Fund Performance: Worst Equity Funds

Schemes from JM Financial, LIC Nomura and HSBC have done disastrously

In the three-year period ending March 2012, the Sensex went up from a low of 9,708 to 17,404, providing an impressive 21.48% annual compounded return. Equity funds may or may not do well in a sideways market, but if they have not made good money in a bull market, it is a huge disappointment. Which are these laggards?

In the list of the bottom 15 mutual fund schemes, there are three schemes each from HSBC Mutual Fund, JM Financial Mutual Fund and LIC Nomura Mutual Fund. HSBC has been a horrendous performer. None of its seven equity schemes was able to beat the benchmark. HSBC Progressive Themes Fund, which invests in predominantly mid-cap and small-cap stocks, managed to deliver just 10.80% returns, less than half of its benchmark BSE 200 which returned 23.68% in the same period. HSBC Dynamic Fund and HSBC Equity Fund fared poorly as well.

LIC Nomura Mutual Fund has often figured in our list of underperformers. Four of its five equity schemes have underperformed; three of these are present in the bottom 15. Only LIC Nomura MF Growth gave a return of 21.72% compared to its benchmark S&P Nifty which returned 20.57%.

All the four funds of JM Financial Mutual Fund, which we had labelled as the worst Indian fund house, have grossly underperformed as well. JM Multi Strategy Fund and JM Basic Fund underperformed their benchmarks by around 10 percentage points each.

Reliance Mutual Fund’s schemes were top performers at one time. Some schemes are doing well but Reliance Equity Fund made it to the bottom of the list with a return of just 10.93%. Three of Reliance’s 10 schemes underperformed the benchmarks. Reliance Top 200 Fund returned 21.93% and Reliance Natural Resources Fund returned 17.50% while BSE 200 which is the benchmark for these funds gained 23.68%.

Another disappointing performer is IDFC Mutual Fund. IDFC Premier Equity Fund has been among the top performers since its launch in September 2005. However, in the last three-year period, just three of IDFC’s seven funds managed to beat the benchmark. IDFC 50:50 Strategic Sector Equity Fund made it to the bottom of the list with a return of just 15.67%. The other three funds which underperformed their benchmarks include IDFC Classic Equity Fund, IDFC Imperial Equity and IDFC India GDP Growth, all of which returned 17%-18% in the three-year period.

The funds of Religare Mutual Fund, most of which were launched in 2007, have not been consistent performers. However, two schemes, Religare Mid N Small Cap Fund and Religare Mid Cap Fund, made it to the top 10 performers’ list with returns of 40.63% and 38.89%, respectively. At the same time, Religare AGILE Fund, a large-cap oriented fund, returned just 14.21% and came at the bottom of the list.

When UTI Contra Fund was launched in March 2006, we had said that it was a marketing gimmick and, hence, asked you to stay away. It mopped up a huge Rs1,200 crore from nearly 270,000 investors. Investors who are still invested would be sad to see the Fund in the bottom 15 list having returned just 16.14%. Out of the 13 funds of UTI Mutual Fund, five have underperformed their benchmark.

ING OptiMix Multi Manager Equity Fund managed to return just 16.80%. The other four funds from the fund house managed to give an average return of 28%. DWS Alpha Equity Fund returned just 16.13% and the only other fund from Deutsche Mutual Fund, DWS Investment Opportunity Fund returned 17.26%

Source: http://www.moneylife.in/article/fund-performance-worst-equity-funds/25715.html