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SEBI has proposed that, a Mutual Fund New Fund Offer (NFO) will be approved only if it is able to attract a minimum level of investor interest. To be specific, it will be approved only if a certain amount of minimum corpus is invested in it by the public. For Equity Oriented funds, this amount is Rs. 10 Crores. For Debt Oriented funds, this amount is Rs. 20 Crores.
This essentially means that, lets say ABC MF launches a new fund "ABC Dynamic Equity Multiplier" to the public and the overall corpus to begin with is only 8.5 Crores. In such a situation, ABC MF's NFO Request will be Rejected. They have to return all the money collected by them
What else can I help you with?
Why did sebi come up with a new ruling on mf nfos?
Have you ever tried to view details on the total number of mutual funds available for purchase in India? If you haven't, I strongly suggest you visit www.amfiindia.com and check out the sheer number of mutual fund houses and the thousands of mutual funds available for us. There are 50+ Mutual Fund houses and even if consider each fund house has one fund for each fund category, we are looking at atleast a 1000 funds. SEBI feels that, fund houses just offer NFOs to attract investments and then lose interest in the fund if it doesn't attract sufficient funds (As per their considerations). They devote very little interest on such funds and the investor interest is forgotten. Such funds generate dismal returns and investors lose their hard earned money. So, SEBI feels that, if a fund house fails to honor its commitment to investors in one fund, they may not be able to generate investments for any of their subsequent new funds and hence, they will take their jobs more seriously and always take investor interest as the primary factor when it comes to managing the funds.
How do you contact the release group 2HD?
They used to have a Cryptomail e-mail address in the NFOs to contact them, but since Cryptomail went down, they haven't given another e-mail address. I would just be patient and watch their releases until they give another e-mail.
How does a FMP work?
FMPs are debt schemes, where the corpus is invested in fixed-income securities. The tenure can be of different maturities, from one month to three years. They are closed-ended in nature, which means that once the NFO (new fund offer) closes, the scheme cannot accept any further investment. These FMP NFOs are generally open for 2 to 3 days and are marketed to corporates and high net-worth individuals. Nevertheless, the minimum investment is usually Rs 5,000 and so a retail investor can comfortably invest too. FMPs usually invest in certificate of deposits (CDs), commercial papers (CPs), money market instruments, corporate bonds and sometimes even in bank fixed deposits. Depending on the tenure of the FMP, the fund manager invests in a combination of the above-mentioned instruments of similar maturity. Say if the FMP is for a year, then the fund manager invests in instruments that would be maturing in one year. The prevalent yield minus the expense ratio, which varies from 0.25 to 1 per cent, will be the indicative return which can be expected from the FMP. The expense ratio is mentioned in the offer document. The yield can be indicated fairly accurately because these schemes are open only for a short while. The fund received is for a pre-specified tenure and the exit load from this plan is high (usually 1 per cent to 3 per cent, depending on the time of redemption). So, the fund manager has the liberty to deploy most of the funds mobilized under the scheme as per his investment decision. The actual return can vary slightly, if at all, from the indicated return. Against that, a bank fixed deposit exactly prints the amount which is due to you on maturity on the FD receipt. However, FMPs do earn better returns than fixed deposits of similar tenure. Since FMP's and Bank deposits both invest in debt products the returns earned would be more or less similar. But the FMP's always earn a better return than a Bank deposit
