Mutual fund NAVs take the plunge
With stocks back to their year-old levels, it was a little surprise to see the ordeal being recapitulated in the mutual fund space as well. All Headlines I Tackling volatile mkts
By Bakul Chugan, ET Bureau |
Breaching 15,000 and back to 15,000 in just about 11 months! That���s been the vicious circle the Indian stock market has been through, much to the dismay of investors. With stocks back to their year-old levels, it was a little surprise to see the ordeal being recapitulated in the mutual fund space as well.
The Sensex had made a history on July 9, 2007 when they closed at an all time high of 15,045 for the first time. On Monday ��� June 9, 2007, the Sensex once again closed at almost the same levels ��� 15,066 points. The only thing that changed, however, is smile to frown! With stocks across sectors trading at less than half their all-time highs, net asset values (NAV) of the mutual fund schemes have met a similar ordeal.
On Friday, June 6, 2007, when the market closed at the level of 15,572; nearly 100 of the 176 diversified equity schemes had their NAV trading below the July 9, 2007
levels. So with Monday���s fall of over 3%, it will be a little surprise to see many more schemes joining this list.
While many may justify this fall since mutual funds are bound to move in tandem with the market, what is astonishing is the fact that many of these schemes have eroded to levels as low as those of January 2007 when the
Sensex had just kissed the 14000-mark.
The Sensex had made a history on July 9, 2007 when they closed at an all time high of 15,045 for the first time. On Monday ��� June 9, 2007, the Sensex once again closed at almost the same levels ��� 15,066 points. The only thing that changed, however, is smile to frown! With stocks across sectors trading at less than half their all-time highs, net asset values (NAV) of the mutual fund schemes have met a similar ordeal.
On Friday, June 6, 2007, when the market closed at the level of 15,572; nearly 100 of the 176 diversified equity schemes had their NAV trading below the July 9, 2007
levels. So with Monday���s fall of over 3%, it will be a little surprise to see many more schemes joining this list.
While many may justify this fall since mutual funds are bound to move in tandem with the market, what is astonishing is the fact that many of these schemes have eroded to levels as low as those of January 2007 when the
Sensex had just kissed the 14000-mark.
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These include schemes like DBS Chola Global Advantage, Birla India Opportunities, ABN AMRO Future Leaders, JM Hi Fi and Franklin India Prima among others.
Gopal Agrawal, equity head, Mirae Asset Management, said, ���The high erosion in the NAVs is the outcome of heavy concentration by mutual fund industry in sectors like banking, real estate, capital goods, engineering,
cement and construction which were going great guns in 2007, but have eroded sharply this year. Most schemes had comfortably ignored sectors like pharma, FMCG and IT, which have started to perform now. So, the funds that failed to tap in these opportunities then are paying a heavy price today.���
So is there any respite from this ordeal in the near future? Taking cognizance of the high oil prices, Mr Agrawal did acknowledge that the Indian market will perform positively once the oil crisis is taken care of. However, sharing his concern for the same, he did admit that it might take a while before we can actually see the situation under control.
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