Equity funds post worst quarter in nearly three years

Diversified equity mutual funds posted their worst quarterly performance in nearly three years with rising interest rates, global economic slowdown and worries over the debt crises resulting in the fall of key stock indices.

Large-cap equity mutual funds have posted a sharp -9.6 per cent in returns in the quarter ended September this year, while returns on mid cap funds too fell at -7.5 per cent over the same period — their worst quarterly performance since the quarter ended December 2008.

Even as key mid-cap indices fell more than large- cap, returns on mid-cap funds have been marginally better than those of large cap funds. The CNX Mid Cap index fell 22.3 per cent, while the large cap indices BSE Sensex fell 18 per cent and BSE 100 fell 19 per cent since December 2008, according to research by Morningstar.

The benchmark sensitive index lost 12.7 per cent during the quarter ended September, while the BSE Mid Cap and BSE Small Cap indices lost 10.1 per cent and 14.9 per cent respectively.

According to data available with Morningstar, infrastructure funds continued their under-performance, and ended the quarter with an average loss in excess of 11 per cent. Banking sector funds were the biggest laggards during the quarter, losing an average 13.1 per cent, on the back of rising interest rates and concerns of deteriorating asset quality of banks. Both the technology sector and global funds lost close to 13 per cent during the period.

“Defensives such as FMCG sector funds were the only saving grace during the quarter, delivering an average return of 5.4 per cent. Healthcare sector funds also did not fall as much as other equity fund categories, and returned negative 6.7 per cent during the quarter. Over the past year FMCG and healthcare managed to deliver a positive return of 14.3 per cent and 2.6 per cent respectively, while other

equity fund categories dabbled with losses over the same period,” said Dhruva Chatterji, senior research analyst, Morningstar.

Source: http://www.indianexpress.com/news/equity-funds-post-worst-quarter-in-nearly-three-years/855863/0