1. A lot of fire in the traditional NFO-Existing Fund debate will, hopefully, get quenched with the new Sebi circular, as far as open-ended funds are concerned, because it's One Category-One Fund mandate prevents AMCs from offering NFOs where they already have a presence, under any pretext whatsoever.
2. Sebi, however, allows them to participate in other categories as well, hence we can expect a spate of NFOs in most categories in future, as even the biggest AMCs don't have presence in all of them yet.
3. Therefore, the new debate could shift to what these NFOs offer, in "pre-standardized" categories, as they would belong to reputed AMCs, with star fund managers, who may be given the "additional charge" of handling these NFOs too.
4. Currently, Existing Funds enjoy patronage by investors due to:-
a) Being tested products with past track record,
b) User experience feedback with fund ratings,
c) Known underlying portfolios to decide selection,
d) Known expense ratios and AUMs, and
e) SIP facility from the first investment itself.
6. Having said that, Existing Funds have often suffered due to:-
a) Accumulation of "baggage" with time, reflected in their NAVs,
b) Bad decisions of several previous fund managers, and
c) Unending cash flows (in and out) causing management discomfort.
7. Only time will tell whether the several forthcoming NFOs of these established AMCs be game-changers (especially where Existing Funds are lesser) by offering a cleaner slate with no previous "baggage", but having no declared portfolio, no price advantage, and higher initial expense ratios due to their smaller AUMs.
2. Sebi, however, allows them to participate in other categories as well, hence we can expect a spate of NFOs in most categories in future, as even the biggest AMCs don't have presence in all of them yet.
3. Therefore, the new debate could shift to what these NFOs offer, in "pre-standardized" categories, as they would belong to reputed AMCs, with star fund managers, who may be given the "additional charge" of handling these NFOs too.
4. Currently, Existing Funds enjoy patronage by investors due to:-
a) Being tested products with past track record,
b) User experience feedback with fund ratings,
c) Known underlying portfolios to decide selection,
d) Known expense ratios and AUMs, and
e) SIP facility from the first investment itself.
6. Having said that, Existing Funds have often suffered due to:-
a) Accumulation of "baggage" with time, reflected in their NAVs,
b) Bad decisions of several previous fund managers, and
c) Unending cash flows (in and out) causing management discomfort.
7. Only time will tell whether the several forthcoming NFOs of these established AMCs be game-changers (especially where Existing Funds are lesser) by offering a cleaner slate with no previous "baggage", but having no declared portfolio, no price advantage, and higher initial expense ratios due to their smaller AUMs.