MF industry's digital drive helps in collections of new fund offerings

The digital capability of the MF industry has helped NFOs have a wider access to different parts of the country, despite the current lockdown conditions

The digital drive undertaken by the mutual fund (MF) industry and distributors is helping collections of new fund offerings (NFOs), even as parts of the country are still witnessing a partial lockdown.

Recently, Nippon India Multi-Asset Fund saw a collection of Rs 720 crore for its NFO. Executives of Nippon India MF said around 60 per cent of applications were made through digital modes.

According to industry participants, the digital capability of the MF industry has helped NFOs widen their access to different parts of the country, despite the restrictions following the outbreak of Covid-19.

“The digital model helps gain scale, as one can penetrate deeper and go into smaller cities. The success of our NFO can be attributed to educating our distributor partners on acquiring and servicing investors digitally, and continuous investment in our digital assets,” said Saugata Chatterjee, co-chief business officer, Nippon India MF.

For Nippon India MF’s NFO, over 80,000 investors across 370 locations participated in the offering.  

Industry players are of the view not just direct MF platforms, such as Paytm Money and Groww, are contributing to NFO collections, but also the adoption of digital channels by MF distributors.

Among other fund houses, Baroda MF has launched an NFO of large- and mid-cap funds in August. On Monday, Union MF floated a medium duration fund, which will see its NFO close on September 7.

 

 

“We have seen the step-up by exchanges on their MF platforms. This has played an important role in helping independent financial advisors (IFAs) to route their clients’ investments in the current environment,” said Swarup Mohanty, chief executive officer of Mirae Asset Management Company.
 

Mirae AMC had a banking and PSU debt fund in July which mobilised Rs 204 crore. Among other NFOs, HSBC Focused Equity Fund saw a collection of Rs 509 crore in July.

The lockdown was expected to create major disruptions in the MF industry as MFs were forced to shut their branches. However, MF platforms operated by the BSE and the National Stock Exchange (NSE) allowed smooth operations for IFAs, even though branches had become inaccessible.

In some cases, offline-focused IFAs in smaller cities had requested MFs to delay their NFOs, as they wouldn’t be able to participate during the lockdown.

While digital modes have facilitated the NFO participation, industry experts say the sharp market bounce-back has kept investor sentiment afloat.

Since March 23 lows, the frontline indices — Sensex and Nifty — have gained about 50 per cent each.
 

The Securities and Exchange Board of India (Sebi) has also been nudging the MF industry to adopt more digital-focused avenues to make it easier for investors to buy and sell MF units.  

Earlier in the year, Sebi issued a circular stating that it had decided to allow investors to directly access infrastructure of the recognised stock exchanges to purchase and redeem MF units directly from asset management companies.