After a long time, equity mutual fund investors are sitting on healthy profits, following the huge rally in January 2012, and then again, in the September-December period. While benchmark equity indices delivered close to 30 per cent return year-to-date (YTD), aided by the low December 2011 base effect, equity mutual fund schemes have performed even better, aided by better portfolio management by top performing fund managers this year.
This has resulted in top performers among equity mutual funds clocking returns of 35 per cent to 50 per cent. The top performers among large-cap equity funds in 2012 that Financial Chronicle surveyed in terms of year-to-date (YTD) return were Principal Growth Fund (Growth) 44.01 per cent, Reliance Equity Fund (G) 41.49 per cent, Reliance Top 200 Fund (G) 39.18, SBI BlueChip Fund (G) 36.56 per cent, ICICI Pru Top 200 Fund (G) 34.79 per cent.
The equity mid-cap and small-cap funds too have posted dream returns of 44 to 51 per cent on a YTD basis.
Some of the sectoral funds have posted even better returns at more than 50 per cent, with the top five performers giving returns in the range of 54 per cent and 66.81 per cent. Top performing sectoral funds this year were mostly from the banking and financial sectors and only one from the media sector — ICICI Pru Banking & Financial Services (Growth)-66.84 per cent, Reliance Media & Entertainment Fund (G)-56.86 per cent, SBI Magnum SFU - FMCG Fund-56.01 per cent, Reliance Banking Fund - (G)-54.35 per cent, Religare Banking Fund (G)-54.21 per cent.
The top five diversified equity funds did equally well posting returns between 35 per cent and 44.80 per cent. Harsha Upadhyaya, senior vice-president and head of equities at Kotak Mahindra Asset Management, said: “Equities have delivered much better returns than fundamentals suggest, the kind of returns generated (30 per cent YTD) looks more than reasonable, but this has also happened due to the base effect of December 2011,”
“Equities will perform in 2013 as well, though debt will outperform equity maybe in first six to nine months,” Upadhyaya said.
Jimmy A Patel, chief executive officer at Quantum Asset Management Company, said, “We remain optimistic about Indian equities in the long run. Despite the double-digit rally in Sensex during Calendar 2012, we see current equity valuations as reasonable. We remain hopeful that India will continue to record GDP growth of 6.5 per cent to 7 per cent over the long term, irrespective of global uncertainties. We believe that Investors should hold on to equities for inflation beating returns in the long term.”
“While equities have done well due to several factors, including decent FII inflows during the year, we believe that the future is bright for Indian equities as domestic consumption shows no sign of a dramatic slowdown in the coming years,” Patel said.
Sandesh Kirkire, chief executive officer of Kotak Mahindra Asset Management, said: “Both equity and debt should do well, driven by expected drop in interest rate in 2013.” Talking on the outlook for mutual fund products in 2013, Kirkire said, “We are slaves of the underlying markets.”
With a late rally in the equity market, equity mutual funds this year have posted much better returns. Debt mutual funds, on the other hand, managed returns between 9.5 per cent and 12 per cent. “It will be difficult to say which of the two — debt or equity mutual fund schemes — will do better in 2013 based on their respective performance in 2012,” Kirkire said. zz