The Hindu Business Line : One-year return turns negative for most diversified schemes

Mumbai, July 21 One year may not be a long enough time for judging the performance of equity-related investment schemes, particularly in a bearish market. Yet, for a retail investor who has put in his money in a mutual fund scheme a year ago – when Sensex was 15,000 points, the returns are negative or pitiably low now when the benchmark index is down by less than 2,000 points at 13,500 levels.

Most of the diversified equity schemes have given negative returns during the past one-year.

Out of the 170 schemes, which have reported their one-year returns as on July 18, 2008, only six have given positive returns.

According to Value Research data, of the 170 schemes, which have been functional since the past one year, more than 60 per cent of the schemes have under-performed the Sensex.

Most of the schemes have fallen more than their benchmark indexes also, said analysts.

“If markets are bad, obviously the schemes are bound to under-perform, but in such times investors need to look at a long-term investment horizon,” said Mr Srinivas Jain, Chief Marketing Officer, SBI Mutual Fund.

There was a steep fall in the markets in the past one year, and typically in such volatile times, equity is a risky asset unless they are for a period of three to five year horizon, said Mr Sandesh Kirkire, Chief Executive Officer, Kotak Mutual Fund.

Benchmarks

The Sensex has fallen by more than 10 per cent since July 18, 2007.

Most of the equity diversified schemes are benchmarked either against the BSE-200, which has fallen by more than 12 per cent since July 18, 2007, the S&P CNX Nifty, which has fallen by more than 9 per cent, the BSE-100 which has fallen by more than 11 per cent, or the S&P CNX 500, which has fallen by more than 13 per cent over the same time period.

According to an analyst with domestic brokerage, diversified funds should have given better returns.

Fund mangers blame the falling market, but they are supposed to manage the funds in good and bad times.

Investors who have invested in these schemes a year ago would have been better off had they invested in index schemes rather than the diversified schemes, said another analyst.

When the going was good these schemes were beating the Sensex, said Mr Dhirendra Kumar, CEO, Value Research.

Fund managers had earlier taken greater risks for higher returns, and invested in mid-cap and small-cap stocks, said Mr Kumar.

That greater risk is translating into more negative returns as the mid-cap and small cap indices have taken a greater beating than the Sensex, he added.

More Stories on : Mutual Funds | Mutual Funds

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

Stories in this Section
Locally heavy rain in TN, Karnataka

Q1 cement despatches rise

Dhaka told to improve connectivity to cut trade deficit

One-year return turns negative for most diversified schemes

Will UPA govt pull it off?

Tech Mahindra bags $700-m outsourcing deal from BT

Maruti Q1 net skids despite higher sales

Dr Reddy’s net down 26% at Rs 134 cr

Re, input costs hit auto parts export growth rate

Pepper exporters gain from sale calls in futures

Markets cautious ahead of vote

Indian Bank (Rs 101.80): Buy

Courier industry reels under high oil price; costs rise 30%