NFOs fail to deliver big-time

Well, the reasons for this tumble are simple – more than the fresh influx of funds, it is the money moving out from the existing funds to the newly launched New Fund Offers (NFO). Over the past one & half years, the market has been witnessing a bull run with Sensex thundering across the 15,000 milestone; but to the agony of investors, more than 60% of the NFOs have had a trailing record against their benchmarks (the table alongside has startling performance results). UTI Contra, Tata Contra, Sundaram BNP, Stanchart Classic, SBI, Reliance, Magnum, take a name & we’ll show you blood on Dalal Street. Gauri Magar of Arihant Capital Market, puts across her views while speaking to B&E, “They are changing their portfolio on a monthly basis, investors are looking for short term gains & hence you have AUMs eroding, NFOs must be looked as a long term investment...” Easier said than done. If one year is not considered long term, then pray, tell us what else can be?

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Source: IIPM Editorial, 2008

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