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Tuesday, September 01, 2009

Funds offering better returns than sensex

The net asset value (NAV) appreciation of nearly 480 funds or nearly one out of every two funds has bettered the sensex returns of 9% in the past year.

Around 100 funds have at least doubled the 30-share index’s gains. The ones like IDFC Small & Midcap Equity (42.92%), Tata Life Sciences & Tech (39.79%), UTI Transportation and Logistics (37.96%), Canara Robeco Equity Tax Saver (36.25%), Birla Sun Life Dividend Yield Plus (35.69%), ICICI Prudential Gilt Investment PF (35.23%) and Reliance NRI Equity (33.99%) returned eye-popping 3x times sensex’s returns. Overall, there are at least 23 funds which more than tripled the benchmark’s gains in the period starting August 31 2008 and ending this August 30.

‘‘Mutual funds have always showed the ability to beat popular benchmarks. While investors remain cautious especially after Sebi regulations on loads, the fact remains that most funds have good track records. We (the industry) have delivered always alpha (a measurement of risk-adjusted performance),’’ said the CEO of a top mutual fund. Interestingly, many funds which sported NAVs of less than Rs 10 have proved to be real gems and may have helped systematic investment plan (SIP) users. Take for instance Religare Contra fund which had an NAV of Rs 9.78 on August 30, 2008.

The market rally has helped the same fund’s NAV to almost touch Rs 13 per unit, gaining 32.52% in 12 months. Others ‘beaten-down’ funds which have outperformed sensex include Taurus Infrastructure (29.09%), Mirae Asset India Opportunities (25.29%), AIG World Gold (20.27%), HSBC Tax Saver Equity (19.86%) and Morgan Stanley ACE fund (18.81%).

‘‘Many themes may not have done well in the past few months. Take for example international funds. While performance is one of the metrics, it’s important for the investor to allocate some portion of their MF assets to them. They might do well when global economies rise,’’ S Naren, CIO of ICICI Prudential AMC said in a recent interview.

Numerous exchange traded funds (ETFs), which track a specific index or commodity, find their place in the market-beater list with those tracking gold like Gold Benchmark ETF (26.69%) or banks such as Kotak PSU Bank ETF (31.8%) doing exceedingly well.

Monthly income plans, best suited for getting specified monthly payment to investors like senior citizens and retired persons, also make it to the sensex-beater list. Funds like Reliance MIP (27.61%), HDFC MIP Long-term (22.08%), Principal MIP Plus (13.87%), Templeton MIP-G (11.74%) and LIC Floater MIP (10.4%) are some examples.

source: TOI

MY COMMENTS -

Investors need to understand this thing that investing in Mutual Funds may or may not outperform in short terms, as the case above is the result of 1 year which is considerably short term. Long Term Equity or Equity Funds investment is a period above 10 years.

In long term always returns are higher & risk is minimal. Yes, though it is important make 'Financial Plan' with ample facts & figures. Also, confidentiality by the intermediary should be maintained.
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