Investors lose out on missed opportunity due to NAV glitch

Neha Chauhan is an experienced investor in mutual funds. On the counting day for the general elections on June 4, the results were not as expected.

There was a significant decline in the stock market. To take advantage of this decline, Neha invested Rs. 5 lakh in mutual funds through an app. She was very happy. But the units transferred to her account, meaning the Net Asset Value (NAV), were bought at a high price the next day. This has worried Neha. Well this is not just Neha’s case.

On the day of the major decline in the market on June 4, most of the investors who invested in mutual funds online did not receive units as per that day’s rate. The NAV of this investment was bought based on the market rates of the next day, which were 2 to 5 percent higher. In this way, instead of gaining about Rs. 25,000, Neha incurred a loss. People like Neha are demanding compensation for this loss on social media.

In fact, the stock market dropped by 5.75 percent on June 4. Whereas there was a recovery of 3.2 percent the next day in the market. Discount brokerage apps like ZeroDha and Groww have acknowledged, that transactions were not completed for a large number of people on June 4. Even though investors had made these transactions before 2 o’clock. As a result, investors suffered some losses. According to the rules of market regulator SEBI, if an investor makes a transaction before 2 o’clock, then it is mandatory to execute the transaction on the same day.

Discount brokers have blamed the stock exchange for the problems related to transactions. These brokers say that transactions on a large scale took place on June 4. Some trades couldn’t be completed at the exchange’s level.

However, BSE has dismissed the allegations. BSE has issued a statement clarifying that, there was no system-related issue on the BSE Star MF platform on June 4. And that there was a delay in receiving payments via the UPI channel, which resulted in some investors receiving NAV the next day.

What is the real reason behind this problem? Where to lodge a complaint in this matter? Can compensation be provided for this loss? There are many questions arising in the minds of common investors. Mutual fund experts say that upon quick examination, there doesn’t seem to be any human intervention in NAV allocation delays. Such a major event in the mutual fund industry has happened for the first time.

Amidst the major decline in the stock market on June 4, due to increased transactions and high volume pressure, these situations can arise. Complaints of this nature are related to index and ETF mutual funds. Those who have suffered losses due to delays in NAV allocation, should register a complaint on SEBI’s website. Although it’s difficult to say whether compensation will be provided for this loss or not at the moment. But such incidents should not happen again. The market regulator will surely take steps in this direction.

If like Neha, you too have received NAV in delay, then make sure to lodge a complaint. Also, if you invest in mutual funds, pay attention to when NAV is being allocated. If you notice any discrepancies, complain immediately. SEBI will take action based on this to ensure that there are no issues with your investments.