In order to cash in on the rally in the equity markets, mutual fund houses are looking at launching a slew of equity-oriented schemes.

But industry officials conceded that the fund industry is facing net outflows, which means that existing investors are cashing out in the current rally.

The new schemes being launched or proposed is one way to getting new investors and shoring up the total corpus of funds, officials said.

At least ten equity-oriented schemes are pending the approval of the Securities and Exchange Board of India. These schemes are expected to hit the market in the near future.

Fund houses have been emboldened by the fact that during the current month, equity schemes launched by Tata Mutual Fund and Principal Mutual Fund managed to collect close to Rs 800 crore (Rs 8 billion) between themselves.

Ravi Sharma, head of sales and distribution at Birla SunLife Mutual Fund said, "Investors rush into these initial offering in droves because they get it at the face value. These prices are not possible with the existing schemes."

Distributors also push fund houses into launching schemes because they stand to make commissions on such launches.

Margins for brokers vary from 2 per cent to 4 per cent, depending on their profit sharing with the asset management company.

Industry sources said that apart from the actual outflows in the equity schemes, this month the number of investors who have exited is more than in the previous months. "This is worrying," said Sharma.

Further while the IPOs manage to draw an impressive initial corpus, a good part of the funds mobilised flows out in the next oen month. Industry officials said nearly 60 per cent of the funds mobilised in initial offers is "hot money" invested by corporates and banks.

The list of plans:

• Chola Dividend Yield Fund
• HDFC Capital Guard Fund
• LICMF Outsourcing Fund
• Sundaram SMILE Fund
• Sundaram Capital Fund
• Reliance All Sector Equity Fund
• Tata Banking Services Fund
• Ing Vysya Mid Cap Fund
• HDFC Multi-manager fund
• Chola Multicap Fund