC
(New Fund Offer)
❖ New fund offer:-
What Is a New Fund Offer (NFO)?
A new fund offer (NFO) is the first subscription offering for any new fund offered by an
investment company. A new fund offer occurs when a fund is launched, allowing the firm to raise
capital for purchasing securities. Mutual funds are one of the most common new fund offerings
marketed by an investment company. The initial purchasing offer for a new fund varies by the
fund’s structuring.

KEY TAKEAWAYS

• A new fund offer (NFO) refers to the initial sale of fund shares issued by an investment
company to investors.
• Similar to an IPO in the stock market, NFOs are intended to raise capital for the fund and
attract investors.
• Even though NFOs are marketed, they are done less aggressively so than IPOs, and target
certain select groups of investors. As a result, new fund issues may be less noticeable to
individual investors than IPOs.
• Investors should check an NFO's expense ratio and the performance of previous funds
offered by the investment company before deciding to invest in an NFO.
• Investors looking to research new fund launches can monitor the press releases of various
investment companies as well as news outlets dedicated to aggregating the latest fund
news.

Understanding New Fund Offers (NFOs)

A new fund offer is similar to an initial public offering (IPO). Both represent attempts to raise
capital to further operations. New fund offers can be accompanied by aggressive marketing
campaigns, created to entice investors to purchase units in the fund. New fund offers often have
the potential for significant gains after beginning to trade publicly.

❖ Brief about NFO

• Asset management companies offer a new mutual fund (NFO) to the public before it is
open for daily transactions(regular mutual fund). If the offer is for a close-ended fund, you
can only invest in it during the offer period; but if it is the launch of an open-ended mutual
fund, you can invest in it once it reopens for subscription.

• But then, why do fund houses come up with an NFO when there are already hundreds of
mutual fund schemes available in the market?
• There are two reasons, either to complete the product basket or to introduce a new
investment theme that is not offered by any existing funds.

• In that case, should you invest in every NFO that comes into the market? No. For instance,
do you watch every movie on the day of its release? Of course not! Even if it is practically
possible, you only go for select films that have an appealing story or directed by a renowned
director or the ones that match your taste.

• Similarly, you should subscribe to an NFO only if it fits in with your checklist or meets
your investment objectives. The best way to find that out is by reading the Scheme
Information Document (SID) which contains basic information such as investment
objective, strategy, fund management team, asset allocation and other risk and liquidity
details. Let’s look at the points you should consider before investing in an NFO.

• New theme: If you have been investing in open-ended mutual funds, the only reason you
should subscribe to an NFO is if the new fund offers a unique theme that is not part of your
portfolio so far.
• Conviction: The theme of the fund may be unique but are you convinced that the theme
will work out? From the above example, you should invest in the NFO only if you believe
that a particular sector / theme will perform well in the future. If you are not fully
convinced, it is better to stay put in existing mutual funds.

• Investment objective: Check out if the fund matches with your investment objective. Do
not invest in a scheme just because everyone is investing or a friend has recommended it.
Make sure it aligns with your financial needs.

• Asset allocation: Check your risk profile and, accordingly, sketch out your asset allocation
strategy. If you are a conservative investor and the NFO is offering an equity fund, it may
not fit well into your portfolio.

• Fund manager: NFOs come with a clean slate. However, a fund manager who is going to
manage the scheme would have a track record. Check the performance of the other schemes
managed by him / her to get an idea on their credibility and expertise.

• Fund house: Next on the list is checking credibility of the fund house. How is the track
record of their management team? Are they ethical and do they comply with all the
regulatory guidelines? Are they process-oriented or people-oriented? Find answers to these
questions as well.

• Now that you have done your research about NFOs, do you want to invest in one? But
before you do that, let’s clear a few of the myths associated with NFOs. Lower NAV means
more units, and more profit: Fund houses price all NFOs at Rs.10 per unit. The
misconception is that lower NAV means one can purchase more units and thereby make
higher profits. But the truth is, performance of any scheme does not depend on the
purchasing price of the fund, but on the performance of its underlying securities.
Let’s take an example.

• NFO is the same as an IPO: The only similarity between an NFO and an IPO is that they
are both open for subscription for a limited period of time. However, the key difference is
that an NFO is launched to expand the product basket by an asset management or mutual
fund companies. The money collected by NFOs is invested in a portfolio of securities based
on its investment objective. Whereas a company comes up with an IPO to raise capital that
could help them meet their operational and or capital expenditures.
❖ Types of New Fund Offers (NFOs)
Mutual funds are the most common type of new fund offering. New fund offerings can be for
open-end or closed-end mutual funds. New exchange-traded funds are also first offered through
a new fund offering. Below are details on how to invest in a few of the market’s common types
of new fund offerings.

• Open-End Fund
In a new fund offer, an open-end fund will announce new shares for purchase on a specified
launch day. Open-end funds do not limit their number of shares. These funds can be bought and
sold from a brokerage firm on their initial launch date and thereafter. The shares do not trade on
an exchange and are managed by the fund company and/or fund company affiliates. Open-end
mutual funds report net asset values daily after the market’s close. Fund companies can launch
new fund offers for new strategies or add additional shares classes to existing strategies.

• Closed-End Fund
Closed-end new fund offers are often some of the most highly marketed new fund issuances since
closed-end funds only issue a specified number of shares during their new fund offer. Closed-end
funds trade on an exchange with daily price quotes throughout the day. Investors can buy closed-
end funds on their launch date through a brokerage firm.

• Exchange-Traded Fund
New exchange-traded funds (ETFs) are also launched through a new fund offer. An exchange-
traded fund is a type of investment fund that can be publicly traded on the stock market. On April
7, 2021, Vanguard launched the Vanguard Ultra-Short Bond ETF (VUSB). According to
Vanguard, "the fund's objective is to seek to provide current income while maintaining limited
price volatility. The fund invests in a diversified portfolio of high-quality and, to a lesser extent,
medium-quality fixed-income securities. The fund is expected to maintain a dollar-weighted
average maturity of 0 to 2 years."

Launches and Alerts

Often, new fund offers are not widely publicized making them challenging to identify. Companies
must register a new fund offering with the Securities and Exchange Commission (SEC) offering
one method of tracking. Investors seeking information on new fund offers prior to their launch
date may also receive alerts from their brokerage firm. News outlets and news aggregators are
also good sources for information on new fund offers. Sources such as the Closed-End Fund
Center provide details on new fund offers.

Companies will also issue press releases on new fund offers. For example, you can
find Vanguard's statement on the launch of their latest ETF on their website.

❖ Advantages and Disadvantages of a New Fund Offer (NFO)

Investing in a new mutual fund may seem like an exciting way to diversify your portfolio,
however, there are some concerns you should know about before doing so.

For example, many investment companies launch a new fund when the market is rich and
investors are hungry to get in on the latest new industry or sector of the economy. However just
because a certain technology or industry is booming now does not mean it will remain popular in
the future. Furthermore, a new fund offer often comes with a higher expense ratio than normal.
Pros of NFO

New Fund Offers or NFOs are generally launched by an AMC as continuation of its popular series
or to introduce a newly themed best Mutual Fund. Therefore, they come with the following
benefits.

• Provides opportunity to invest with small budget in a theme such as tax savings
or specific sector of the industry, when prices of existing Mutual Fund units are higher.

• NFOs are ideal if you will stay invested for long in a particular types of Mutual Fund.
Hence, they are best suited for long-term investors.

• If you believe that a particular industry or sector will witness boom in future and some
AMC launches that specific NFO, it provides you an investment opportunity.

• You can get larger number of units through an NFO than buying the same later as lump
sum or through Systematic Investment Plans (SIPs).

• Generally, prices of units bought during NFO are bound to rise at least marginally. They
can slump a bit during stock market downturns.

Cons of NFOs

NFOs come with their fair share of problems that you may be unaware at the time of investing.
Here are some disadvantages of investing in NFOs.

• Usually, AMCs charge an ‘exit load’ when you redeem Mutual Fund investment units
bought during an NFO. Exit load is not applicable only if the NFO is continuation of a
series of Mutual Funds. This exit load can be as high as three percent of your Net Asset
Value at the time of redemption.

• Generally, most NFOs come with a lock-in period. Meaning, you cannot redeem their
units before six months to a year.

• There are no guarantees that an NFO will develop into a profit making Mutual Fund.
There are no past records to prove its performance.
• NFOs are not rated by credit rankings agency, CRISIL. Hence, how the AMC and that
particular fund manager handles the Mutual Fund is anybody’s guess.

• Large financial scams can send prices of Mutual Funds you bought as NFO into a
tailspin. If the NFO has equities in the scam tainted fund, it might take years to recover
from the initial value of Rs. 10 per unit.

Another big risk of investing in an NFO is also one of the most obvious—the fund has no track
record of success (or failure). While some bullish investors may look at this as an opportunity for
large profits, there is also a serious risk in investing in a fund whose performance you cannot
track.

NFO process:

When a mutual fund Assets Management Company (AMC) announces a public issue of units of
& new fund/scheme, it is called a new fund offer (NFO). The new fund is planned and sources
from where it should be collected and where the amount should be invested is planned by the
AMC. According to the SEBI rules any new fund launched should be approved by SEBI. Once the
AMC get the approval of SEBI for the fund it does the marketing of the fund by it
self or through brokers.

The investors who are willing to invest in a particular fund deposit the amount they plan to invest
in the bank as directed by the AMC. These banks collect the application and amount and direct it
towards the registrar specified by the AMC. From this point India info line came into the picture
as the registrar. The role, responsibilities, activities, forms and reports involved in this process of
NFO is general, are AMC, fund manager, SIP I/c, Switches I/c., NFO Coordinator. Internal auditor,
Systems(S/W) dept. IPO Centre coordinator, IPO-RTI, IPO-EDP, Scanning and Printing &
Dispatching.

Teams involved in the NFO process-

➢ Mutual fund unit

➢ Technology team

➢ Data entry team

➢ Verification team

➢ External audit team

➢ Scanning team

➢ Franking and dispatching team Description

• Bank wise segregation: The India info line branches collect the applications of the
investors across India and abroad for all the branches of the bank that is involved in this
NFO. These applications are sent to India info line processing center, Hyderabad. After
receiving, these applications are segregated bank wise and branch wise.
• IH Numbering: IH numbering is also called as In house Numbering. India info line
gives this IH numbering to those applications. This is done for their convenience in doing
back office functions easily. All the data on the application is entered into systems through
software developed by India info line technology team called K-Bolt. Later on, we can get
any information of a particular application or investor that we require by entering this IH
number.
• Binding: All the applications that are received are given for binding. Binding of
application is done by segregating them according to the bank and branch fro which they
are received. India info line does this Binding because to keep all these applications safe,
out of any damage and miss-place.
• First Entry: After finishing binding of applications they are sent to Date Entry team.
Here the first time entry is done. All the information or date of an investor that is available
on the application like name of the applicant, age, Address, PAN, Bank details, broker
code, sub broker code, email addresses, guardian name, amount invested, name of the
scheme or plan invested in, etc., are entered into the systems of India info line.
• Second Entry: After first entry the data is again sent for the second entry. Here in second
entry, the data that is entered in first entry is checked and the information what ever is
missing is entered.
• Online Matching: After entering the data like applicant, age, Address, PAN, Bank
details, broker code, sub broker code, email addresses, guardian name, amount invested,
name of the scheme or plan invested in, etc., in the first entry and once again in the second
entry it is sent to the online matching. Here in online matching the physical form of
application are kept side by an checking of data that was entered in the first entry and
second entry is done.
• First time verification: Data from online matching is sent to the verification team. This
team verifies mistakes that are left in online matching. Mistakes like blank address, PAN
blank for amount greater than or equal to 50000 RS. Name blank, bank details blank,
invalid or blank broker code etc., are rectified in the first time verification.

• First time CCL: First time check clearing list is in short is called as first time CCL. First
Time CCL is prepared based on the data that is provided after first time verification.

• External Audit: First time check-clearing list is sent to an external audit team. India info
line appoints this team before the NFO processes. They are nowhere related to the
organization. This external audit team will mainly check name of the investor, amount
invested, bank details PAN number, name of the scheme/plan and mode of holding (MOH).
But in total they will check more than 30 characters

• Second time verification: If the external auditing is not satisfied and if they find any
mistakes or missing information they will send the first time CCL for second time
verification. Here they verify the check list once again and mistakes like invalid mode of
folding (MOH), invalid email address, status minor without guardian name, invalid date of
birth for minor, invalid existing account number, blank/null application number, NRI with
blank account type, saving or current, investor signature missing are rectified.

• Second time CCL: Second check the verification team prepares clearing after verifying
the mistakes that are pointed out by the external audit team. After preparing second time
CCL it is again sent to external audit team.
• Integrity Check (NFO team): Check clearing list will be given by the external audit
team to the NFO team in India info line This NFO team in India info line will once again
check further mistakes like spelling mistakes in the name of the applicant etc., and rectify
them.
• Integrity Check (by Audit): After integrity check by the NFO team it is once checked
by the internal audit team of India info line.
• Scanning Default Values, Verification of Mismatch cases: Entire data is filtered at
each and every step and finally it is given to the scanning team for scanning here scanning
team will detect and rectify any further default values and mismatch cases.

• Reconciliation, Rejections and Cheque returns:

Cheques of the investors are sent are sent by the balk to India info line Reconciliation team.
Here this team will verify bank details of the investor like PAN number, bank a/c number,
comparing the amount invested with that of the minimum amount that has to be invested
cheques with out hue signature of the investor bounced cheques etc., and they are rejected.
These rejected cheques are dispatched to the investors. A sample statement of accounts
(SOA) is prepared by this reconciliation team.

• Handling over the data to MFS:

Entire data after getting filtered at each and every step will be handing over to mutual fund
services team. This MFS team will once again verify the data and the final data will come out
any mistakes and default values.

• Porting in Task MF: Task MF is the software developed by India info line Technology
team. It is prepared according to the suggestion given by AMC. This Task MF will
resemble the style or Performa or outlook of the statement of accounts. Final data that they
got after filtering the mistakes and default values is ported in the task MF.
• Allotment of units: Allotment of units is done as per the amount that is invested by
investors. They will avail the units taking the Net Asset Value (NAV) of that particular
scheme as base.
• Sample SOA verification by audit:

Statement of accounts (SOA) is picked up randomly from a huge lot and the audit team does
verification. This verification will result in preparing a statement of accounts which in cent
percent correct and exact. This SOA contains data like:

* Name of the investor

* Address

* Bank details

* Pan Number

* Guardian name

* Broker code

* Sub broker code

* Nominee name

* Nominee addresses

* 2 nd and 3rd applicant name

* Amount invested

* No. Of units allotted

* Fund name, Scheme Name, Plan Name & A/c no

* Transaction type details

* Mode of redemption payment

* Mode of dividend payment

* Mode of dispatch

* Status, occupation.

* Current balance, average price, current cost, current NAV etc.,

• Dispatch of SOA: Statement of accounts (SOA) once prepared is dispatched to the
investor. SOA’s are neatly packed in an envelope and dispatched to the investors by
the dispatch team through courier.

❖ Things to consider as an investor

• Fund House Reputation

If an investor wants to invest in an NFO, it is of utmost importance to do a background check on

the fund house. Ensure that the fund house has a strong history of operating in the mutual fund
industry, say at least 5 years to 10 years. It will help you analyse the kind of performance that the
fund house has delivered during market ups and downs. If the fund house has a good track record,
then the NFO might perform as promised.
• Fund Objectives

The fund objectives spell out the asset allocation, riskiness, expected returns, and liquidity, among
other things. It helps you develop a perception of the viability of the NFO. An NFO needs to clearly
explain its investment process, which it’s going to carry out for the given investment horizon. In
simple words, it means that reading the offer document should help potential investors understand
what the fund manager is going to do with their money. If investors are unable to make out the
objectives of the NFO, then it shows weaknesses in the investment process.

• Theme of New Fund Offer

There are hordes of mutual fund schemes in the Indian mutual fund sector. So it is advised to read
the fine print carefully to understand the fund theme when you come across an NFO. The
investment theme must be sustainable and something not provided by the existing schemes.
However, if you find that the new fund offer is a mere repetition of a current strategy, then it is
probably not a viable option.

• Returns

If you are interested in an NFO, then it is advised to analyse the past returns. The offer document
may or may not touch upon this information. You can set an expected rate of return against which
you can analyse the fund accordingly. In case you have already invested your money in the fund,
you can consider reviewing it quarterly, say for the first three years. You can compare the mutual
fund’s performance with the index and peer funds to understand the returns trend.
• Risk factor

Investing in NFOs could be risky. Unlike existing funds, where you can readily check the asset
allocation and risks involved, NFOs don’t have a performance history. And, you won’t be able to
assess how the fund manager intends to utilise your money. Without any benchmarks or metrics,
it will be difficult for you to predict the fund’s performance. Whether the fund emerges in flying
colours or goes down the drain can remain a mystery.

• Cost of investment

The overall cost involved in investment is one of many parameters that decide your potential
returns. Though there is no entry load, some NFOs charge exit loads if you happen to redeem units
before the completion of the tenure. If the lock-in period is longer than your investment horizon,
then your returns can be affected on account of the exit loads. The expense ratio – the annual fee
charged by the fund house for managing your money – is another crucial parameter. It is advised
to check if the expense ratio is lower or equal to what SEBI mandates.

• Minimum Subscription Amount

NFOs usually specify a minimum subscription amount for the investors. It may range from as low
as Rs 500 to Rs 5,000. As an investor, this can be your primary criteria for shortlisting your
possible investments. If the minimum subscription amount is higher than what you can spare, re-
evaluating your options would be a wise decision. In such cases, you can consider opting for a
systematic investment plan (SIP), in an existing high-performing scheme, which is an affordable
and more convenient choice.

• Investment Horizon

NFOs also come with lock-in periods ranging from three to five years. In such cases, you will be
required to stay invested for the entire tenure. Ensure that your investments are in line with your
investment horizon and goals. Once you have subscribed to a mutual fund scheme, you may not
be able to redeem your units before maturity.
❖ Benefits of Investing in NFO

One should go forward with investing in NFOs because of the benefits and merits they possess.
These are discussed below:

1. Flexibility:
Close-ended funds also offer flexibility to the investor of when to invest in the market. Even if
the timing is not ideal for investment and the NFO is launched at the market peak, the fund
manager can hold a part of investors’ funds to invest them later.

2. Opportunity to Invest in Innovative Funds:

Many AMCs nowadays are coming up with the idea to invest in innovating fund schemes like
the use of hedging strategies, business cycle-based investments, ESG investments, etc. Through
NFO, an investor can get an early opportunity to benefit from the same.

3. Lock-in Support:
Spending time in the market is more important than backing out within a short period of time.
Many investors just spend a few years in the market and end up impairing their gains.
Nevertheless, the lock-in tenure in NFOs, the closed-ended ones helps investors from
indisciplined and hassled investing behaviors.

4. Profit Generation:
As there may exist a significant difference between the NAV and NFO price, it can help the
investor to earn good returns on their investments.

Why Are Investors Choosing the NFO Route to Mutual Funds?

You have many investors opting for equity mutual funds as fixed deposits are offering low-interest
rates. Moreover, many investors missed the stock market rally over the past year and are eager to
invest in equity funds. You also have many individuals working from home due to the COVID-19
pandemic. It helps them save money which they infuse into equity funds.
Investors who missed the equity rally over the past year believe investing in NFOs helps them
take exposure to equities at a low cost. Moreover, you will find investors deploying funds into
NFOs because AMCs offer units at a fixed price of Rs 10 per unit. AMCs heavily market NFOs
which induces investors into these new mutual fund schemes

You have many investors deploying funds into NFOs of balanced advantage funds. It helps you
invest in a mix of equity and fixed income securities based on your investment objectives and risk
tolerance. Investors who don’t have the skills or the time to pick stocks prefer balanced advantage
funds.You also have investors putting money in Flexi-Cap funds through NFOs to get exposure to
stocks of companies across market capitalisation. advantage funds.

You also companies across market capitalization New Fund Offers (NFOs) are generally
introduced when the markets are doing well. As this is the time when more people are attracted to
markets, giving an opportunity to mutual fund companies to make the most of it. This year also,
when markets have mostly done well, several new fund offers were launched by asset management

❖ 5 Reasons for avoiding NFOs

1. They don't have any track record and most of the times mutual funds sell old wine
in new bottle; meaning they launch funds that are pretty similar to ones currently
offered by the fund house.

2. More often than not, NFOs are launched when market momentum is strong,
valuations are stretched, investors' confidence is high and there is good news all
around. This limits the chance of fund managers getting good bargains while
constructing portfolio.
3. NFOs are often sold as Initial Public Offers (IPOs) and investors expect listing or
quick gains. Taking advantage of this tendency, sometimes brokers lure investors
by 10 rupee per unit cost.
4. NFOs have no track record to rely on
5. You always have an option to choose a scheme from the existing ones based on
their track record. NFOs can't provide you any better opportunity unless they have
any extraordinary feature, which is rare to find.

❖ Why Invest in an NFO?

Investing in a New Fund Offer has the following advantages:

• New Strategies: Close-ended funds offer the chance to invest in new and innovative
strategies that existing open-ended funds may not. The Edelweiss Maiden Opportunities
Fund, launched in February 2018 was dedicated to investing in pre-IPO and recently listed
companies. The DSP A.C.E Fund Series 2 and the Kotak India Growth Fund Series 4 were
both launched with innovative hedging strategies which would protect your downside using
put options. Being close-ended, you could have only invested in these funds in the NFO
period.
• Flexibility: Close-ended funds have flexibility in terms of when to invest your money in
the market. In other words, even if the investment timing is bad and the fund is launched
at a market peak, the fund manager can hold on to your funds and invest some of them a
little later. This flexibility helps fund managers outperform.
• Freedom from large flows: Open-ended funds are vulnerable to large inflows and
outflows. A sudden outflow can force the fund manager to sell his stocks at rock-bottom
prices, causing a loss to all unit holders in the fund. On the other hand, investors in close
ended funds are locked-in for the tenure of the fund and the manager can focus on stock
selection and monitoring. You can only invest in a close ended fund through an NFO.
• Lock-in Support: For better returns, the time spent in the market should be considered
more important than timing the market. Most equity fund investors stay invested for only
two years in the market, which greatly impairs their returns. This is simply because it is
difficult for investors to stay immune from market panics and manias. However, the lock-
in provided by close-ended funds of 3-4 years acts as a break, thereby preventing investors
from falling prey to bad investing behaviours.

❖ Difference between NFO and IPO

IPO is the initial offer made by the company to the public for a subscription of
its shares. In comparison, NFO is the first offer of units in a mutual fund scheme just
launched and shown to the investors.
Let us look at the difference between NFO and IPO on three parameters:
• Pricing
Pricing is an essential parameter since it is based on the company's value of past and future
prospects and the company's fundamentals.
The price at which shares are offered helps the investors determine whether they are offered a
discount or premium to its valuations.
Shares that are offered at a discount rate has greater demand in an IPO. On the other hand, in
NFO, the units offered are the face value of the unit. Therefore, these units do not show the
actual value of the investment.

• Performance
A company creating an IPO is in existence and typically engaged in several operations before
stepping into an IPO.
This helps the investors get a clear idea about the company's past performance, strength,
weakness, and market capitalization before planning to invest.
Whereas, in NFO, the investors do not get to see the company's past performance and other
measures to evaluate a company.
They could only look at the performance of other several schemes managed by the fund
manager and fund house that are offering NFO to get a clear understanding of the approach and
philosophy of the fund management.

• Listing price
Once the IPO is over, the price of shares at which they are listed and traded on the stock
exchange depends upon the judgment of the market people on the profitability and prospects of
the company.
On the other hand, the Net Asset Value (NFA) of the scheme in the NFO reflects the securities
of the recent market value held in the portfolio.

• Usage of Funds
In IPO, the funds raised by a particular company is used for several business purposes like
repayment of debts, expansion of the company, or to lower the stake of promoters in the
company.
NFO is launched where fund managers lift all the funds to invest in securities and funds. The
primary objective behind raising funds is to capitalize on a trending theme of investment.

• Listing
IPO is listed in the stock exchange above or below the decided price band. Therefore, if the
price rises up on the listing day, investors can easily secure a good profit.
In NFO, the fund is gathered at the start and then it is invested based on the Net Asset Value
(NAV), which can be below or above the face value.

• Valuation
The valuation of a company entirely depends on the performance, company's value and more.
Whereas in NFO, the total fund is split and invested in the form of units.

• Risk
The risk involved in IPO is an internal risk that can be exposed to the stock market. Whereas in
NPO, the risk appetite is medium to low and considered ideal for all the investors.

• However similar they may seem to be, it is important to note than an Initial Public Offering
is quite different from a New Fund Offer. An IPO is the sale of a company’s shares prior
to its listing on the stock market, whereas an NFO is an offer of a mutual fund scheme’s
units.
• An IPO may be priced above or below the stock’s real value, as dictated by the
fundamentals, which in the case of an NFO cannot be interpreted. The pricing of a mutual
fund is simply dictated by the market value of the units it holds, which is also known as
the Net Asset Value or NAV. This is true during the valid time period of NFO and even
after the fund is launched. So, while investing, you do not have to worry about IPO-like
huge price fluctuations and getting allotment in an NFO.

❖ Guide to Investing in an NFO

Investing in a New Fund Offer is a simple task. The first step that needs to be completed is your
KYC. Once this is done, you may log in to your Paisabazaar account and check for suitable plans
that suit your investment objectives.
Investors find New Fund Offers value for money proposition and hence subscribe to it. NFOs help
the investment companies meet their goals of increased Assets under Management. While
investing in a New Fund Offer, it is suggested that you consider the following points.

• Keep a background check on the fund house. It must be ensured that the fund house you
are investing in, has a substantial history of mutual fund investments.
• Asset allocation, risk involvement, returns expected, etc. are a few important points to be
considered before investing your money in an NFO.
• NFOs are launched for new funds without an established track record, which may bring in
an additional level of uncertainty.
• One must carefully go through the offer document and the investment process that the fund
manager is going to follow. It is of utmost importance to keep yourself updated with what
the fund manager is planning to do with your money.
• Since NFOs don’t have any performance history, it is not possible to track the fund’s
performance. However, while investing, you must be wise enough to go through the returns
aspect. Keep an ideal figure of the expected returns and analyze your fund accordingly.
• The minimum subscription amount for an NFO is an important criteria for deciding which
fund you may want to invest in. Generally, the minimum subscription amount ranges from
Rs. 500 to Rs. 5000.
• Some NFOs might even come with a lock-in period of around 3-5 years. You must be
careful of the time period for which you want to keep your funds locked in and invest
accordingly

SEBI Guidelines on New Fund Offer:

1. Procedure for launching of schemes:

(1) No scheme shall be launched by the asset management company unless such scheme is
approved by the trustees and a copy of the offer document has been filed with the Board.

(2) Every mutual fund shall along with the offer document of each scheme pay filing fees as
specified in the Second Schedule.
2. Disclosures in the offer document:

(1) The offer document shall contain disclosures which are adequate in order to enable the
investors to make informed investment decision [including the disclosure on maximum
investments proposed to be made by the scheme in the listed securities of the group companies
of the sponsor].

(2) The Board may in the interest of investors require the asset management company to carry
out such modifications in the offer document as it deems fit.

(3) In case no modifications are suggested by the Board in the offer document within 21
[working] days from the date of filing, the asset management company may issue the offer
document.

(4) No one shall issue any form of application for units of a mutual fund unless the form is
accompanied by the memorandum containing such information as may be specified by the
Board. 3. Advertisement material:

(1) Advertisements in respect of every scheme shall be in conformity with the Advertisement
Code as specified in the Sixth Schedule and shall be submitted to the Board within 7 days from
the date of issue.

(2) The advertisement for each scheme shall disclose [investment objective for each scheme]

4. Misleading statements:

The offer document and advertisement materials shall not be misleading or contain any
statement or opinion, which are incorrect or false.

5. Listing of close ended schemes:

Every close ended scheme shall be listed in a recognized stock exchange within six months
from the closure of the subscription Provided that listing of close ended scheme shall not be
mandatory.
(a) If the said scheme provides for periodic repurchase facility to all the unit holders with
restriction, if any, on the extent of such repurchase; or

(b) if the said scheme provides for monthly income or caters to special classes of persons like
senior citizens, women, children, widows or physically handicapped or any special class of
persons providing for repurchase of units at regular intervals; or

(c) If the details of such repurchase facility are clearly disclosed in the offer document; or

(d) If the said scheme opens for repurchase within a period of six months from the closure of
subscription.

6. Repurchase of close ended scheme:

(1) The asset management company may at its option repurchase or reissue the repurchased
units of a close ended scheme.

(2) The units of close ended schemes referred to in the proviso to regulation may be open for
sale or redemption at fixed pre-determined intervals if the maximum and minimum amount of
sale or redemption of the units and the periodicity of such sale or redemption has been disclosed
in the offer document.

(3) The units of close ended scheme may be converted into open ended scheme.

(a) If the offer document of such scheme discloses the option and the period of such
conversion; or

(b) The unit holders are provided with an option to redeem their units in full.

(4) A close ended scheme shall be fully redeemed at the end of the maturity period [Provided
that a close ended scheme may be allowed to be rolled over if the purpose, period and other
terms of the roll over and all other material details of the scheme including the likely
composition of assets immediately before the roll over, the net assets and net asset value of the
scheme, are disclosed to the unit holders and a copy of the same has been filed with the Board.
Provided further, that such roll over will be permitted only in case of those unit holders who
express their consent in writing and the unit holders who do not opt for the roll over or have
not given written consent shall be allowed to redeem their holdings in full at net asset value
based price.

7. Offering Period:

No scheme of a mutual fund other than the [initial] offering period of any equity linked savings
schemes shall be open for subscription for more than 45 days 8. Allotment of Units and refund
of money:

(1) The Asset management company shall specify in the offer document

(a) The minimum subscription amount it seeks to raise under the scheme and

(b) In case of over subscription the extent of subscription it may retain Provided that where
the asset management company retains the over subscription referred to in clause , all the
applicants applying up to five thousand units shall be given full allotment subject to the
oversubscription mentioned in clause .

(2) The mutual fund and asset Management Company shall be liable to refund the application
money to the applicants-

(i) If the mutual fund fails to receive the minimum subscription amount referred to in clause
(a) of sub-regulation ;

(ii) If the moneys received from the applicants for units are in excess of subscription as
referred to in clause of sub-regulation .

(3) Any amount refundable under sub-regulation shall be refunded within a period of six
Weeks from the date of closure of subscription list, by Registered A.D and by cheque or
Demand Draft marked "A/C Payee" to the applicants.
(4) In the event of failure to refund the amounts within the period specified in sub-regulation ,
the asset management company shall be liable to pay interest to the applicants at a rate of
fifteen percent per annum on the expiry of six weeks from the date of closure of the
subscription list.

9. Unit certificates or Statement of Accounts:

The asset management company shall issue to the applicant whose application has been
accepted, unit certificates or a statement of accounts specifying the number of units allotted to
the applicant as soon as possible but not later than six weeks from the date of closure of the
[initial subscription list and or from the date of receipt of the request from the unit holders in
any open ended scheme].Provided that if an applicant so desires, the asset management
company shall issue the unit certificates to the applicant within six weeks of the receipt of
request for the certificate.

10. Transfer of units:

(1) A unit certificate unless otherwise restricted or prohibited under the scheme, shall be freely
transferable by act of parties or by operation of law.

(2) The asset management company shall, on production of instrument of transfer together with
relevant unit certificates, register the transfer and return thse unit certificate to the transferee
within thirty days from the date of such production. Provided that if the units are with the
depository such units will be transferable in accordance with the provisions of the Securities
and Exchange Board of India (Depositories and Participants) Regulations, 1996.

11. Dispatch of warrants and proceeds:

Every mutual fund and asset management company shall,

(a) Dispatch to the unit holders the dividend warrants within [30 days] of the declaration of the
dividend.
(b) Dispatch the redemption or repurchase proceeds within 10 working days from the date of
redemption or repurchase.

(c) In the event of failure to dispatch the redemption or repurchase proceeds within the period
specified in sub-clause the asset management company shall be liable to pay interest to the unit
holders at such rate as may be specified by Board for the period of such delay.

(d) Aside payment of such interest to the unit holders under sub-clause the asset management
company may be liable for penalty for failure to dispatch the redemption or repurchase
proceeds within the stipulated time. Wherever an application for a total value of RS. 50,000 or
more, the applicant or in the case of application in joint names, each of the applicants, should
mention his/her permanent account number (PAN) allotted under the Income Tax Act, 1961 or
where the same has not been allotted, the GIR number and the income-tax Circle/Ward/District
should be mentioned. In case where neither the PAN nor the GIR number has been allotted,
the fact of non-allotment should be mentioned in the application form. Any application form
without these details should not be accepted by the mutual fund. The above clarification is
being issued in accordance with Regulation 77 of the SEBI (Mutual Funds) Regulations, 1996.

12. Instructions for filing scheme offer document with SEBI:

As advised in SEBI circular MFD/CIR/06/275/2001 dated July 9, 2001, while filing offer
document for launching a new scheme/revising and filing existing offer document with SEBI,
the mutual funds should highlight and clearly mention the page number of the offer document
on which each of the following observation has been incorporated. In case of any amendment
to Regulations, the new provisions should be incorporated in the offer documents.
❖ Recently launched NFO in bank of baroda
Business cycle approach is an investment based on identifying the economic trend.

• The various business indicators help us understand the economic trend.

• The business cycles have 4 phases; Recovery, Growth, Expansion and Contraction, each
phase are unique Opportunities and Rewards.
BUSINESS CYCLE INVESTING – KEY DIFFERENTIATORS
• Top-Down Approach - Focus on Macro indicators for sector allocation

• Wind Shield Approach - Focus on forward indicators rather than historical data

• Flexible Approach - Exposure to a set of sectors that are beneficiaries from the
economic recovery & is not restrictive in its investment approach

• First Mover Advantage - Based on the lead indicators, opportunities are identified well
ahead of time

• Agility - Investments across sectors are not static in nature & are rotated based on
business cycle phase

What is Business Cycles Investing?

You can skip this section if you are already aware of business cycle theme.

Business cycle has the following phases.

1) Expansion: Strong demand, Capacity utilization above normal, Output growth strong,
corporate profitability very strong, Strong tax revenues, Risk aversion very low
2) Recession: Demand growth starts to slow down, Capacity utilization starts to fall, Output
growth starts trending lower, tax revenues moderating, risk aversion starts to increase.
3) Slump: Demand growth below normal, Capacity utilization much below normal, Risk aversion
very high
4) Recovery: Demand growth starts to pick up, credit growth starts to improve, Tax revenues start
to pick up

It has been observed that over a period, stock returns are largely driven by cyclical factors tied to
Macro economic factors and hence corporate earnings. The business cycle can therefore be a
critical determinant of equity market returns and the performance of equity sectors.

Baroda Business Cycle Fund SID

What is the investment objective of this MF scheme?

The investment objective of the Scheme is to generate long term capital appreciation for investors
by investing predominantly in equity and equity related securities with a focus on riding business
cycles through dynamic allocation between various sectors and stocks at different stages of
business cycles in the economy.

What is the allocation pattern in this mutual fund?

This fund investment pattern is as follows:

Why to invest in the Baroda Business Cycle Fund?

Type of instruments Min % Max % Risk Profile

Equity and equity related instruments

selected on the basis of business cycles 80% 100% High

Other equity and equity related

instruments 0% 20% Medium to High

Overseas equity and equity related

instruments, including ADR, GDR,
or any other type of securities 0% 20% High

Units issued by REITs and InvITs 0% 10% Medium to High

Debt and Money Market Securities 0% 20% Low to Medium

Here are a few reasons to invest in such mutual fund schemes.

1) The mutual fund invests in opportunities that arises during different stages of business Cycle in
the Indian economy. These are unique opportunities where such mutual funds can benefit.

2) In the recent past we are seeing the business cycles getting shortened. This can provide
numerous opportunities.

Some key risk factors you should consider before you invest in such funds

One should consider some of these risk factors / negative factors before investing.

1) It invests in opportunities arising out of various stages in business cycle. This would limit the
capability of the fund to invest in other themes / sectors.
2) It invests based on opportunities arising out of various stages of business cycle that could be
high in one period and lower in another period. Though we have seen the shorter business cycles
in the recent past, the returns could highly fluctuate.

3) Since this scheme invests in specific opportunities for companies in special situations,
concentration risk is extremely high.

4) It invests in overseas equity to the tune of 20% which are high risk along with geo-political risk,
forex conversion risk etc.,

5) It invests in REITs and InvITs which are considered as high risk.

6) You can refer complete risk factors by going through the scheme related documents.

Performance of existing Business Cycle Funds

Currently there are two funds with more than 6 months performance in this segment. Here are the
performance details.

L&T Business Cycles Fund: This fund generated 12%, 56%, 11.4% and 11.3% returns in the last
6 months, 1 year, 3 years and 5 years respectively.
ICICI Pru Business Cycles Fund: This fund generated 10% returns in the last 6 months and 19%
since Jan-2021 (inception)
CASE FOR BUSINESS CYCLE INVESTING

*Strong consumer demand

*Rebust earnings growth after
across sectors as economy
a lost decade
reopens
*Nifty EPS is expected to
*Record low interest rates,
grow 25% CAGR from FY21-23
driving increased investor
vs 7% CAGR in last decade
participation in equities

* Improving GDP growth rate

*Low interest rate scenario *Increased capacity utilization
with centeral banks *Capex revival
supporting growth

Domestic economy is showing initials signs of recovery, although the pace of recovery has been
relatively slow. However, there are several investment opportunities which are emerging & the
Business Cycle Fund could capitalize on them.

BARODA BUSINESS CYCLE FUND – KEY BENEFITS

• A fund which could benefit from the changes in the Economic Cycle
• Investing is based on the Macro-Economic Indicators rather than themes or sectors
• Agility to move across sectors, with no sectoral caps on allocation
• Top-Down Approach with Bottom-up stock selection
BARODA BUSINESS CYCLE FUND – FUND SUITABILITY
• Investors aiming to benefit from the strategic fund positioning based on the business cycle
phase
• Investors aiming to benefit from economic recovery over the next few years
• Investors aiming to add style diversification to their portfolio
• Investors aiming wealth creation through a fund which could provide higher alpha and better
risk-adjusted returns over the long term,
SCHEME DETAILS
• Type: An open-ended equity scheme following the Business Cycles theme.
• Investment Objective: The primary objective of the Scheme is to generate long term
capital appreciation for investors by investing predominantly in equity and equity related
securities with a focus on riding business cycles through dynamic allocation between
various sectors and stocks at different stages of business cycles in the economy. However,
there is no assurance that the investment objective of the Scheme will be achieved.
• NFO Period: Open date : 24th August 2021
Close date :06th September 2021
• Benchmark: BSE 500 TRI
• Plans/Options: Growth Option (default option in case no option is specified by investor)
Income Distribution Cum Capital Withdrawal Option (ICDW)
▪ Pay-out of Income Distribution Cum Capital Withdrawal Option
▪ Re-investment of Income Distribution Cum Capital Withdrawal Option (default
sub-option in case no sub-option specified by investor)
• Fund Managers: Sanjay Chawla (Chief Investment Ocer), Abul Fateh (Fund Manager
& Sr. Equity Analyst) and Pratish Krishnan (Fund Manager & Senior Analyst)
(Dedicated fund manager for overseas investments)
• Min. App Amt: Purchase : Rs. 5,000/- and in multiples of Re. 1/- thereafter per application
during the NFO period.
• Additional Purchase : Rs. 1,000/- and in multiples of Re. 1/- thereafter Re-purchase : No
minimum amount Exit Load*: Redemption/ switch out of units up to 10% of the units
allotted before 1 year from the date of allotment: NIL For Redemption/switch out of units
within 1 year from the date of allotment: 1% of applicable NAV For redemption/switch
out of units after 1 year from the date of allotment : NIL
* The above Exit Load will be applicable on a FIFO (First-In-First-Out) basis, to all subscription
transactions, excluding switch-ins.
Baroda Business Cycle Fund – Should you invest in this NFO?

Baroda Business Cycle Fund invests based on a business cycle’s investment theme. Such
opportunities could be high in one period (e.g., post covid-19) and limited number of opportunities
in another period. The returns can fluctuate year on year. As indicated in our earlier articles, this
is not that exciting theme. High risk investors who still want to test with such themes can invest
for at least 5 years’ time frame. Moderate to low risk takers should stay away from such funds.
New Fund Report

India info line will finally prepare New Fund Report. This new fund report has to be submitted
to the AMC. Then AMC will submit a copy of the same to the SEBI, which is mandatory. The
new fund report details like

Scheme details

* Scheme name

* Scheme type

* Date of opening

* Date of closing the scheme / initial subscription period

* Target amount

* Minimum amount to be raised

2) Subscription / Allotment details

* Number of applications received with in the country

* Number of NRI applications received

* Subscription amount received with in the country

* Subscription amount received form NRI

* Date of allotment of units

3) Initial issue expenses

4) Date of dispatch of refund of refund orders

5) Unit holding pattern

6) Distribution schedule

7) Geographical Dispersion list

Holding profile of applicant:

Particulars Single Joint Anyone Total

No. of applicants 89 0 31 120

% of applicants 74 0 26 100

Mode of holding
100
89
90
80 74
70
60
50
40 31
30 26
20
10 0 0
0
Single Joint Anyone

No. of applicants % of applicants

Interpretation:

It can be seen that majority of the applicants prefer to hold the allotted units individually and
26% prefer to hold anyone/survivors. This corroborates with the age profile of the applicants.
Occupation profile of applicants:

Particular Business Service Student Professional Retired Housewife Others Total

No. of applicants 34 46 2 4 7 23 5 120

% of applicants 28 38 2 3 6 19 4 100

Occupation
50 46
45
40 38
34
35
30 28
25 23
19
20
15
10 7 6
4 5 4
5 2 2 3
0
Business Service Student Professional Retired Housewife Others

No. of applicants % of applicants

Interpretation:

Majority of the applicants are from services personnel at 38%, next comes
business People are 28%. The housewife occupy 3rd highest at 19%. It is found
that professionals and retired are at the lowest.

STATUS:
a) Residential status of individual applicants:

Particulars Resident NRI Total

No. of applicants 104 4 108
% of applicants 96 4 100
Status

104

Resident NRI

Interpretation:

It can be observed from the table and the chart that the majority of applicants are resident
individuals constituting 96% the applicants and remaining 4% are the Non-resident
Indians.

b) Status of non-individuals:

Particulars Partnership AOP/BOI Trust HUF Fll Banks

No. of applicants 1 0 0 10 0 0

% of applicants 10 0 0 80 0 0

Particulars Company Society Fl SME Others Total

No. of applicants 1 0 0 10 0 0

% of applicants 10 0 0 80 0 0
Non Individuals
90 80 80
80
70
60
50
40
30
20 10 10 10 10
10 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0
0

No. of applicants % of applicants

Interpretation:

In the non-individuals category HUF occupied the highest at 80% and next 10% is for
partnerships. In others category 10% is found and all other non- individual entities have
recorded zero applications

Age profile of the applicants:

Particulars Below 18 18-30 31-60 Above 60 Total

No. of 0 30 72 18 120
applicants
% of 0 25 60 15 100
applicants
Age
80 72
70
60
60
50
40
30
30 25
18
20 15
10
0 0
0
Below 18 18-30 31-60 Above 60

No. of applicants % of applicants

Interpretation

The age profile of the applicants shows that the majority of the applicants fall into the

age Group 31-60 years and the percentage of them being 60. This is followed by the age

Group 18-30 years and 15% of the applicants are above 60 years

Investment profile of the applicants:

Particulars 5000- 25001- 50001- Above Total

25000 50000 100000 100000
No. of 78 32 4 6 120
applicants
% of 65 27 3 5 100
applicants
Amont invested
90
78
80
70 65
60
50
40 32
27
30
20
10 4 3 6 5
0
5000-25000 25001-50000 50001-100000 above 100000

No. of applicants % of applicants

Interpretation:

Amount of investment is high at 65% in the range 5000-25000 and it is very low at 3% in
50001-100000, but the next slab. Above 100 has registered 5%.

Scheme profile of applicants:

Particulars Growth Bonus Dividend Dividend Total

option option reinvestment payout

No. of applicants 59 4 37 20 120

% of applicants 49 3 31 17 100
Scheme
70
59
60
49
50
37
40 31
30
20 17
20
10 4 3
0
option option reinvestment payout
Growth Bonus Dividend Dividend

No. of applicants % of applicants

Interpretation:

Majority of the applicants Opted the growth option and the option of dividend
reinvestment is 31%. This means that 80% of the applicants are not investing for income
sake rather they look at the accumulation of profits.

Analysis of mode of payment:

Particulars Cheque DD Total

No. of applicants 119 1 120

% of applicants 99 1 100
Mode of payment
140
119
120
99
100

80

60

40

20
1 1
0
Cheque DD

No. of applicants % of applicants

Interpretation:

The mode of payment reflects upon the quality of applicants. On an average 99% have paid
through cheques and therefore the NFO is able to attract good quality retail investors.

Analysis of type of account:

Particulars SB Current NRO NRE FCNR Total

No. of 119 1 0 0 0 120
applicants

% of 99 1 0 0 0 100
Applicants
Type of account
140
119
120
99
100

80

60

40

20
1 1 0 0 0 0 0 0
0
SB Current NRO NRE FCNR

No. of applicants % of Applicants

Interpretation:

Majority of the payments have been made from Savings Bank account (SB). No payments
have been found from NRO, NRE, and FCNR even though 4% of the applicants are NRI s

Gender profile of the applicants:

Particulars Male Female Total

No. of applicants 89 31 120

% of applicants 74 26 100
Gender
100
90
80
70
60
50
40
30
20
10
0
Male Female

No. of applicants % of applicants

Interpretation:

The female participation in the NFO is low at 26%. The male applicants are very high at
76% as is not normally found in found in institutional invest
QUESTIONNAIR

1. Are you interested in Mutual Funds?

(A)Yes (B)No

2. What is your age group?

(A)25-35 (B)35-45
(C)45-55 (D)55-65

3. In which type of mutual fund do you like to invest

(A)close ended (b) open ended

4. What percent of return do you expect

(a) 10-15 (b) 20-25
(c) 30-40 (d) doubling your amount

1. Which type of fund allocation do you like

(A) 100 percent equity
(B) 80 percent equity & 20 percent debt
(C) 70 percent equity 20 percent debt & 10 percent money market
(D) 100 percent debt
2. In which of the UTI scheme you have invested

(a)UTI wealth builder fund

(b)UTI infrastructure advantage fund
(c)UTI long term advantage fund
(d)none

3. Are you satisfied with the returns of which uti is giving

(A) Yes (b) no
(c)cannot say

4. Do you advice people to invest in mutual funds (a)yes

(A) Yes
(B) No (c)cannot say
SUGGESTIONS AND RECOMMENDATION 
➢ The most vital problem spotted is of ignorance. Investors should be made aware of the
benefits. Nobody will invest until and unless he is fully convinced. Investors should be
made to realize that what they are losing by not investing.

➢ Mutual funds offer lots of benefit which no other single option could offer. But most of
the people are not even aware of what actually a mutual fund is? They only see it as
just another investment option. So the advisors should try to change their mindsets.

➢ The advisors should target for more and more young investors. Young investors as well
as persons at the height of their career would like to go for advisors due to lack of
expertise and time.

➢ Baroda Mutual Fund needs to give the training of the Individual mutual fund about the
Fund/Scheme and its objective, because they are the main source to influence the
investors.

➢ Before making any investment Mutual fund should first enquire about the risk tolerance
of the investors/customers, their need and time (how long they want to invest). By
considering these three things they can take the customers into consideration.

➢ Younger people aged under 35 will be a key new customer group into the future, so
making greater efforts with younger customers who show some interest in investing
should pay off.

➢ Customers with graduate level education are easier to sell and there is a large untapped
market there. To succeed however, advisors must provide sound advice and high
quality.
➢ Systematic Investment Plan (SIP) is one the innovative products launched by Assets
Management companies in the industry.

➢ SIP is easy for monthly salaried person as it provides the facility of do the investment
in EMI. Though most of the prospects and potential investors are not aware about the
SIP.

➢ There is a large scope for the companies to tap the salaried persons.

➢ SIP is more comfortable then lumpsum because in India there is bit difficult to trust on
other person.
FINDINGS AND CONCLUSION
➢ In Jaipur the investors in the Age Group of 36-40 years were more in numbers. The
second most Investors were in the age group of 41-45 years and the least were in the
age group of below 30 years.

➢ In family Income group, between Rs. 20,001- 30,000 were more in numbers, the
second most were in the Income group between Rs.30,000-40,000 and the least were
in the group of below Rs. 10,000.

➢ About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed Deposits,
Only26% Respondents invested in Mutual fund.

➢ Mostly Respondents preferred High Return while investment, the second most
preferred Low Risk then liquidity and the least preferred Trust.

➢ Only 30% Respondents were aware about Mutual fund and its operations and 60%
were not.

➢ Among 100 Respondents only 26% had invested in Mutual Fund and 74% did not have
invested in Mutual fund.

➢ Most of the Investors had invested in LIC and preferred to invest in that due to security.

➢ Out of 26 investors of Baroda mutual fund 41% have invested due to its association
with the Brand Baroda, 29% Invested because of Advisor’s Advice and 30% due to
better return.

➢ Most of the investors who did not invested in BOB due to not Aware of BOB, the
second most due to risks.
➢ For Future investment the maximum Respondents preferred Reliance Mutual Fund,
the second most preferred ICICI Prudential, SBIMF has been preferred after them.

➢ 25% Investors preferred to Invest through Financial Advisors, 15% from their
colleagues and 55% through Bank.

➢ 15% preferred One Time Investment and 85% preferred SIP out of both type of Mode
of Investment.

➢ The most preferred Portfolio was GOLD, the second most was EQUITY and the least
preferred Portfolio was Debt portfolio.

➢ Maximum Number of Investors Preferred Growth Option for returns.

BIBLIOGRAPHY

➢ www.barodamutualfund.com

➢ www.investor.gov

➢ www.hdfcfund.com

➢ www.amfindia.com

➢ www.investopedia.com

➢ www.financialexpress.com