The Hindu Business Line : 10-year-old equity funds turn in 20% returns

Kolkata April 30 A decade may not be a very long time in fund management, but equity funds that have a track record of 10 years and more have mostly ended 2006-07 with a cool 20 per cent or even higher since inception. The wealth that some of them have created makes them superior to most other categories of savings and investment products.

While there are a little over 30 diversified funds with at least 10 years behind them, quite a few (about dozen) have turned in 20-25 per cent returns, considering March 31, 2007, as the cut-off date. Barring a few exceptions, almost all players have double-digit returns to their credit.

The last 10 years, which have seen a number of exceptional occurrences, the dotcom bust included, have been good for the fund management industry in part. The trend has markedly turned in favour of equities in the last few years, helping smart fund managers consolidate performance and turn in higher-than-average figures, report MF sources.

Some of the more experienced players (that is, in terms of number of years) have products that rank higher in the returns charts, it is pointed out. Franklin Templeton, to which schemes of the first private-sector outfit Kothari Pioneer were transferred, has three funds that fit the bill. Bluechip, Prima and Prima Plus, have provided 28.83 per cent, 24.55 per cent and 22.96 per cent respectively since their launch in 1993/1994, according to Value Research.

HDFC Capital Builder, which traces its origin to the erstwhile Zurich, has given a more modest 14.61 per cent. HDFC Equity, however, has given a much higher 24.17 per cent. Both were flagged off in 1994.

A clutch of funds in the UTI MF stable too are in the list - Master Growth, Master Plus, Master Value and Mastershare. These have recorded 15.55 per cent, 15.44 per cent, 25.12 per cent and 21.48 per cent since their launch. Mastershare, incidentally, is the oldest of the lot, having been launched in late 1986.

A few one-off cases also stand out. Sundaram BNP Paribas Growth and SBI Magnum Equity, for instance, have handed out 23.85 per cent and 17.17 per cent since 1990 and 1997 respectively.

Business Line sought to put the trend in context, collecting views of CEOs, both young and not-so-young. Mr Krishnamurthy Vijayan, who now heads new entrant JP Morgan's asset management business in India and was earlier with JM MF, underscores the significance of investing over longer periods. `Good' fund managers, he notes, are often able to make fuller use of time, attracting more investors in the process.

Mr Pankaj Razdan, who has been the chief of ICICI Prudential MF for over three years, feels time sometimes levels out performance. There are cases where fund managers, whose feats were once somewhat pedestrian, have turned a new leaf, he adds.

Funds that couldn't

In a few exceptional cases, funds have not been able to capitalise on the long-term that they have enjoyed. Notable among these are the likes of LIC MF Growth, LIC MF Equity and CanFortune 94. These have, at the end of March 2007, have provided a negative 0.02 per cent, 4.72 per cent and 9.54 per cent respectively since inception.

Among the private-sector players, JM Equity and Tata Growth have just about scraped through, turning in 10.19 per cent and 10.25 per cent respectively. Both were launched in 1994.

Taurus Discovery Stock, with 3 per cent since introduction, has also made it to this league. The other two equity funds under the Taurus umbrella have done better: Taurus Bonanza Exclusive, with 13.61 per cent, and Taurus Starshare, with 10.5 per cent.

More Stories on : Stock Markets | Mutual Funds

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page