Investors who had invested in fund launches under the then popular sector and thematic equity schemes during the stock market boom are currently facing losses.
Because, now there is a wave of recession going on in the stock market. Heavy selling is being seen in the market these days, in such a situation the condition of such investors has become weak. Many recently launched funds have seen their net asset value (NAV) fall by up to 21 per cent from their offer price of Rs 10 per unit. Defense index, PSU index, tourism index, metal index and some passive schemes based on some momentum based strategies have been most affected. Whose NAV is now between Rs 8 to Rs 9. The decline in defense and PSU stocks started in July. The market went into recession as foreign investors started withdrawing.
During this period, Nifty 50 declined by 10.44 percent, Nifty Midcap by 10.9 percent, Nifty Small Cap by 9.1 percent. Since September 27, Defense Index has declined by 10.25 percent, PSU Index by 11.7 percent, Metal Index by 12.28 percent.
Economic experts said all sectors face an uphill climb, but some new fund offerings are struggling the most. Especially in index funds, which revolve around popular themes. The scheme was launched by mutual funds when sectors like defense and PSUs had already given more than 100 per cent returns last year. New Fund Offers (NFOs) attracted many new investors. Rs 1.08 lakh crore was raised from NFOs in the last 12 months. Declines may lead to reevaluation of holdings.
