About 75% of equity funds beat benchmarks

Despite equity markets remaining volatile for the year till date, over 75% of the equity schemes have managed to outperform their respective benchmark indices by huge margins. According to data provided by Value Research, out of over 340 equity schemes in the country, around 246 schemes managed to outperform the benchmark indices.

Interestingly, many mid and smallcap equity funds have managed to give better return then large-cap and thematic schemes. Some of the mid-small cap fund like Magnum Emerging Business, Mirae Emerging Bluechip, HDFC Mid-cap opportunities, Reliance Small Cap and DSP BlackRock Micro Cap have given negative returns in the range of 5-15% till year to date. During the same period their benchmark indices have fallen by about 25-35% while largecap index Sensex was down by 22%. According to fund managers, conservative investing coupled with aggressive cash calls taken during the market fall helped give better returns than that of their respective benchmarks.

Neelesh Surana, head of equity, at Mirae MF, says, “Last one year overall environment was very challenging following high inflation and surging interest rate scenario. In such a situation, we had stayed away from sectors such as real estate, infrastructure and construction, which helped us.”

Soumendra Nath Lahiri, head equities, at Canara Robeco MF, says, “The construction of our portfolio was defensive as equity markets were volatile. In the past few months we had remained underweight on interest rates sensitive sectors, while hiking exposure to consumption and cement sector which helped us to generate better returns.” “It was not only stocks picking that helped get better returns, but investing in companies which have low gearing and good cash flows” added Surana.

Also many equity funds were seen investment in non cyclical sectors such as pharma and consumer goods which helped arrest the fall in NAV values in the downturn. According to market participants, some schemes were seen sitting on cash of over 15-20% at one point in time which was gradually reduced at lower market values.

Some fund managers changed asset allocation in favour of high interest yield debt which helped generate better returns. However some of the funds like JM Core 11 (-33.99%), JM Basic (-36.25%), Reliance Infrastructure Retail (-40.80) and HSBC Mid-cap Equity (-37.52%) saw major erosion of their NAVs in the current calendar year.

Source: http://www.financialexpress.com/news/about-75-of-equity-funds-beat-benchmarks/879657/0