Investors have started giving the cold shoulder to domestic funds’ new fund offerings (NFOs). Two NFOs that closed this week have been able to mobilize around Rs150 crore from investors, according to people familiar with the development.
Just about a month ago, Reliance Capital AMC’s Natural Resources Fund which opened for subscription in the first week of February, managed to mobilize Rs5,660 crore, the highest ever subscription in any mutual fund NFO in recent times.
The sharp fall of the Sensex, the benchmark index, has changed investor sentiment dramatically. The Sensex has shed some 27% from its peak reached on 10 January and more than Rs20 trillion worth of investor wealth has been eroded since the beginning of this year.
“It’s a reflection of the pessimistic market sentiment. In a bearish market, nobody wants to catch the falling knife,” said Sameer Kamdar, country head of mutual funds, Mata Securities India Pvt. Ltd, a treasury services firm.
Mirae Asset Global Investment Management (India) Pvt. Ltd’s maiden fund offering, Mirae Asset India Opportunities Fund, has collected around Rs70 crore. This is despite keeping the NFO open for almost a month and extending it for a day after its scheduled closing date of 10 March.
Morgan Stanley Investment Management Pvt. Ltd, which launched its second fund, ACE Fund, after 14 years, managed to collect around Rs80 crore, people familiar with the development said.
Morgan Stanley’s ACE Fund was opened for subscription around the same time as Mirae, and had extended its offer period by a day.
HSBC Asset Management (India) Pvt. Ltd’s Emerging Markets Fund, that closed last week, had mobilized around Rs100 crore.
However, these numbers could not be independently verified with the fund houses. Morgan Stanley and Mirae Global Asset Management said they are waiting to get collections numbers from their other centres across the country and would be able to get the overall figure in one-two days only.
Arindam Ghosh, chief executive officer of Mirae Asset Global Investment Management (India) Pvt. Ltd, said: “We are a long-term player and would keep coming up with innovative products irrespective of whether the markets are good or bad. Though the market sentiments are negative, we are excited to be building a portfolio at these levels.”
“While there are no immediate redemption pressures, the investors have lost the appetite to put in fresh money,” said the marketing head of a foreign AMC who did not wish to be quoted.
Paul D. Souza, proprietor of Cuzinns Investment Services, a Mumbai-based investment advisory firm, said his clients have shown concern about the current market situation but nobody was in a hurry to redeem all their mutual fund investments.
Sapna Narang, partner at Capital League, a wealth management firm based in Delhi, has been advising her clients to wait and watch before they put in additional money in funds. “But nobody has pressed the panic button yet,” she added.
In January and February, mutual funds along with other domestic institutional investors, were lending support to the stock markets and they emerged as net buyers in stocks while foreign institutional investors (FIIs) were net sellers.
However, with lower collections, one could see reduced activity from mutual funds. In March, the domestic funds have bought stocks worth Rs642 crore net of selling while FIIs net sold Rs2,763 crore.