Equity funds: In the roundtrip

The Sensex may have scaled the 20k peak yet again, but have your mutual fund investments followed suit? An analysis of the performance of mutual funds reveals that one in two equity funds beat the Sensex in its round trip from January 15, 2008, when it last closed above 20,000, to September 21, 2010. Mutual funds returned an average of about 2.2 per cent in this period. The funds that outperformed were largely those that had limited NAV losses in the 2008 meltdown.The impressive performance of select sector funds, improving scorecard of mid-cap funds and a wide divergence in overall performance were among the other interesting insights.

Top performers: A good 90 (of the 178) equity funds beat the Sensex in its round trip, with sector-based funds figuring prominently in the list. Given that pharma, consumer goods, banks and auto stocks made the most of this rally, it wasn't a surprise to see funds focussed on these sectors deliver too.

Franklin Pharma, Reliance Pharma, SBI Magnum SFU–FMCG, UTI –Transportation & Logistics, Franklin FMCG and Reliance Banking were among the top five funds in this period. Among underperformers were funds such as Taurus Discovery, Principal Tax Saving and Fortis Future Leaders. Quite a few equity schemes from the JM Pack too were underperformers.Once bitten, twice shy: Most of the funds that had failed to limit their NAV losses during Sensex' down ride, lagged the index in its up turn too. Interestingly, infrastructure funds, which rode the rally last time around, are conspicuous laggards. Funds such as SBI Infrastructure, UTI Infrastructure, Tata Infrastructure and DSPBR T.I.G.E.R. are among the list. However, true to their nature, mid and small-cap funds, which were hit hard in the downturn, bounced back in style.

A score of funds – such as IDFC Premier Equity, Sundaram BNP Paribas S.M.I.L.E, DSP BR Small & Midcap, Sundaram BNP Paribas Select Midcap, Sahara Midcap, Birla Sun Life Midcap and UTI Midcap managed to beat the Sensex despite falling heavily in the downturn. Consistent players: Aside of pharma, auto and FMCG funds, others that fell less and rose more than the Sensex were dividend-yield funds such as Birla Sun Life Dividend Yield, ING Dividend Yield and UTI Dividend Yield.Others such as Quantum Long-Term Equity, HDFC Equity, HDFC Top 200, Franklin India Blue Chip and DSPBR Equity too outperformed in the bull and bear phases.