How equity MFs performed in last one year?

Equity markets have been a volatile ride in the last one year and it would be interesting to analyze the performance of equity MFs during this period as we approach towards the end of the calendar year. The general elections, budget, credit events, state elections and the landmark corporate tax rate cut announcement were among the seminal events levying significant influence on stock prices. It would be interesting to gauge the performance of equity mutual funds in the last one year in an events driven and a volatile equity market.

We have weighed equity mutual funds' performances in context of the performance of benchmark indices, i.e. small, mid and large cap stocks representative indices, depending on the investments profiles of respective funds, over the last one year. We benchmarked large cap funds' performances with the S&P BSE 100 index, and mid and small cap oriented funds have been benchmarked to the S&P BSE mid cap index the S&P BSE small cap index, respectively. The period of study is November 01, 2018 to October 31, 2019.

Looking at the above chart we can say that the broader markets (S&P BSE Sensex) have outperformed mutual funds irrespective of their market cap bias, in the past one year. Does this mean that it is always better to stay invested in the broader indices like the Sensex? Not exactly. The decisive factors are actually your risk appetite, the time horizon that you can stay invested, and your financial objectives.

Coming back to our study, the results hint at broader equity categories tending to perform better in volatile market conditions. In the past one year, large cap funds are the ones which would have been a better bet to ride the volatility compared to mid cap and small cap funds. Lastly, it be noted that investments in equities should be held for a longer term to optimize returns.