How your equity mutual funds fared in 2019

  • As of December 20, the large-capitalization category showed an average return of 10.54%, according to Value Research data

  • Aggressive hybrid funds are classified as capital funds for tax purposes


Mutual Funds Infographic


Amid an in-depth slowdown in GDP growth, India's benchmarks hit record highs. However, the indicators were driven by a narrow set of actions and most mutual funds could not keep pace. As of December 20, the large-capitalization category showed that the average return is 10.54%, less than the benchmark yield of 13.34% in Sensex according to value research data.

Large and medium capital funds delivered only 7.19% and multi-cap funds yielded a 9.12% return. The hardest hit was medium and small-capitalization funds, which yielded 1.20% and -3.90%, respectively. “2019 teaches us that diversification is essential and this includes diversification in all sectors of the market (large, mid and small caps). It is best to do this through multi-cap funds.” Said Viral Bhatt, an independent financial advisor based in Mumbai. “Investors should avoid choosing specific sectors, such as medium-capitalization or small-capitalization funds."

A small group of AMCs, such as Axis Mutual Fund, which placed growth-focused bets with better performance, managed to break the standards. The returns to the Axis Bluechip Fund yielded 18.69%. On the other hand, funds that focus on investing "value" rather than "growth" have seen modest returns. ICICI Prudential Value Discovery Fund, the largest asset planner in this category, showed a small 0.27% return. "Consistency is important. Investors should not simply jump into this year's performers. Additionally, the focused positions taken by them are a source of risk."

Aggressive hybrid funds are classified as capital funds for tax purposes. These funds were helped by lower interest rates in both debt and capital components (bond prices rose when interest rates fell). As a result, several funds in this category recorded high yields of double digits, such as the BNP Paribas Substantial Equity Hybrid Fund (16.16%), Motilal Oswal Equity Hybrid Fund (16.08%) and Axis Equity Hybrid Fund (14.05%). However, giants of this class, such as the ICICI Pru Equity and Debt Fund and HDFC Hybrid Equity Fund, left 10.62% and 7.98% returns, respectively.

The unexpected behavior of stock markets in 2019 brings a lesson of diversification. Those who enter the best results for the year should be careful.

Image Source: The Financial Express

Also Read: 2020 Budget: Government plans to reduce Tax rates for Individual Taxpayers

  • Share
Subscribe now