The plethora of new mutual fund schemes is sure to leave investors foxed, especially because of their similar features. So how does one choose the fund to invest in?
The first thing to do is to opt for a performer fund house. According to analysts, an asset management company, which has given consistent returns across many schemes and whose management style has stood the test of time can always be expected to deliver, so go for schemes from such a firm.
Recent launches include HDFC Core and Satellite Fund, SBI Emerging Business Fund, Kotak Opportunity Fund, Prudential ICICI Discovery Fund, Sundaram Leadership Fund, HDFC Multiple Yield Fund, Standard Chartered MF's All Seasons Bond Fund. Tata Mutual's Dividend Yield Fund is awaiting clearance from the Securities and Exchange Board of India.
Interestingly, an overview of the recent launches does not give any clear answers on how the new schemes differ from one another.
SBI's Emerging Business Fund, an open-ended growth fund (the IPO closed on September 17), aims to "focus its investments in emerging business themes, primarily based on export/ outsourcing opportunities and/ or global competitiveness of such themes."
SBI Mutual Fund's chief investment officer N Sethuram says, "The fund will invest in sectors where opportunity is unfolding now and can result in market-cap increasing manifold. Pharmaceuticals and textiles, for instance, will be the focus of the fund." It will also focus on emerging domestic investment themes as well.
Birla Mutual Fund's India Opportunities Fund runs on a somewhat similar theme. The fund aims to "identify companies that seek to utilise India's low-cost and high-quality resources to service the needs of global customers."
Kotak Mutual's Kotak Global India also has similar objectives.
HDFC Mutual launched a Multiple Yield Fund, which was soon followed by Tata MF's plans to launch its own dividend yield fund.
According to HDFC Mutual, equity investments in the scheme "will be made primarily in moderate to high-dividend yielding stocks of well-managed companies, which have a sound performance record and where dividends are expected to be maintained or even to grow" -- a theme similar to the Tata fund, which says it "will invest in scrips that will have a relatively high dividend yield."
According to the managing director of a leading retail investment firm, most new schemes are nothing but old wine in new bottles. "They merely indulge in window dressing," he says, adding that it's the brand name of a fund house that sells in the market, rather than the quality of new schemes.
Also there is no need to invest in an IPO, unless you need the product in your portfolio. Only if the product is unique is it better to invest in an IPO. According to Chaturvedi, there are several reasons for a fund house to launch an IPO.
"It could be a new product idea that could benefit investors," says he. "Not just a few investors, but a sizeable chunk of investors should be attracted to the fund to make it work."
Funds also launch schemes to fill up gaps in their product portfolio. In short, go for a mutual fund IPO if it is unique and in line with your risk profile.
In case you are not sure, it is always better to entrust your money to existing funds with a good track record, say market analysts. The key to successful mutual fund investment is to follow the same old thumb rules: define your investment objectives, decide your asset allocation based on your risk profile, and then give the fund manager time to perform.Powered by 
