![](\"https:\/\/im.rediff.com\/money\/2022\/oct\/18mf1.jpg?w=670&h=900\")
<\/p>\nThe launch of new schemes by mutual funds (MFs) has decelerated due to changes in debt fund taxation.<\/p>\n
<\/p>\n
During the first half (H1) of this financial year (April–September 2023), fund houses introduced a total of 73 new fund offerings (NFOs), compared to 183 in the second half (H2) of 2022-23, or FY23 (October–March), according to data from the Association of Mutual Funds in India.<\/p>\n
However, a higher proportion of equity and hybrid fund launches has driven up average collections.<\/p>\n
NFOs in the ongoing financial year have averaged approximately Rs378 crore, compared to around Rs 226 crore in H2FY23.<\/p>\n
In total, NFOs collected approximately Rs 27,600 crore in H1 of 2023-24 (FY24), compared to roughly Rs 41,300 crore in the preceding six-month period.<\/p>\n
Debt funds, including both open-ended and closed-ended, comprised the majority of NFOs in FY23.<\/p>\n
However, with changes in taxation, new debt fund launches have declined.<\/p>\n
In FY23, there were a total of 79 active and 64 passive debt fund launches.<\/p>\n
In comparison, there have been only seven debt fund launches in the first six months of FY24.<\/p>\n
With debt funds losing their tax advantage, MFs have been banking on higher offtake for hybrid schemes.<\/p>\n
MFs introduced nine schemes in various hybrid categories, primarily in the balanced advantage, multi-asset, and arbitrage spaces, in the first six months of FY24.<\/p>\n
Fund houses have also aimed to differentiate their products from both asset allocation and taxation perspectives.<\/p>\n
Two fund houses, 360 ONE and WhiteOak Capital, introduced their schemes in a lesser-known category known as a balanced hybrid.<\/p>\n
These schemes differ from balanced advantage funds (BAFs) in terms of their flexibility for fund managers to shift allocations between equity and debt.<\/p>\n
In balanced hybrid funds, fund managers must maintain a minimum 40 per cent allocation to both equity and debt.<\/p>\n
In contrast, in BAFs, fund managers are free to decide the proportion of equity and debt, although most BAFs maintain a minimum of 65 per cent equity exposure to qualify for equity taxation.<\/p>\n
Equity scheme launches were also prominent during the period, driven by positive equity market sentiment.<\/p>\n