Large-size mutual funds have performed better than smaller funds, says Prashant Jain, Executive Director and CIO, HDFC Asset Management Company. He points to the record of his company’s flagship fund, the HDFC Equity Fund (HDFC EF) with assets under management (AUM) of ₹18,000 crore, as having outperformed the benchmark index in 18 of the last 20 years.

He debunks the myth that smaller funds have greater flexibility and can suffer lesser impact cost when they want to sell. By that yardstick there are no large funds in India, he says, pointing out that HDFC EF, the largest equity fund in the country is just 0.2 per cent of the total market capitalisation.

Giving an indication of how they have outperformed the market, Prashant points out that ₹10,000 invested in the CNX 500 index would have yielded ₹70,000 in 20 years while the same amount might have yielded about ₹4.7 lakh in that period if invested in HDFC EF.

‘Volatility is temporary’

Asked about the current volatility in the stock market, Prashant said these were temporary and they were seeing positive signs of the economy bottoming out. He said despite the run-up of stock prices in 2014, when looked at from 2008, prices are up only 40 per cent versus a nominal 100 per cent increase in GDP in the same period. Price earnings (PE) multiples were also reasonable, he said.

Prashant was critical of the domestic retail investors’ tendency to go for gold purchases. He said gold had yielded a return of 9-10 per cent over the past 36 years whereas the Sensex had yielded 17 per cent on a compounded basis.

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