The net asset value of one in every four equity mutual fund schemes touched a 52-week low on August 17, owing to the decline in the equity markets.
According to data from NAVindia, 64 of the 247 equity-diversified schemes in the industry dipped to their 52-week lows. All of these schemes, except one, had hit their 52-week highs in November 2010 when the BSE Sensex was hovering close to the 21,000 levels.
While NAVs continue to decline, fund managers and analysts are not really concerned because the investors, although a worried lot, have not reduced their exposure to mutual funds. Redemptions have also reduced drastically as they have also “lost their charm”, they added.
On the contrary, many more were coming into the industry via the Systematic Investment Plan (SIP) route, said fund managers and distributors.
‘Merely a reflection'
“The fall in the NAV is merely a reflection of the fall in the markets. There is a slight confidence shake, however, we are not overly perturbed by this as the drive on SIPs has been phenomenally successful,” said Mr K. Venkitesh, National Head-Distribution, Geojit BNP Paribas.
This view is held by most mutual fund analysts who agree that the situation is not as dire as it was in 2008 when many investors discontinued their SIP investments.
Between August of last year and this year, the equity markets have fallen by close to 10.1 per cent. Of the 64 funds which dipped to their 52-week lows, around 13 are infrastructure funds, which prior to 2008 were among the most sought-after sectors by most fund managers.
While this may still not be ideal time for investments in the equity markets, some mutual fund investors seem to think otherwise.
“Redemptions have come down in the industry and we are seeing new investments through SIPs as well as the normal route. In fact, the inflows in August are higher as compared to June and July, because markets are at a lower level than in June and July. Some investors consider this a good time to enter the markets,” said Mr Waqar Naqvi, CEO, Taurus Mutual Fund.