The Association of Mutual Funds in India (AMFI) has passed on investor complaints to mutual fund houses for further investigation said Venkat Chalasani, CEO of AMFI, during a conference call on Monday.
What Happened: Investors who sought to capitalise on the June 4 market crash by buying mutual funds were left in the lurch as they were allotted units at the subsequent day’s net asset value (NAV).
Chalasani clarified that the allotment of units in a mutual fund scheme is dependent on when the mutual fund house receives the money, not when the account is debited, reported NDTV Profit. He further explained that if the Asset Management Company receives the money before 3 p.m., they will allot units for that day. If the money is received after the cut-off time, then the next day's NAV will be allotted.
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The disruption is believed to have been caused by a delay in transaction processing as some banks and payment aggregators couldn’t handle the surge of orders on the election result day. All institutions involved, including BSE StAR MF, have denied responsibility for the glitch.
Kalpen Parekh, CEO of DSP Mutual Fund, stated that the issue needs to be investigated to prevent future occurrences. Market and banking regulators may need to intervene as all parties currently refuse to accept responsibility. Investors seeking redressal can file a complaint on the SEBI Complaint Redressal System website.
Why It Matters: On June 4, the markets fell as the BJP secured fewer seats in the election results compared to the exit polls prediction. Nifty fell 5.93% to 21,884.50. Investors who tried to buy mutual funds at a lower NAV found their orders didn't get placed on different investment platforms despite placing the order before 2:30 pm.
Instead, the order got placed on June 5's NAV when markets recovered 3%. Investors said that due to the delay in acquisition, they lost gains from buying when the markets crashed. This incident underscores the need for robust systems and clear communication to ensure investor confidence in the mutual fund industry.
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