It could be financially hazardous to randomly pick a mutual fund. The five worst performers in the equity diversified category lost a third of their value in the past year. On the other hand, the best performing fund in this category, Reliance Regular Savings, contained its losses to a mere -2.5%. Among the equity tax plans, relatively newer funds faced the brunt of the market meltdown.
Index funds have not lost as much as diversified equity funds in the past one year and have even outperformed them over a three-year period. Midcap funds as a category, on an average, lost more than any other form of equity funds. In the past one year, the worst performing midcap plan has lost more than 40%, which is double of what the Sensex lost during the period.
Balanced funds try to mitigate the risks associated with equities by investing some of their corpus in debt instruments. But, the worst performing balanced funds have registered losses equal to those of equity funds, which primarily invest in stock markets. The best performing debt-oriented fund, Sundaram BNP Paribas Value Plus, has generated enviable returns of 10% in the past year.
MIPs as a category generated positive returns in the past year. Though the LIC Floater MIP is in the worst funds pack, in the past six months it has outperformed its category average. DBS Chola MIP, the top performer in this category, earned returns of 23% in the past year. The best performer in the FoF list, ICICI Pru Advisory-Very Cautious plan, generated 8.3% in the past year.
The Takeaways
• Funds have increased their exposure to the capital goods sector, which until recently was considered to be the most vulnerable to the slowing economy.
• Oil and gas companies are in the limelight. Reliance plans to pump crude oil from the KG Basin early next year. ONGC is in the process of acquiring UK-based Imperial Energy.
• An SIP of Rs 2,000 over a three-year tenure (Rs 72,000) from Sptember 2005 to August 2008 would have grown to Rs 80,040.80, a growth of 11.17%.
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