Page 18 - Banking Finance January 2020

MUTUAL FUND

Sebi releases norms for Principal Mutual Fund introduces mid cap fund
mutual fund investment Principal Mutual Fund has launched a new fund called Principal Midcap Fund.
The NFO of the Principal Midcap Fund closed on Decem-
in minors' name ber 20. The scheme offers features like SMART and My

Sebi has recently brought a frame- Gain, a communication from the fund house said.
work for According to a press release, “SMART is an exclusive
making in- facility that is available during the NFO period. This fa-
vestment cility staggers a lumpsum investment to mitigate mar-
in mutual ket-timing risk. Through the SMART facility, investors can stagger their invest-
funds in ment in Principal Midcap Fund into four equal instalments, only 25% of the ap-
the name plication money is invested upfront in Principal Midcap Fund while the remain-
of minor through guardian and to ing 75% is invested in Principal Cash Management Fund.”
ease the process for transmission of
such schemes. The move is aimed at If the benchmark index falls 3% from the date of allotment, the SMART facility
bringing uniformity in such invest- gets activated and 25% of the initial investment is automatically shifted to Prin-
ment process across asset manage- cipal Midcap Fund else the switch takes place from Principal Cash Management
Fund to Principal Midcap Fund at the month end. In a nutshell, this facility helps
ment companies (AMCs).
reduce the risk of timing the market.
The regulator said payment for in-
vestment by means of cheque, The press release also said, “My Gain facility allows investors to set a target
demand draft or any other mode rate of return to activate auto trigger which automatically shifts the amount of
will be accepted from the bank ac- appreciation to another fund of the investor’s choice when the target return is
count of the minor or from a joint achieved.”
account of the minor with the guard-
ian only. For existing folios or Motilal Oswal Mutual Fund introduces two large cap
investor accounts, AMCs need to in- index funds
sist upon a change of pay-out bank
mandate before redemption is pro- Motilal Oswal Asset Management Company has recently introduced two large
cessed. cap Index funds: Motilal Oswal Nifty 50 Index Fund
and Motilal Oswal Nifty Next 50 Index Fund. The
Upon the minor attaining the status NFO for these two funds opened between Decem-
of major, the minor in whose name
ber 3 and December 17. Aashish Somaiyaa, MD &
the investment was made, shall be
CEO, MOAMC said, “These launches are in con-
required to provide all the KYC de- tinuation of our recent efforts to retailize passive
tails, updated bank account details investing through investorfriendly open-ended in-
including cancelled original cheque dex fund formats with ability to size at a bite size as low as Rs 500.”
leaf of the new account.
“We have received enthusiastic response to our index fund launches as they have
Further, no further transactions gained prominence amongst digitally savvy DIY investors as well as distributors
shall be allowed till the status of and advisors who take low cost tools for asset allocation and financial planning
the minor is changed to major, the
very seriously,” he added.
regulator noted. Sebi has asked
AMCs to build a system control at the The likely performance of large cap mutual funds have been a cause for con-
account set-up stage of Systematic cern since the re-categorisation exercise carried out by Sebi two years ago. After
Investment Plan (SIP) and Systematic the exercise, these schemes were mandated to invest in top 100 stocks by
Transfer Plan (STP) on the basis of market capitalisation. Mutual fund advisors and analysts fear that the restricted
which, the standing instruction is sus- investment universe would cap the alpha-generating capabilities of large cap
pended when the minor attains ma- mutual funds. The narrow rally in the market in the last one and half years also
jority, till the status is changed to resulted in many actively-managed large cap schemes losing out to passively-
major. managed large cap index funds by a wide margin.

18 | 2020 | JANUARY | BANKING FINANCE