It was not a particularly easy year for the mutual fund industry. Regulatory changes at a frequency that was hard to keep pace with, fund manager churns, big ticket takeover and the constant uncertainty on the interest rate front that kept debt managers guessing, all caused plenty of anxious moments for the investor community as well.
\nYet, focus on performance helped funds garner market-beating returns, thanks to the bounce back in the equity market and the price rally in some debt instruments in 2012.<\/p>\n
With an average return of 28 per cent in the equity category and a good 9.6 per cent in debt, year to date in 2012 (up to December 25), mutual funds delivered well. The Sensex returned 24.5 per cent over this period while the CRISIL Composite Bond index rallied 9 per cent.<\/p>\n
While the equity performance was a complete turnaround from 2011, when funds fell an average 23 per cent, the debt category saw a marginal improvement over last year (average return of 8.9 per cent in 2011), thanks to a stronger rally in gilt this year.<\/p>\n
Banking theme tops list<\/strong><\/p>\n The rally in a number of private sector banks led to funds with a banking theme topping the equity list in 2012. ICICI Pru Banking and Financial Services, Reliance Banking, UTI Banking and Religare Banking topped the list, delivering 55-70 per cent year-to-date. It is to be noted that these toppers fell hard in 2011 and still lag the category average over a three-year period. In all, about three-fourth of the 370-odd active equity funds we analysed beat key benchmark indices, Sensex and Nifty. But then, they were not so lucky with a broad benchmark such as S&P CNX 500. Only 38 per cent of this universe outperformed the S&P CNX 500\u2019s return of 30.5 per cent. The CNX 500 is heavy on mid-cap stocks. Debt still shines<\/strong><\/p>\n If 2011 was a year for short-term funds, 2012 saw gilt funds and income funds that took positions in gilt, emerge as winners. Funds such as Kotak Gilt Investment, L&T Gilt Investment and Reliance Gilt Securities delivered over 12 per cent returns, laden with government bonds that had average maturity between 10 and 20 years. It is noteworthy that the CRISIL 10-year gilt index by itself delivered 9.9 per cent.<\/p>\n A few income funds such as SBI Magnum Income, Reliance Dynamic Bond and Kotak Bond Plan A that had relatively higher exposure to long-dated government securities compared with peers, also delivered double-digit returns. Short-term funds, together with a few gilt funds were mostly the ones at the bottom of the list with 6-7 per cent returns. Gold glitters less<\/strong><\/p>\n After couple of years of racy performance, gold funds and gold ETFs settled for an average 11.4 per cent return in 2012. HDFC Gold, ICICI Pru Gold Savings and Quantum Gold Savings topped the list with 12-12.5 per cent returns.<\/p>\n What the year ahead holds<\/strong><\/p>\n It was not a particularly easy year for the mutual fund industry. Regulatory changes at a frequency that was hard to keep pace with, fund manager churns, big ticket takeover and the constant uncertainty on the interest rate front that kept debt managers guessing, all caused plenty of anxious moments for the investor community as […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[6],"tags":[516],"yoast_head":"\n
\nNext in the list were mid and small-cap funds. Here the list appeared a bit tricky with less established ones such as HSBC Midcap Equity or Taurus Discovery making it to the top; ahead of more established peers such as IDFC Premier Equity or ICICI Pru Discovery by 10-12 percentage points.<\/p>\n
\nIn the diversified fund category, while the oft-repeated names \u2013 Quantum Long Term Equity, HDFC Top 200, UTI Opportunities, Reliance Equity Opportunities all comfortably beat key indices such as the Sensex and Nifty, the outperformance was not as high as the above mid-cap list. Relatively subdued performance in the large-cap category coupled with the fact that these funds did not suffer too badly in 2011 (and hence did not have a low base) led to the diversified category throwing no surprise on the upside.<\/p>\n
\nThere were no surprises in the bottom of the list. Funds with the IT theme underperformed as stocks in this space languished in 2012. Funds that invest in international mining stocks, gold equities and energy stocks generated negative returns, in line with the respective sector performance globally.<\/p>\n
\nIn all, 73 per cent of the debt universe beat the CRISIL Composite Bond index return of 9 per cent. Liquid funds continued their joy ride delivering a little over 9 per cent on an average.<\/p>\n\n
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