It has been a long time since the price of mutual fund units fell below its face value. Although the price of other stocks is in the increasing trend, the value of mutual fund units has not taken the pace yet.
Given that the value of mutual fund units has fallen for a long time, investors have begun to sell them in losses as well.
According to the NESPE, the mutual funds saw the highest turnover in the last mid-July to mid-August compared to the last three years. In the period, a total of 10.1 million units of mutual funds were traded compared to 3 million units in the corresponding period of the previous FY. The market recorded the huge sales of mutual fund units despite the price being below the face value.
Given that the market price of mutual funds is comparatively low and the dividend rate is 10 percent in average, the trading of mutual fund units has increased in the market. On one hand, individual investors are selling the units citing declining prices, on the other hand, institutional investors are buying them citing an opportunity to cash in 8 to 10 percent return during that time when BFIs are providing low-interest rates to deposits.
At present, out of the total listed mutual fund schemes, only two have higher base prices. NIC Asia Growth Fund and Citizen Mutual Fund 1 are the schemes having market prices higher than the base price. Their market price is Rs 10.28 and Rs 10.22 respectively. The market price of all other mutual funds is less than Rs 10.
Although the market price is low, their net asset value (NAV) is high. The net worth of all listed mutual funds is high which indicates good returns. As per their NAV report, they can distribute at least eight to 10 percent return.
Although the weekly NAV is higher, the monthly NAV of NIBL scheme is negative. Its monthly NAV is Rs 9.86. However, as per its report published in the last week, it reported NAV of Rs 10.21.
