Hit by global headwinds, most equity new fund offers of MFs post negative returns in last one year

Blame it on market meltdown, most of the equity and hybrid new fund offers made by mutual fund houses since January 2022 are currently quoting below their face value of ₹10.

In all, there were 40 equity and hybrid NFOs mopping up ₹40,462 crore since January 2022 to last month, according to data sourced from the Association of Mutual Funds in India

Investors in NFOs are a worried lot as these funds are down between 2.55 per cent and 10.68 per cent in last one year. The bellwether Sensex was down marginally by 0.68 per cent or 400 points to 57,614 points last month from 58,014 points logged in January 2022, amid intense volatility in last 13 months.

Quant Large Cap fund has delivered the highest negative return of 10.68 per cent year-to-date as of March 27 with a NAV of ₹9.03 while White Oak Capital Large Cap fund is down 7.51 per cent at ₹8.85.

Though ICICI Pru Housing Opportunity and Bandhan Multi-cap have delivered 11.92 per cent and 11.58 per cent in last nine month, year to date they are down 2.72 per cent and 5.05 per cent.

Whiteoak Capital Flexi cap, which had raised ₹550 crore during the NFO, gave a negative return of 7.40 pe cent with a NAV of ₹9.66. Given the volatility in the market, NJ Balanced Advantage Fund, which raised a record ₹5,200 crore, has managed to deliver 1.28 per cent return with NAV of ₹10.34.

Santosh Gaikwad, Director, Smart Investors said investors generally get panicked when their investments get eroded particularly when they are handled by experience fund managers, but they should understand that these are difficult times for market with domestic uncertainty and strong global headwinds.

“Investors should give at least three years before they guage performance of investments and switch over if they are unhappy,” he added.

Kaustubh Belapurkar, Director (Manager Research), Morningstar India said investors should continue to focus on picking funds that meet their asset allocation requirements which is determined by their goals and risk return objectives.

It is also important to rebalance the portfolio in case the exposure to the desired allocation is not doing well due to market movement. Rather than purely going by fund value, investors should base their decisions on fitment in a portfolio, he said.