The mutual fund industry has been wading through troubled waters ever since SEBI imposed a ban on entry load from 1 August 2009. The lack of interest among distributors in selling mutual fund schemes due to the absence of a commission incentive has resulted in a sharp fall in retail participation. As a result, the industry witnessed a net outflow of Rs 13,139 crore from equity funds in 2010-11.
However, that has not deterred the better performing funds from providing decent returns to investors who have reposed faith in them. Nearly 100 funds in the equity-diversified category beat their benchmark indices in 2010-11. Over a longer period, 61 equity funds have yielded over 20% annualised returns over the past 10 years, nine of which gave 30% or more. Such returns would compare well with returns of most other asset classes.
However, mutual fund investments have their own attendant risks and investors who are able to pick long-term performers stand to gain. In our annual special issue, we try to walk you through the basics of investing in mutual funds and help you hone your skill at spotting funds that could make you that much richer. We also give you the best investment strategies for the long run, especially the benefits of systematic investing. The package also includes a detailed ranking of the various schemes.
As in most long-distance races, the pecking order will keep changing. Funds that may be laggards today could pick up speed, show tactical agility and pack greater stamina to join the frontrunners and, at times, race ahead. As an investor, the trick is to try and identify the future frontrunners. We have put together some broad guidance tools. However, one should do one's homework diligently before choosing a fund.
Elsewhere, we have squeezed in a summer-related investment story where we bring you some companies whose stocks you can invest in with the hope of making quick gains in the coming months. With it scorching outdoors, there are several companies that will profit from consumers trying to beat the heat. You can also be a smart gainer.
