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Over whelming number of IPOs below par in 1999-00

As many as 63 balanced, equity and sectoral funds were launched between January 1999 and December 2000. A shocking 57 among them are now below par

Had you invested in one of the equity or balanced scheme IPOs since January 1999, there is a remote chance that your fund would be above the offer price of Rs 10. A whopping 57 funds of the 63 schemes launched in the last two years are currently trading below par. The esitimated initial mopup of Rs 4400 crore stands hammered to under Rs 3950 crore, despite some funds receiving loads of fresh money.

Further, the "bear" gale has not only blown off technology stocks; it has also dragged down other sectors on the bourses. Thus, apart from technology funds, schemes with such diverse objectives as pharma, FMCG, contrarian, cyclical, tax planning, index and balanced have incurred losses, albeit of a varying degree. This reflects that the downturn in equities has been sharper than the surge witnessed in 1999 and early part of 2000. The bellwether 30-stock sensex is currently hovering around 3200, marginally lower than its April 1999 level of 3300 points.

The handful of gainers notwithstanding, funds launched in the last two years by asset management companies have eroded investor value, indicating herd mentality and absence of contrarian investment approach to guard assets in a falling market. Worse, funds with varied objectives have been managed with similar aggression with some balanced funds even losing in line with their equity counterparts!

Of course, the "bottom" honours are shared by the once famous technology funds, with losses in excess of 70%! Among the diversified lot, the growth fund from Templeton, Franklin India Growth has shed over 50% while the balanced family's worst performers include ING Balanced Portfolio and Sun F&C Balanced Fund. However, since we are talking about returns since their respective launch, the returns are not strictly comparable.

On the other hand, while the gainers are unlikely to cheer a large number of investors, they include UTI Petro and UTI services Sector. Launched in 1999, the duo from UTI have posted a return since launch of 23% and 45%, respectively. The third major gainer is KP Taxshield, the tax-saving fund from Kothari Pioneer, which has given a over 40%.

Contrasting Numbers!
  Name  IPO close  Ret.since launch (%)
  K Tech 21/03/2000 -71.12
  IL&FS eCOM Fund-G 05/02/2000 -70.27
  DSPML Technology.com-G 10/04/2000 -69.30
  Pru ICICI Technology-G 28/01/2000 -66.77
  Sun F&C Emerging Tech-G 24/02/2000 -65.60
  KP FMCG-G 31/03/1999 1.75
  Birla Equity Plan 13/02/1999 3.13
  UTI Petro 26/06/1999 22.64
  KP Taxshield-G 10/04/1999 40.45
  UTI Services Sector 26/06/1999 45.46