Only 4 equity MF schemes show positive return in 3 years
Returns between 1-2.5% when Sensex fell 8%.
Sharvari Patwa
Mumbai, March 14 Against the backdrop of a lacklustre stock market, only four
equity diversified mutual fund schemes have given positive returns over the
three-year period ending March 12, 2009, a compilation of annualised returns by
Value Research shows.
Of the 137 active schemes in this category, 53 (or 38 per cent) did not do as
badly as their own benchmark indices, and 42 of the 53 did not do as badly as
the Sensex.
The returns of the four schemes (see table) which managed a positive
performance are not very high, and stand at between 1 per cent and 2.57 per
cent. But given that the Sensex fell by over 8 per cent during this period, any
positive gains are a matter of surprise in this market.
(Taking three-year returns at end February 2009, 15 of the 137 equity schemes
category showed positive returns.)
A large cap bias, low cash levels and an investment path which is different
from the routine herd investment strategies appear to have worked to these
funds' advantage.
"The strategy of the ICICI Infrastructure fund has been to stay away from the
herd mentality. We would exit a sector before it came into favour. We also
avoided investing in mid-cap companies and the real estate sector," said Mr
Shankaran Naren, CIO-Equity, ICICI Prudential Mutual Fund.
The Sahara Growth Fund invests mainly in Nifty stocks and the exposure to
non-Nifty and mid-cap stocks is less than 20 per cent, said Mr A.N. Sridhar,
Fund Manager, Sahara Mutual Fund. Also the fund does not "over-invest" in a
specific stock even if that stock is giving continuous gains over a long period
of time, he added.
If a fund has a large cap bias it gives flexibility as it becomes easy to
liquidate the stocks in a fall, said Mr Mahesh Patil, Co-Head, Equity, Birla
Sun Life Mutual Fund, two of whose schemes have bettered their indices and the
Sensex.
Many of the better performing funds have also gone low on cash.
"People keep criticising fund managers, that they do not go into cash when the
markets turn but they should keep in mind that a fund manager's job is not to
go into cash because an equity fund is supposed to be run truly as an equity
fund," said Mr Naval Bir Kumar, Managing Director, IDFC Mutual Fund, two of
whose equity schemes have bettered their own benchmarks as well as the Sensex.
The funds that do well are very disciplined and they do not rely on a
particular skill set of a particular individual; they are as concerned about
the risk matrix of a portfolio as they are about their return potential, said
Mr Kumar.
If a fund has failed to give even benchmark returns in the long term, then it
is for the investor to question and review his investment decision, said Mr
Mahesh Patil, Co-Head of Equity, Birla Sun Life Mutual Fund.
Those funds which have invested in non-Nifty, illiquid and high FII-ownership
stocks have been affected the most, said Mr Sridhar.
While only four of the 137 equity diversified schemes gave positive returns,
about 70 per cent of the equity diversified schemes have fared worse than both
the Sensex and even their own benchmark indices.
The benchmark index of a scheme is a parameter against which fund houses
measure the performance of their schemes, although there is no mandate on the
fund houses to deliver benchmark returns.
http://www.thehindubusinessline.com/2009/03/15/stories/2009031551180100.htm
ekamber
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