Mutual fund houses launched 10-12 equity new fund offers (NFOs) every month in the last three years. Last month, 9 open-ended mutual fund NFOs were floated in the market, which together collected Rs 1,532 crore. On Tuesday, DSP Mutual Fund announced the launch of DSP Nifty Bank Index Fund, an open-ended scheme tracking Nifty Bank Index. Earlier this week, WhiteOak Capital Mutual Fund and SAMCO Mutual Fund announced their special opportunities funds that are designed to harness specific market scenarios.
DSP Nifty Bank Index Fund
DSP Nifty Bank Index Fund is an open-ended scheme tracking Nifty Bank Index. It offers investors an opportunity to get exposure to the 12 most liquid and large Indian banking stocks through a single fund. Nifty Bank Index is diversified with a composition of private and public sector banks.
The New Fund Offer for DSP Nifty Bank Index Fund has opened for subscription on May 15, 2024, and will close on May 27, 2024.
Historically, the Nifty Bank Index has delivered much better long-term returns compared to the broader Nifty 50 Index. Since January 2000, the Nifty Bank Index has grown 67 times compared to the Nifty 50 which grew 21 times over the same period.
However, the Nifty Bank Index is currently witnessing the longest stretch of underperformance compared to the Nifty 50 on a 5-year rolling basis which has led to it being relatively better placed in terms of sector valuations versus their own historical averages as well as relative to other sectors.
"A robust banking system is the key to economic growth and development, especially for a fast-growing country like India. At DSP, we endeavor to bring the right products at the right time for our investors. We recommend DSP Nifty Bank Index Fund to investors with longer time horizons, especially based on the long-term performance of the Nifty Bank Index," said Anil Ghelani, CFA, Head – Passive Investments & Products, DSP Mutual Fund.
“DSP is a serious player in the Passive Investments segment with a dedicated investment team as well as business team. We are gradually expanding our product range and with this launch we will have 22 products available for your investment allocation across all asset classes – Equity, Debt, Commodities, and the entire market with a wide range of products of index funds, ETFs and rules based smart beta products,” said Gurjeet Kalra, Business Head - Passive Funds, DSP Mutual Fund.
WhiteOak Capital Special Opportunities Fund
WhiteOak Capital Mutual Fund on May 14 launched WhiteOak Capital Special Opportunities Fund, which is an open-ended equity scheme that will be following special situations theme. The NFO opened on May 15 and close on May 29, 2024.
The fund investment objective is to generate long-term capital appreciation by investing in opportunities presented by special situations such as corporate restructuring, including mergers and acquisitions; government policy and regulatory changes; technology-led disruption and innovation; new trends; new and emerging sectors; companies and sectors going through temporary unique challenges; and other similar instances. The scheme is benchmarked against S&P BSE 500 TRI Index.
The fund will focus on being ahead of the curve i.e. identifying Special Situations well in advance and capitalising on them before the market fully factors in the outcome. It will adopt a bottom-up approach of investing, carefully selecting stocks and maintaining a diversified portfolio within the theme, ensuring a balanced investment strategy, by focussing on specific news, events, incidence that can impact a particular stock, sector or economy.
Ramesh Mantri, CIO of WhiteOak Capital Asset Management, said: “With this special opportunities fund, the purpose is to capitalize on opportunities arising from a unique situation such as opportunities or challenges faced by a company, sector, or economy which may create a temporary disruption in the price. Opportunities arises if a transient, easily fixed issue has a negative impact on the stock price or if the stock price has not completely reflected a positive development.”
Samco Special Opportunities Fund
SAMCO Mutual Fund launched Samco Special Opportunities Fund, which is built on unique proprietary disruption model that has 10 distinct sub-strategies, each designed to uncover special situations within diverse themes. The fund capitalizes on market inefficiencies, aiming for long-term capital growth through undervalued or overlooked opportunities.
The investment objective of the scheme is to achieve long-term capital appreciation by investing in a portfolio of securities that are involved in special situations such as restructurings, turnarounds, spin-offs, mergers & acquisitions, new trends, new & emerging sectors, digitisation, premiumisation, and other special corporate actions.
The scheme will open on May 17 (Friday) and closed on May 31, 2024.
Samco Special Opportunities Fund vs Equity categories (Smallcap, Midcap, Flexicap)
The Samco Special Opportunities Fund demonstrates dynamic flexibility, crucial for navigating the ever-changing landscape of sectors and themes in the investment world. Its adaptability allows it to swiftly shift focus across diverse areas such as defence, energy, railways, pharmaceuticals, and infrastructure, capitalizing on the best opportunities as they emerge rather than sticking to just one theme.
This strategic flexibility ensures that the fund can adapt to and thrive in the fluid nature of market trends, offering a robust advantage to investors seeking diversified exposure and potential growth across varied sector, for compounding their wealth.
The fund is designed to be universe agnostic, meaning it does not limit its investment scope to companies of a specific market capitalization. This strategy allows the fund to explore and capitalize on special situations across the entire market spectrum, from large-cap to micro-cap companies.
By not confining itself to a particular segment, the fund is able to pursue a wide range of investment opportunities wherever they may arise, enhancing its potential for capital appreciation by tapping into diverse and sometimes underexplored areas of the market.
Viraj Gandhi, CEO of SAMCO Mutual Fund, highlighted the fund's flexibility, allowing it to pivot across sectors and themes to capture emerging trends.
Umeshkumar Mehta, CIO of SAMCO Mutual Fund, also mentioned the tax efficiency and diversification advantages of the SAMCO Special Opportunities Fund.
Taxation of Samco Special Opportunities Fund
For taxation purposes, Samco Special Opportunities Fund is treated as an equity scheme and taxed accordingly.
Short-term capital gains (STCG) tax: If you sell your units within 12 months of purchase, the capital gain will be classified as STCG, and tax will be levied at 15%.
Long-term capital gains (LTCG) tax: If you sell your units after 12 months of purchase, the capital gain will be classified as LTCG. Every financial year, the first Rs. 1 lakh long-term capital gain will be exempt from taxation. The incremental long-term capital gain above Rs.1 lakh will be taxed at 10%.