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The recent turbulence in equity market has pulled down the net asset value (NAV) of 42 new fund offers (NFOs) of mutual funds (MFs) launched in the last one year below their face value of ₹10. If not for the relief rally last month, they would have been stuck deep in the red.
The NAV of HSBC Mid-cap Fund, which hit the market last September, was traded at ₹9.10 a unit last Friday and it has an asset under management (AUM) of ₹1,002 crore.
One of the most successful NFOs last December, Axis Multicap Fund, which has an AUM of ₹4,843 crore, was traded at ₹9.65. Similarly, Kotak Multi-cap, which collected ₹3,500 crore during its NFO last September, was available at ₹9.72 a unit last Friday.
Some of the passive fund NFOs were also not spared by the market vagaries. Aditya Birla Sun Life Nifty Healthcare ETF and Motilal Oswal Nifty 200 Momentum 30 Index Fund were quoted at ₹8.04 and ₹8.80, respectively, while ICICI Pru Nifty Small Cap 250 Index Fund had registered a NAV of ₹9.
Fund houses had launched a slew of NFOs during the peak bull run last year and deployed the funds raised at a very high valuation. The NAV of these NFOs started to melt after the market slipped due to raging inflation concerns and the Russia-Ukraine war.
A July revival
The bellwether Sensex had crashed to 53,019 points in June from a high of 59,307 recorded last October on the back of relentless selling by foreign portfolio investors. However, last month it gained a whopping 4,551 points to 57,570, as India Inc displayed better ability to withstand inflation headwinds than its global peers.
Abhinav Angirish, Founder, Investonline.in, said instead of trying to average their investment after the fall in NAV, investors should wait for two-three years to gauge the performance of these funds before taking a call on further investment even while continuing ongoing SIPs.
In the last two years, he noted that due to the roaring bull market, many NFOs were launched with unique investment strategy to attract investors. Till the NFO strategy and themes are proven, investors should stick to established active funds with an established track record, he said.
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