here are two new mutual funds market.
No, we are not referring to mid-cap funds which every mutual fund house seems to be dishing out. These are equity funds with a twist.
GenNext Fund
Brought out by Birla Sun Life, this fund will solely invest in companies that cater to the youth.
According to BSL, 55% of the Indian population is below the age of 25 and, in the next few years, the 14 to 30 year age group will form our population's largest segment.
They have a higher disposable income, high indulgence level and high consumption of high-value and branded products.
So, what's the fund manager going to do?
Simple. Target sectors that are to be impacted by this demographic profile.
Automobiles, entertainment (media, television, music), personal care, consumer durables, hospitality and travel (hotels, airlines, travel agencies), retail chains, banks and financial services, utilities (telecom) and healthcare are the chosen sectors.
The fund manager will identify stocks that cater to this age group and pick up what he or she thinks are potential winners.
So, if you believe manufacturing, oil, coal, steel, cement and other such sectors are what you want to look at, this fund is not for you.
If you believe in the philosophy that the companies (Hero Honda, Nestle, Pantaloon, Trent to name a few) that fall under this segment are going to be money spinners, you could consider investing in this fund.
Remember, though, to do so in addition to your other investments. Don't make this your sole investment.
Birla Sun Life Mutual Fund
The Initial Public Offering is open from June 14 to July 12, 2005
Cost per unit during IPO is Rs 10
Kotak Contra
If the earlier one did not catch you fancy, this one might.
As the name suggests, it will follow a contrarian view to investing. This means the fund manager will deliberately bypass the most popular stocks that everyone is chasing.
What will he focus on instead? Those that have strong fundamentals but are trading at a significant discount to their intrinsic value. In layman's terms, funds whose share is, say, Rs 15 right now but have the potential to be Rs 100 over a period of time.
In other words, they will invest in out-of-fashion sound companies. These will be stocks that are strong on fundamentals but whose value is not yet recognised by the market.
So, while this fund will appear unattractive in the short-term, over the long run, you could reap some great returns.
If you have already invested in a diversified equity fund or already have some stocks in your portfolio, you could consider opting for this fund.
Kotak Mahindra Mutual Fund
The Initial Public Offering is open from June 2 to July 1, 2005
Cost per unit during IPO is Rs 10
