New fund offers struggle to quote at face value

Suresh Parthasarathy BL Research Bureau | Updated on November 12, 2017


The performance of launched in 2010 has been quite unimpressive, with half of them quoting below face value at present.

The year was lacklustre even after taking into consideration the new issues and collections. The year saw 17 new fund offerings collect about Rs 2,600 crore, down 44 per cent (Rs 5,900 crore) than what was collected in 2009. This also pales in comparison with the NFO collections during the peak of the bull run between August 2007 and January 2008, when 33 schemes collected about Rs 21,770 crore.

The highly volatile equity markets in 2010 as compared to a upswing in 2009 may to a great extent explain this trend.

DSP BR Focus 25 fund, launched in April, made the highest collections of about Rs 700 crore. In stark contrast was ICICI Prudential Nifty Junior Index Fund, which collected just about Rs 1 crore.

Interestingly, of the 40 asset management companies only 12 raised funds last year.

With the market regulator advising asset management companies against launching schemes that overlapped with offerings, some of the bigger players such as HDFC, Franklin and UTI did not launch any schemes.

Seven of the 17 schemes launched were index-based. PSU stocks that stole the limelight last year failed to influence the fortunes of sector schemes. The two PSU schemes — Baroda Pioneer PSU and SBI PSU — that were launched last year are quoting below face value. On the contrary, infrastructure funds managed to contain losses well.

Published on January 20, 2011

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