Mutual losses: Funds see worst financial year

The mutual fund industry posted its worst-ever performance in 2008-09, with almost all equity schemes depreciating their investors' wealth by 20-50 per cent. The only good news came from gold ETFs, which gave investors 22-24 per cent returns.

Among sectoral equity funds, technology funds hit the bottom with their net asset values (NAVs) sinking by an average 47 per cent. The diversified equity category, which has more than 500 schemes, witnessed a loss of 40 per cent.

Even banking & tax-planning schemes' NAVs lost an average 39 per cent each, while index funds slipped by 37 per cent in line with such major indices as the Sensex & the S&P CNX Nifty on which they are benchmarked. NAVs of speciality funds declined by 34 per cent and that of auto funds went down by 33 per cent. Among the remaining funds, NAVs of FMCG, pharma, asset allocation and hybrid funds lost 20-25 per cent.

Redemption is not the only reason for the downturn, especially in the case of equity schemes. In fact, these schemes hardly saw any redemption pressure. Rather, the huge depreciation in value was caused by falling stock prices across all sectors. Over all, equity-related schemes recorded an erosion of more than Rs 81,000 crore during the financial year.

Among these, diversified funds alone saw a value erosion of Rs 50,000 crore. Speciality funds lost Rs 5,000 crore, followed by index funds (Rs 2,900 crore), tax-planning (Rs 2,600 crore) and hybrid equity funds (Rs 2,000 crore). Auto, banking, FMCG, pharma and technology funds together lost Rs 700 crore.

Of the over 800 equity schemes in the market, more than 750 posted losses. Some schemes lost over 70 per cent. For example, JM Small- and Mid-Cap Fund gave the worst performance with a loss of 76 per cent. Even JM Core11 Fund and JM Emerging Leaders Fund slipped by 75 per cent and 72 per cent respectively. There are about 300 such schemes that underperformed their respective benchmark indices.

Reliance MF tops the chart by losing nearly Rs 10,000 crore in equity schemes, followed by ICICI (Rs 7,600 crore), SBI (Rs 5,700 crore), Franklin Templeton (Rs 5,300 crore) and UTI (Rs 5,200 crore).

Clearly, 2008-09 would be one financial year these funds houses would like to forget.