MF equity investors lost up to 27% in past year

Investors in equity schemes of mutual funds have gone through a rough patch in the last three years despite investing diligently even during troubled times.

In the last one year 89 per cent of ₹1.37 lakh-crore assets in the large cap schemes of mutual funds have delivered negative returns of 5 per cent to 22 per cent as of June-end.

Similarly, 86 per cent of ₹1.37 lakh-crore assets in multi-cap funds have given negative returns of up to 27 per cent. The riskier small cap funds have registered negative returns of up to 26 per cent while 82 per cent of mid-cap schemes have recorded negative returns of 18 per cent.

Omkeshwar Singh, Head- RankMF, a mutual fund rating company, said equity returns over three and five years are also nothing to write home about.

As per RankMF Research and Ratings, nearly ₹11 lakh-crore of AUM at present are less than three Star Funds, he said.

Sunil Subramaniam, Managing Director, Sundaram Mutual, said cheap money from the US flowed into the equity markets with a hope that the Indian economy will bounce back but even while the revival was happening the Covid pandemic broke out, dampening investor sentiment, he added.

“We hope that in the next 6-18 months things will start looking up,” he said.

Nilesh Shetty, Associate Fund Manager- Equity, Quantum Mutual Fund, said flow into the equity schemes of mutual funds are continuing despite the poor performance as the competing asset classes such as bank deposits and real estate are not doing well.

The substantial closure of SIP in equity schemes may be due to fall in investor earnings and job loses due to the Covid crisis, he added.

Nirakar Pradhan, Chief Executive Officer, PRMIA, a risk management firm, said the negative return in the broad equity market in the last couple of years is a reflection of the large corporate failures such as IL&FS, DHFL, YES Bank and PMC Bank.

However, he said investors should stagger their investments in equity mutual funds given the low return in bank deposit, he added.

On the timeline for long-term investment in mutual funds being extended from 3-5 years to 10 years and now to the next generation, Subramaniam said goal-based investment is the best option in mutual funds and investors should redeem once their goal is achieved as being greedy will destroy the entire wealth.

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