NFOs now join troubled IPO club
It’s not only IPOs, which are trading below their offer price but also NFOs (new fund offerings) which have witnessed a severe meltdown in their NAVs (net asset values).
By Bakul Chugan, TNN |
It���s not only IPOs, which are trading below their offer price but also NFOs (new fund offerings) which have witnessed a severe meltdown in their NAVs (net asset values). Most NFOs launched in 2007 have either fallen below or are on the verge of falling below what is considered a psychological barrier, their NFO price of Rs 10.
An ETIG analysis reveals that 71% of the 28 equity NFOs launched last year are today available in the price range of Rs 6.8 to Rs 9.8 per unit while 18% of these schemes are barely managing to trade above the Rs 10-mark.
So adverse is the sentiment currently that even though these schemes appear to be value buys at these levels, there are no takers. ���Investor���s money inflows to mutual funds have sidelined for the time-being,��� says A Balasubramanian, CIO Birla Sun Life Asset Management.
The downtrend has been secular in virtually every type of NFO irrespective of type or size ��� mid-cap, small-cap, infrastructure, large-cap, global ��� all have seen sharp erosion in their NAVs.
Many of these funds had aggressively been marketed by the fund houses and sold on the promise of various themes which were being favoured by the markets back then. The only consolation that perhaps fund managers of these funds could take is in that even the quant funds ��� where mathematical models are used for stock selection ��� have performed just as poorly. Neither man nor machine it seems has managed to survive the onslaught of the bears.
The only exceptions to this trend however; have been the funds investing in gold or gold-related equities. The gold ETFs (exchange traded funds) which came to the market last year are today trading at all time highs. Similarly with physical gold in great demand, the companies mining the precious metal are undoubtedly the major beneficiaries. And the results are getting reflected in the returns generated by the gold fund.
The only gold fund that we currently have is the DSPML World which invests in mining companies through its international gold fund ��� Merrill Lynch International Investment Funds ��� World Global Fund.
An ETIG analysis reveals that 71% of the 28 equity NFOs launched last year are today available in the price range of Rs 6.8 to Rs 9.8 per unit while 18% of these schemes are barely managing to trade above the Rs 10-mark.
So adverse is the sentiment currently that even though these schemes appear to be value buys at these levels, there are no takers. ���Investor���s money inflows to mutual funds have sidelined for the time-being,��� says A Balasubramanian, CIO Birla Sun Life Asset Management.
The downtrend has been secular in virtually every type of NFO irrespective of type or size ��� mid-cap, small-cap, infrastructure, large-cap, global ��� all have seen sharp erosion in their NAVs.
Many of these funds had aggressively been marketed by the fund houses and sold on the promise of various themes which were being favoured by the markets back then. The only consolation that perhaps fund managers of these funds could take is in that even the quant funds ��� where mathematical models are used for stock selection ��� have performed just as poorly. Neither man nor machine it seems has managed to survive the onslaught of the bears.
The only exceptions to this trend however; have been the funds investing in gold or gold-related equities. The gold ETFs (exchange traded funds) which came to the market last year are today trading at all time highs. Similarly with physical gold in great demand, the companies mining the precious metal are undoubtedly the major beneficiaries. And the results are getting reflected in the returns generated by the gold fund.
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The only gold fund that we currently have is the DSPML World which invests in mining companies through its international gold fund ��� Merrill Lynch International Investment Funds ��� World Global Fund.
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