Morgan Stanley To Roll Out Multi-Cap Open-Ended Fund

Morgan Stanley has decided to roll out an open-ended equity fund in India after 13 years. Morgan Stanley A.C.E (Across Capitalisations Equity Fund) will carry a diversified portfolio. The objective of this diversified portfolio is to generate long-term growth of capital. To be benchmarked against the BSE 200, the fund will manage its assets actively, with the fund manager embracing a combination of a top-down approach and a bottom-up stock selection.

Stocks selected may also include those representing sectors that are considered out-of-favour. The fund will seek both value and growth, and will not be restricted in terms of market capitalisations, the offer document filed with SEBI said. There will be an entry load of 2.25 per cent, while a one per cent exit load will be levied for purchases below Rs 5 crores, if a unit holder pulls out within six months from the date of allotment. This will be reduced to 0.5 per cent if the exit takes place between six months and one year from the relevant date. For purchases of Rs 5 crore and above, the exit load will be 0.5 per cent if an investor moves out before six months from date of allotment.

The former is mostly a large-cap oriented fund, while the proposed fund will be more multi-cap in nature. The positioning, therefore, will be somewhat different. (Incidentally, MSGF, launched in early 1994, has large exposure to ABB, Bharti Airtel, BHEL, HDFC Bank and Infosys. At the close of August, ABB was the top holding, accounting for 7.34 per cent of the assets. The fund's corpus stood at Rs 3,360 crores. As on September 4, its NAV was Rs 56.81). Fund houses in India have come to managing multiple products, including those that are positioned differently, sometimes even unique. There is scope for asset management companies to do this efficiently.

Morgan Stanley Mutual Fund, among the first private sector players to set up shop in the country, mopped up a record Rs 981 crore during the initial offer period of its close-ended fund. Unlike other private sector players, the fund house didn't roll out any other scheme in the domestic markets, and till date continued to manage just one close-ended product – the Morgan Stanley Growth Fund. Despite this, the AMC could be among the more profitable private sector investment managers in India. Appreciation on the fund's NAV has contributed to a steady expansion in Morgan Stanley Growth Fund's asset base over the years. As a result, the investment management fee earned by the fund house for managing this one scheme alone, has more than doubled from Rs 13.5 crore to Rs 28.2 crore between 2004-05 and 2006-07.