In the last one year, the Indian equity markets were down by around 16%, but many of the equity schemes managed to outperform the broader markets. Investing into quality companies and specific stock selection helped fund managers generate strong returns.
While all the equity fund categories gave negative returns, many of them delivered better returns than markets. According to the data from Value Research, while mid-cap funds gave returns of around -5% on an average, multi-cap funds provided returns of -8%. On the other hand, on an average, largecap funds were down by 11% and small cap funds gave -4% returns.
In the multi-cap category, Motilal Oswal MOSt Focused Multicap 35 Fund gave return of 4.13%, while SBI Magnum Multicap Fund gave returns of -0.80%. Returns of a few equity schemes from the Motilal Oswal Asset Management Company (AMC) were positive in the last one year.
Taher Badshah, senior vice-president and head of equity at Motilal Oswal AMC, says, “We have always believed in focused strategy, and bottom up stock picking has helped us. As a investment process we follow QGLP, which essentially means quality of business, growth in earnings, longevity of competitive advantage and last is price where we buy good business for fair price. For us, this strategy has worked across the market cycle.” In the last one year, equity markets were volatile, but most pain came in the past two months largely due to concerns over slowdown in the Chinese economy. In the mid-cap category apart from Motilal Oswal MOSt Focused Midcap 30 Fund, Mirae Asset Emerging Bluechip Fund also gave positive return in the last one year.
Gopal Agrawal, CIO at Mirae Asset Global Investments (India), said, “I would like to attribute positive returns of the fund to the quality stock picking and investing companies with free cash flows.” He also believes with indices down there is value in some segments in the markets.
Many fund managers believe that equity markets might continue to remain volatile even in next few months. “Though the fundamentals of India remain strong, equity markets might continue to take cues from global markets. In this kind of scenario investors should continue investing through systematic investment plan (SIP) in equity funds,” a fund manager from a top fund house said.