Returns of mutual fund equity schemes turn negative

In the past 1 month, as key indices lost 5%, equity schemes' NAV fell 5-10%

The performance of several equity mutual funds (MF) has taken a severe beating. Most equity scheme categories have witnessed a fall anywhere between five and 10 per cent in their net asset values (NAVs) in the past two months.

These schemes have been among the top losers this year, under-performing other asset classes such as gold, liquid, debt and arbitrage funds. Thematic funds — pharma, technology, infrastructure and FMCG — are the worst performers, as NAV of these categories have nose-dived 6-10 per cent. Amid these categories, there are several individual funds, which have under-performed the category average returns.

For instance, the average return in technology funds for the last one month stood in the negative territory at 7.56 per cent; however, SBI IT Fund gave a negative return of 8.21 per cent. Similarly, in infrastructure fund category, the average negative return is 6.66 per cent; NAVs of funds like SBI Infrastructure and HDFC Infrastructure funds are down over eight per cent.

Rajiv Shastri, CEO & MD of Peerless Mutual Fund, says, “Since the underlying asset class, in this case stock markets, had a tough time; it is natural for equity schemes to see dip in NAVs. Markets have been quite volatile and are trading around 8-10 per cent down against recent peaks. It should not be taken as a deterrent by investors, they should keep investing.” S Naren, CIO, ICICI Prudential AMC, said, “We continue to believe that correction is an opportunity to invest. This phase does not affect the long-term compelling case for Indian equities with a moderated return expectation. 2015 is the year for investing in equities with a horizon of three years and more.”

As on 30 April, there are over 400 equity related schemes offered by the mutual fund industry managing an asset of Rs 3.45 lakh crore.