2014 turned out to be a remarkable year for equity mutual funds, with positive investor experience in the last one year.
Of all the equity funds category, mid and small cap funds emerged winners as a few of them delivered returns in excess of 100% in the last one year. Constant rise in equity markets since December last year and betting on stocks that could benefit from revival of the Indian economy helped fund managers generate strong returns.
According to the data from Value Research in the past one year, on an average large cap funds gave returns of around 35%, while large and mid cap funds provided returns of 44 %. But mid and small cap funds generated returns of 72% on an average in the same period.
Funds such as Sundaram SMILE Fund and SBI Small and Mid Cap Fund were able to post returns of of 105% and 102% respectively in the last one year. Sundaram SMILE fund is managed by their head equity-S Krishna Kumar and was one of their flagship funds in the mid and small cap segment. SBI Small and Mid Cap Fund is managed by R Srinivasan who is known to ‘spot’ opportunities in mid and small cap stocks.
In the large and mid cap category, Birla Sun Life Special Situation Fund and Kotak Select Focus Fund were top performers giving returns of 60% and 56% respectively in the last one year. Harsha Upadhyaya, fund manager of Kotak Select Focus Fund and CIO of equity at the fund house says, “The mandate of the fund is such that, we focus on investing only in select sectors and try and outperform the market. In 2014, our call on both sector selection and stocks worked very well.”
Towards the end of 2013, things had started looking positive and efforts of the previous government gave confidence to the fund managers that an economic recovery was at hand. “We started investing in quality companies with clean balance sheets. Investments into sectors like auto, auto ancillaries, oil marketing companies (OMCs) benefitted the funds,” added Upadhyaya. Going forward he will continue to focus on sectors that might profit from economic recovery such as banking and financials, cements and auto.
In the large cap category, funds such as L&T Equity Fund and HDFC Top 200 Fund were top performers. HDFC Top 200 Fund which is managed by star fund manager Prashant Jain had seen an ‘average performance’ in the past few years. But in 2014, the fund managed to outperform the markets by giving returns of 45% as compared to 34.25% return on the benchmark BSE 200 in the last one year.
Many fund managers believe even in 2015 markets are likely to continue their upward journey with some corrections. “Equity as an asset class will outperform in 2015, but we are advising investors not to expect the find of returns they have seen in the last one year,” concluded a fund manager from a top fund house.