Sundaram MF starts filling product gaps; launches equity savings fund

Expects lower subscription due to change in commission structure

Sundaram MF on Thursday announced the launch of new fund offer (NFO) -- Sundaram Equity Savings Fund. This will be an open-ended scheme that will invest in a mix of equity, debt and arbitrage. 

Sunil Subramaniam, managing director of Sundaram MF, expressed that with upfront commission recently getting scrapped, the NFO collection may be limited.

"Distributors are reviewing their own business models. In this situation, we have a more realistic collection expectation of up to Rs 1.5 billion," Subramaniam added.

The fund aims to meet the retail investors' asset-allocation needs. The fund will run on a three-pronged strategy that will invest in equity for capital appreciation and high-quality credit instruments for consistent income generation and take exposure to stock futures for hedging and arbitrage opportunities.

"Now with the upfront commission going away, it is difficult to assess how much distributor/advisor will be able to give specialised solutions to retail investors and do their risk-profiling. Retail investors will now depend on manufacturers for products that can help with asset-allocation," Subramaniam said.

The fund will be managed by three fund managers -- S Krishna Kumar, chief investment officer (equity), Sundaram MF, S Bharath, fund manager (equity) and Dwijendra Srivastava, chief investment officer (fixed income). 

The performance of the scheme will be benchmarked against Nifty Equity Savings Index. 

As gross equity exposure will be maintained at 65 per cent, the fund will enjoy the equity taxation benefit. Around 80 per cent of the equity exposure will be towards large-caps, while the fixed-income exposure will be largely towards AA-rated credit papers. 

The NFO will be open for subscription between November 16 and November 30. On future product launches, Subramaniam said, the fund house will try to fill the gaps in its product basket over three years' time.

"We will continue with our innovations. As long as it makes sense for investors, we will continue to launch innovative thematic funds. But, we will also fill all these plain-vanilla gaps," he said.

Some of these gaps for Sundaram MF include an open-ended multi-cap fund, a balanced advantage fund, a value fund and a contra fund.