NFOs now join troubled IPO club

NFOs now join troubled IPO club

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Mumbai: Like IPOs, new fund offerings (NFO) also have witnessed a severe meltdown in their net asset values (NAV). Most NFOs launched in 2007 have either fallen below or are on the verge of falling below their offering price of Rs 10. An ETIG analysis reveals that 71 percent of the 28 equity NFOs launched last year are today available in the price range of Rs 6.8 to Rs 9.8 per unit while 18 percent of these schemes are barely managing to trade above the Rs 10-mark, reported The Economic Times.

So adverse is the sentiment currently that even though these schemes appear to be value buys at these levels, there are no takers. The downtrend has been secular in virtually every type of NFO irrespective of type or size - mid-cap, small-cap, infrastructure, large-cap, global. Many of these funds had aggressively been marketed by the fund houses and sold on the promise of various themes, which were being favored by the markets back then. It seems that only consolation for fund managers of these funds is that even the quant funds - where mathematical models are used for stock selection - have performed poorly.

However, the funds investing in gold or gold-related equities have been the only exceptions to this trend. The gold ETFs (exchange traded funds), which came to the market last year, are currently trading at all time highs. Similarly with physical gold in great demand, the companies mining the precious metal are undoubtedly the major beneficiaries. And the results are getting reflected in the returns generated by the gold fund.
Source: IANS
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