Equity schemes still top performers

3 out of 5 top schemes are from equity segment and offer annualised returns of 10-25%

On no less than three occasions recently, the Sensex has crashed 700 points in a single day trading. Investors, therefore, continue to shy away from equities.

In a fortnight, it will be five years since Wall Street titan Lehman Brothers went bankrupt. But even today the situation appears to be no different than what it was half a decade back. Rather, market observers say India's situation is worse now than during the global financial crisis, which hit world's economies in 2008.

But believe it or not, no matter how bleak the situation appears, a look at the mutual fund schemes suggest that it's the equity segment which has emerged as the top performer in the last five years.

Investors may be eschewing equities like never before. Statistics from capital markets regulator Securities and Exchange Board of India (Sebi) show that since March 2009, India's mutual fund industry has lost close to a crore equity folios. However, ground reality still suggests that equities can beat other asset classes.

As per the data available from fund tracker firm Value Research, 3 out of top five performing schemes in India are from the equity basket. During the global crisis, chief executive officer (CEO) of one of the top five asset management companies (AMCs) had told Business Standard that only way to beat inflation is by investing in equities. His advice may have been ignored by many investors, but it has now come true.

Consider this: Equity FMCG funds have topped the list with a category annualised return of 25.05%. This essentially means that Rs 100 invested in September 2008 would have become Rs 293.75. Similarly, the other two equity categories  - Pharma and Technology schemes  - returned 18.15% and 10.96%, respectively.

Gold schemes have managed to remain in the top league thanks to the recent sharp upward move in gold prices. Gold funds gave an annualised return of 22.12% which translates into Rs 100 becoming Rs 271.60 over the last five years.

Barring these four categories, none other asset class could even manage to come anywhere closer to 10% return.

Such a performance by some of the equity schemes, yet again, reaffirms the fact that in the long run equities are capable of making money for investors if they stay invested for longer duration.