Mutual Fund Update: How NFOs faired in last one year?
When the markets are at their peak, many investors seek investment opportunities in mutual funds. They desire to enter the market with an assumption that it will further rise. However, they prefer investment opportunities that are available at a cheaper rate. Due to this investor’s psychology, most asset management companies (AMCs) try to capitalize on it. Usually, investors consider NFOs a value for money proposition and subscribe to the same. This is why AMCs are able to achieve their goal of increasing their assets under management (AUM). If you are an NFO investor then you need to monitor your fund annually.
In this article, we would consider all those open-ended funds that were launched in 2018 and see how they have performed during the period from December 2018 to November 2019. To get some deep insights, we have compared it with the returns of its respective benchmarks for the same period. Let's find out how these funds performed against their respective benchmark:
| Funds | Inception Date | Benchmark Index | Fund P2P Return | Bench. P2P Return | +/(-) |
| DSP Healthcare Fund | 30-Nov-18 | S&P BSE Health Care | 8.30% | -3.92% | 12.22% |
| Mahindra Rural Bharat and Consumption Yojana | 13-Nov-18 | NIFTY 200 | 0.83% | 8.32% | -7.49% |
| Tata Small Cap Fund | 12-Nov-18 | Nifty Smallcap 100 | 5.49% | -7.24% | 12.73% |
| L&T Focused Equity Fund | 05-Nov-18 | NIFTY 500 | 12.87% | 7.52% | 5.35% |
| Invesco India Smallcap Fund | 30-Oct-18 | S&P BSE 250 Small Cap | 4.93% | -7.28% | 12.21% |
| Axis Growth Opp Fund | 22-Oct-18 | Nifty LargeMidcap 250 Index | 15.20% | 5.45% | 9.75% |
| ICICI Pru Manufacture in India Fund | 11-Oct-18 | S&P BSE India Manufacturing Index | 2.47% | 6.03% | -3.56% |
| Shriram Multicap Fund | 28-Sep-18 | NIFTY 500 | 6.60% | 7.52% | -0.92% |
| Sundaram Services Fund | 21-Sep-18 | S&P BSE 200 | 21.26% | 8.78% | 12.48% |
| BNP Paribas India Consumption Fund | 10-Sep-18 | NIFTY 200 | 19.45% | 8.32% | 11.13% |
| Tata Multicap Fund | 06-Sep-18 | S&P BSE 500 | 11.17% | 7.59% | 3.58% |
| IDBI Long Term Value Fund | 20-Aug-18 | S&P BSE 500 | 2.87% | 7.59% | -4.72% |
| ICICI Pru Pharma Healthcare & Diagnostics (P.H.D) Fund | 13-Jul-18 | S&P BSE Health Care | 3.08% | -3.92% | 7.00% |
| Essel Multi Cap Fund | 09-Jul-18 | NIFTY 500 | 13.35% | 7.52% | 5.83% |
| Mirae Asset Healthcare Fund | 02-Jul-18 | S&P BSE Health Care | 4.28% | -3.92% | 8.20% |
| UTI Nifty Next 50 Index Fund | 28-Jun-18 | NIFTY NEXT 50 | 3.84% | 3.13% | 0.71% |
| IDBI Banking & Financial Services Fund | 04-Jun-18 | Nifty Financial Services | 15.64% | 24.32% | -8.68% |
| Mahindra Unnati Emerging Business Yojana | 30-Jan-18 | S&P BSE Mid-Cap | 6.81% | -0.15% | 6.96% |
P2P: Point to Point Returns
+: Out performance
(-): Under performance
Here, we can see from the above table that only 5, out of 18, under performed their respective benchmarks. The remaining 13 funds outperformed. Even from those 13 funds, 6 funds were such, that provided positive returns even when their benchmarks were giving negative returns.
Having said that, I would reiterate that it is always important to monitor the performance of the NFO to understand how it is moving against the benchmark. Also, it is always advisable while investing in NFO that you should consider investing in a fund 6 to 12 months after it is offered. The reason behind it is that it takes time for the fund to build a complete portfolio.
The intention of the above analysis is only to understand how NFOs have performed against their benchmarks in its one-year history and it, in no means, is a recommendation to buy or sell. It is always advisable to have a financial plan in place, which must be followed with discipline and investments in mutual funds being made to be based on your risk assessment. It is also recommended to consult your financial planner before investing.