Mutual Fund Houses: Quarterly Report Card

Like the frontline equity indices, mutual fund schemes too have fared well in the April-June period of the current fiscal, with schemes investing in FMCG and Pharma stocks showing an exceptionally good performance. Saikat Mitra tells us more

In the recently concluded Q1FY14, the benchmark indices Sensex and Nifty have witnessed an up-move of around 6.35 per cent each. However, there are many who do not deal directly in the stock market but use the mutual fund routeto invest. This is because of the benefit of mutual fund schemes of placing investments in the able hands of fund managers, who are better equipped and more experienced in handling money wisely. The other advantage of going through this route is that investors own a portion of the basket of stocks that the fund manager has accumulated, and can hence gain from diversification.

Needless to say, it is always a good idea to put hypotheses to the test. Therefore, we at DSIJ decided to look at the report card of mutual funds for the quarter ended June 2013.

For the purpose of our analysis, we have taken into consideration ope nended equity diversified funds, including sector funds. Contrary to common perception, we find that mutual fund schemes in the country have indeed performed well in Q1FY14. Out of the total of 351 schemes that we have studied, we find that only 23.08 per cent of them (81 schemes) have generated negative returns. Most of these are from the already beleaguered sectors such as power, infrastructure, mining and gold. Although the various schemes might have different benchmarks, we compared their returns with those yielded by the Sensex in the same period. While the Sensex gave returns of 6.35 per cent during the first quarter of FY14, a good 45 per cent (160 schemes) have been able to outperform the index. Of these, the best performing schemes were from the FMCG and Pharmaceuticals sector.

Taking a scheme-wise look at the performance of fund houses, we find that Franklin and Edelweiss lead the list the best performing ones. In both these, not a single scheme (of a total 12 and 7 schemes respectively) has generated negative  returns. On the other hand, Sahara and DSP Blackrock find a place on the bottom rungs of the performance list.

Finally, let’s take a look at the performance of the schemes on a standalone basis. In Q1FY14, the SBI FMCG Fund has secured the top spot in the list, generating returns of 32.56 per cent. DSPBR World Gold Fund scheme was the worst performer, generating negative returns of 36.69 per cent.