The Hindu Business Line : Many new MF schemes quoting below par

INVESTORS in schemes recently launched by MFs are in a fix as many of them are quoting at less than the offer price of Rs 10. The list of names that have destroyed value includes a number of growth funds, a few of them launched with considerable fanfare.

Kotak Global India, HSBC India Opportunities and Deutsche Investment Opportunities are just three schemes that have their NAVs in the sub-Rs 10 zone.

These, and the others, are what fund circles say are victims of uncertain market conditions, marked as these are by wild swings in prices of securities.

The situation is particularly annoying for unit holders who chose to invest in the IPOs with the hope of recording capital appreciation and have stayed on till date. They would have to wait for the NAVs to turn northbound again before disposing of their holdings, it is felt. Alternatively, they would have to invest further and bring down their average cost.

"Some of these investments are draining the average investor's portfolio", says Mr S.K. Mitra, Head of Birla MF, while underlining the factors that have led to the situation and referring to a possible upside that could change it for the better.

"Time could bring about a major difference to their fortunes", he adds.

It is not that the fund houses concerned have diluted their beliefs. Kotak Mahindra MF, which had a high-profile introduction of its latest product (the one bearing the `global India' tag), feels it has the potential of doing well in the days ahead.

For the IPO investor, however, the truth remains simple - the scheme's NAV is currently Rs 9.58 (as on March 18).

Principal MIP Plus, the first scheme in the monthly income category that came with a higher equity ceiling, too has crept below the Rs 10-mark. Last month, it maintained an approximate equity allocation of 15 per cent for a good number of days. A few key changes were also made in the equity holdings.

And for the debt part, the average maturity was kept at a little over two years.

Deutsche Investment Opportunities and HSBC India Opportunities, both of which hit the market at around the same time, have also gone under.

The two NAVs are at Rs 9.64 and Rs 9.32 respectively. Their MIPs, hovering at around Rs 10 each, have done better in comparison.

Yet another recent introduction, ING Vysya Nifty Plus, is at Rs 9.19.

Added to the list of sub-Rs 10 prices are NAVs of technology funds. These include Alliance New Millennium, Pru ICICI Tech, DSP Merrill Lynch Tech.com and SBI MSFU IT .

Schemes such as Alliance Buy India (Rs 7.82) and Canglobal (Rs 7.91) also figure in this bracket.