Foreign flavour helping mutual fund investors mint money as D-Street slows down

All equity mutual funds have offered negative returns in one horizon, except for international funds and large cap funds, data crunching by ETMutualFunds showed. Small cap funds were the worst hit, with -5.65% return in one month horizon. Energy & Power funds gave a negative return of around 3.46%.


Pharma & Health Care funds lost around 3% in one month. Mid Cap Funds lost 2.86% during the same time period.


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Now, the question comes what has impacted the performance of equity mutual funds in one month horizon? “The valuation of the markets has been high. There were guidelines for mid and small caps valuation that could be high and investors were advised not to have a very high exposure in them. This impacted the overall short-term performance of equity markets,” said Rajesh Minocha, a Certified Financial Planner (CFP), Founder of Financial Radiance.

He added, “But that is not a concern for long-term investors and they should continue to invest based on their goals and their risk appetite. Besides when investors are investing via Systematic Investment Plans (SIPs), then the averaging out will happen.”

International funds offered 1.70% in one month. There were around 65 schemes in the international fund category that have completed one month in the market.

ICICI Pru Strategic Metal and Energy Equity FoF, the topper in the international fund category, offered 9.22% in one month horizon. Edelweiss Europe Dynamic Equity Off-shore Fund gave 7.59%. Nippon India Taiwan Equity Fund lost the most of around 4.22% during the same period.

Large cap funds offered an average return of 0.19% in one month. There were 31 large cap schemes in the market. Axis Bluechip Fund offered the highest return of 1.85%. JM Large Cap Fund lost around 1.78% during the same time period.

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How did the international funds manage to offer such high returns? Should you allocate money in international funds? “The International funds offered positive returns. The U.S. markets especially have revived well and there is a negative correlation between the domestic and International markets. Investors are therefore always advised to have some exposure in International markets to diversify their portfolio,” commented Minocha.

In one-month horizon, Nifty50 lost around 0.07% and S&P BSE Sensex gave 0.29%. The foreign indices such as Dax, Dow Jones, Hang Seng, Nasdaq were up in one-month horizon. Hang Seng surged up by 2.33%. DAX was up by 4.78% and Nasdaq went up by 1.25%.

Next question comes, what strategy should investors follow who have investments in these funds? “Investors need to continue to invest as per their goals and risk appetite. They should not overly invest in International markets just because recent performance has been good. At any time, there is likely to be an inverse relationship across different markets and therefore diversification is very important,” recommended Minocha.

We considered all equity categories such as large cap, mid cap, multi cap small cap, flexi cap, focused funds, ELSS, large & mid cap, value, contra, and sectoral/thematic fund categories. We considered regular and growth options.

Note, the above exercise is not a recommendation. One not make investment or redemption decisions based on the above exercise. One should always consider risk appetite, investment horizon, and goal before making investment decisions.