Mutual Funds bounce back with better show
While diversified equity mutual funds (MFs) made a strong comeback in 2009, many funds that were battered in last year’s marketdownturn have bounced back even more sharply, generating over 100% return.
Several funds that had declined 62% to 67%, slipping to the bottom of the performance charts in 2008, have grown 100% to 116% this year (till December 24) and have made it to the top-25 list in 2009, analysis shows. Diversified equity Mutual Funds have moved up by 83% during the period, data with fund tracker Value Research shows.
A strong bias towards mid-cap and small-cap stocks, which have raced ahead of key indices in the rally, has helped these funds notch up higher gains. Many funds that performed poorly in 2008, made it to the top now, after having 60% to 99% exposure to mid and smallcap stocks. While sensex and nifty have given 80% and 75% returns in the year so far, the Bombay Stock Exchange mid-cap and smallcap indices have grown by 100% and 113% respectively.
Funds with exposure to construction, capital goods and engineering were beaten down significantly when the markets went down. “But these sectors have bounced back sharply now,” explains Gopal Agrawal, head, equity, Mirae Asset global investments. Incidentally, most of the 10 funds that have clawed their way back to the top have a sizeable bias to construction, engineering and energy stocks.
“Funds that stayed the course by not cutting equity investments significantly have reaped the benefits,” say industry officials. “We stuck with the theme and didn’t turn too defensive when the markets fell,” says Mahesh Patil, co-head, equity, Birla Sun Life MF.
Despite the good run, these funds are quoting 20% to 30% lower than their peaks hit in January 2008 when the benchmark indices hit their life time highs. “Given the higher volatility, these funds suit investors with a higher risk appetite and willing to remain invested,” say fund managers. “Investors shouldn’t exit these funds in a hurry when the markets turn bad. They should stay invested at least for two years,” says Birla Sun Life’s Mahesh.
The net asset values of most funds in the top performers pack are quoting at a 52-week high. Taurus Infrastructure, Magnum Global and DSP Black Rock Micro Cap are among the funds that have seen a sharp surge after plunging deep into the red in 2008.
Several funds that had declined 62% to 67%, slipping to the bottom of the performance charts in 2008, have grown 100% to 116% this year (till December 24) and have made it to the top-25 list in 2009, analysis shows. Diversified equity Mutual Funds have moved up by 83% during the period, data with fund tracker Value Research shows.
A strong bias towards mid-cap and small-cap stocks, which have raced ahead of key indices in the rally, has helped these funds notch up higher gains. Many funds that performed poorly in 2008, made it to the top now, after having 60% to 99% exposure to mid and smallcap stocks. While sensex and nifty have given 80% and 75% returns in the year so far, the Bombay Stock Exchange mid-cap and smallcap indices have grown by 100% and 113% respectively.
Funds with exposure to construction, capital goods and engineering were beaten down significantly when the markets went down. “But these sectors have bounced back sharply now,” explains Gopal Agrawal, head, equity, Mirae Asset global investments. Incidentally, most of the 10 funds that have clawed their way back to the top have a sizeable bias to construction, engineering and energy stocks.
“Funds that stayed the course by not cutting equity investments significantly have reaped the benefits,” say industry officials. “We stuck with the theme and didn’t turn too defensive when the markets fell,” says Mahesh Patil, co-head, equity, Birla Sun Life MF.
Despite the good run, these funds are quoting 20% to 30% lower than their peaks hit in January 2008 when the benchmark indices hit their life time highs. “Given the higher volatility, these funds suit investors with a higher risk appetite and willing to remain invested,” say fund managers. “Investors shouldn’t exit these funds in a hurry when the markets turn bad. They should stay invested at least for two years,” says Birla Sun Life’s Mahesh.
The net asset values of most funds in the top performers pack are quoting at a 52-week high. Taurus Infrastructure, Magnum Global and DSP Black Rock Micro Cap are among the funds that have seen a sharp surge after plunging deep into the red in 2008.
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