Illustration: Binay Sinha

The passive mutual fund (MF) area is seeing a spurt in motion as fund homes are choosing the index fund path to launch differentiated choices. After Mirae Asset MF and Tata MF, Motilal Oswal MF is gearing as much as launch a set of ‘trade first’ index funds.

The fund home has sought the Securities and Alternate Board of India’s (Sebi) approval for 4 index funds, which can monitor the sectoral mid- and small-cap Nifty indices just like the MidSmall Monetary Providers Index, MidSmall Healthcare Index, Nifty MidSmall IT and Telecom Index, and MidSmall India Consumption Index.

Mirae Asset MF launched the Nifty Smallcap 250 Momentum High quality 100 ETF in February and filed papers for the Nifty MidSmallcap 400 Momentum High quality 100 ETF later in the identical month.

These schemes, if launched, would be the first within the trade.

On Monday, Tata MF introduced six new fund choices (NFOs), of which three index funds — Nifty 500 Multicap India Manufacturing 50:30:20 Index Fund, Nifty 500 Multicap 50:30:20 Infrastructure Index Fund, and Nifty MidSmall Healthcare Index Fund — have been the primary within the trade.

The innovation within the passive fairness area has gained tempo as most giant and medium-sized MFs have accomplished their energetic product suite. Within the energetic fairness area, fund homes have the choice to launch a number of choices within the thematic class. Nevertheless, MF executives say that the chances are larger within the passive area.

“In passives, you possibly can launch a number of differentiated merchandise. The funds might be based mostly on any theme or a sector, market-cap, or perhaps a issue like momentum, high quality, and development. The thought is to seize potential alternatives that may make sense for buyers,” stated Anand Varadarajan, head of institutional shoppers, banking, different investments, and product technique at Tata AMC.

The launches and proposals present that MFs need to differentiate by combining elements and sectors. There at the moment are almost 130 index funds. Nevertheless, the highest 10 schemes account for over 64 per cent of the entire property inside index funds. The highest 10 schemes, of which 9 are plain vanilla index funds monitoring the Nifty50, Sensex, Nifty Next50, and S&P 500, handle Rs 67,400 crore out of the entire Rs 1 trillion.

First Revealed: Apr 12 2024 | 7:41 PM IST