Equity funds as a category cannot boast of beating inflation in the last five years. Still, given the poor equity market conditions that prevailed in these years, the performance was not dismal.

Diversified equity funds on an average delivered 6.2 per cent annually in the past five years, beating the Nifty returns of 5.5 per cent and BSE 500 returns of 4.1 per cent.

A hundred and forty diversified equity funds, excluding sector funds and index funds, were analysed for this purpose. These funds also beat the markets in the last three years. Almost 18 per cent of funds delivered double-digit returns in the five-year period suggesting that you would still have beaten inflation, had you held well-established funds. But at least 12 per cent of this collection either lost value or delivered returns below 1 per cent.

Above average

One-half of the collection with track record of at least five years returned more than or equal to the category average. MNC funds, opportunity funds and dividend-yield funds were the ones that topped the charts in the five-year category. IDFC Premier Equity, Birla Sun Life MNC Fund, ICICI Pru Discovery, ING Dividend Yield and UTI Opportunities were the top performers. These funds returned anywhere between 13.9 per cent and 16 per cent.

Both the MNC funds, Birla Sun Life MNC and UTI MNC, delivered robust annual returns of 14.5 per cent and 13.9 per cent respectively in the past five years. These funds invest predominantly in stocks of multinational companies.

Despite steep valuations, MNC stocks have rallied on account of the market’s preference for cash-rich, low-debt companies in the past few years. Many companies are typically well-funded by the parent and also derive revenue from other regions.

Along with MNC funds, dividend yield funds, too, were in the limelight. Five out of the seven dividend yield funds delivered double-digit returns.

Top performers in this category were ING Dividend Yield, Birla Sun Life Dividend Yield Plus and UTI Dividend Yield. Principal Dividend Yield and Escorts High Yield Equity, though, remained laggards with returns of 7.1 per cent and 3.3 per cent respectively.

midcaps’ mixed performance

In the mid-cap space, funds such as ICICI Pru Discovery, HDFC Mid-Cap Opportunities, Sundaram Select Midcap, SBI Magnum Emerging Businesses, DSP BR Micro-Cap, HDFC Capital Builder, Reliance Growth and UTI Mid Cap have returned anywhere between 8 per cent and 14.4 per cent to investors.

But there were a few funds in this category that failed to expand their NAV even over a five-year period. BNP Paribas Mid Cap, ICICI Pru Mid Cap, SBI Magnum Midcap and HSBC Midcap Equity delivered flat to negative returns.

Among funds that have a contrarian strategy, Tata Contra, Religare Contra and Kotak Contra managed above-average returns of anywhere between 6.7 per cent and 9.7 per cent. L&T Contra was the worst performer, falling 3.2 per cent annually in the last five years. Investors holding funds such as Taurus Discovery, LIC Nomura India Vision, JM Equity, HSBC Progressive Themes and JM Basic would have lost between 3.3-13.4 per cent every year in the last five years.

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