Most MFs have underperformed Sensex this round

Source: economic times


NEW DELHI: Mutual funds have underperformed the Sensex in the current market rally. Between June 14 and December 5, out of a total of 168 open-ended diversified equity schemes in the market, only 47 schemes have outperformed the index, according to the data provided by ValueResearch.


The infrastructure and construction sectors have partially salvaged the situation for MFs with all the 47 schemes that have outperfomed the index having a large exposure to both these sectors.


“Besides, the stock-specific selection that is critical to the performance of the mutual fund schemes, specific sectors like engineering, infrastructure and construction have definitely done better than others,” said Sanjay Sinha, Head (Equity), SBI MF.


Franklin India Opportunities, Taurus Starshare and DBS Chola Opportunities are the top-performing schemes with the highest growth in their NAVs during the last six months.

Franklin India Opportunities has 16% of its portfolio in the construction sector and another 8% in the real estate sector. Taurus Starshares and DBS Chola Opportunities, too, have significant exposure in the infrastructure and construction sectors.


Another theme common to these 47 outperformers is that most of them (45) are large cap schemes. “Generally, large cap funds tend to lead the uptrend in the market followed by mid-caps and small caps. We have witnessed strong performance of large cap funds, which is expected to continue, coupled with mid-cap participation, said Nilesh Shah, CIO, Prudential ICICI Mutual Fund.

Small and mid-caps are attractive but there is a lot of scepticism around that segment, which is keeping investors away, agrees Mr Sinha. Birla Midcap and Magnum Midcap, the only two mid-cap schemes that have outperformed the Sensex, have also stayed away from small stocks. “Both schemes have mid-sized companies in their portfolio and there are no downright penny stocks, which shows that fund houses have stayed away from these stocks,” said Dhirendra Kumar, CEO, ValueResearch.