The current meltdown in equity markets has wiped out the returns equity funds made in the past two years. The top five plans in the equity diversified and tax planning categories rewarded the investors who stayed invested for at least five years. Despite taking a knock of over 36% in the past year, both categories, on an average, have generated a 21% return per year in the past five years.
Mid-cap funds can deliver exceptional returns, but they also carry a greater risk. The category has lost almost three times as much as the index funds in the past two years, though they have delivered higher returns in the long term. ICICI Pru Index and Reliance Growth are the only funds that have delivered positive returns in the past two years.
Barring the top two funds in the equityoriented balanced category, none of the other plans have been able to generate notable returns in the past two years. Investors would have earned more if they had opted for liquid funds, which earned over 7.7%, instead of debt funds. Sundaram BNP Paribas, with minuscule assets, delivered higher returns than the topperforming equity fund.
The way technology funds have consistently underperformed the broader markets questions the logic of investing in such specific funds. In the pre-2000 days, these funds were the most sought after. However, looking at the dismal AUM numbers and the quantum of losses, it makes sense for long-term investors to exit theme-specific funds for diversified plans before they run out of steam.
The takeaways
• Top five fund houses account for 51% of all investments in mutual funds.
• HDFC pips ICICI Pru AMC to become the second largest fund house in India.
• Investors withdrew Rs 15,071 crore from mutual fund investments in September 2008.
The takeaways
• Mutual funds bought BPCL as the state-run firm is expected to benefit from its recent crude oil discoveries in Brazil.
• They offloaded Arvind Ltd, which is planning to inject Rs 600 crore into retail and brand expansion.
