Mutual fund themes that turned up in 2019
Several schemes have arisen in the mutual fund industry in 2019. These themes existed based on new processes that took a passive investment route. In this post, we would look into the new schemes that emerged this year. Also, learn about how the mutual fund themes that turned up in 2019, played out so far.
Quant funds is one of the mutual fund themes that turned up in 2019
Generally, quant funds work on a mathematical model. Quant investment focuses on removing the fund manager bias from the process. Each fund follows its own rules to identify stocks. Many fund houses, including DSP Mutual Fund, Nippon India Mutual Fund, and Quant Mutual Fund, came up with different versions of this scheme. The fund came into existence in June 2019. It has gathered an approximate AUM of Rs 150 crores.
ESG (Environment, Social and Governance) Funds
Eventually, many mutual fund schemes rushed into the ESG segment in 2019. A few filed drafts with SEBI, while the rest managed to launch the schemes. SBI in spite of the SBI Magnum Equity Fund launched SBI Magnum Equity ESG Fund. Also, Kotak Mutual Fund and ICICI Prudential Mutual Fund have filed documents with SEBI for their ESG products. Mutual fund advisors and market experts guessed that ESG would turn out better for the future as it is new in India. However, ESG investing includes building a portfolio that would meet high environmental, social, and governance standards.
In the Indian Mutual Fund Industry, Index Funds may not emerge as a new product. However, 2019 has seen intensified interest in passive investment schemes. The outperformance of the funds and ETFs over-actively managed large-cap schemes in 2018-2019. It made the case of index investing stronger. Many index schemes and ETFs came into existence in 2019. However, Motilal Oswal Mutual Fund finds a special place. Namely, the funds include Motilal Oswal Nifty Midcap 150 Index Fund and Motilal Oswal Nifty Smallcap 250 Index Fund.
Mutual Fund advisors believe that small and mid-cap active funds have had an edge of alpha over these schemes. Besides, they also echoed that these index schemes come into use by retail investors as low cost in the future.
To begin with, Kotak Mutual Fund came up with a scheme called Kotak Pioneer Fund. Accordingly, it invested in those companies that would utilize new forms of production. Namely, technology, distribution, or processes. Mutual fund advisors opinioned that such schemes with such narrow investment would not turn out better for retail investors.