The buoyant movement in overall equity markets helped equity mutual fund schemes clock decent gains. PSU, energy, pharma, consumption, and MNC focussed MFs topped the return chart this month with respective category averages between 4% and 7%. Let's take a closer look at the returns of the over 550 equity mutual funds whose return data is available.
The Sensex gained 3.88% in October, quite a good pace of returns. Between January and October of this calendar year, the Sensex has risen by 12.5%. Given the decent returns in the market benchmark, the mutual fund investors would expect similar gains in their fund folios. Let us see how the individual funds have done.
In the month of October, the best performing category has undoubtedly been PSU fund. There are just three PSU focussed equity mutual funds. The best return is 9.5% (SBI PSU Fund) while the fund with the lowest return in this category was notched up 4.88% (CPSE Exchange Traded Fund). This brings the average category return to 7.1%, which is actually lower than the 7.98% gain notch up by S&P BSE PSU TRI.
After PSU funds, the next best-looking category is sector focussed- energy funds. This category was just 2 funds. The two schemes -- Tata Resources & Energy Fund and DSP Natural Resources and New Energy Fund -- clocked almost identical returns of 5.5%, higher than 1.49% return of S&P BSE Basic Materials TRI. Actively managed equity funds are supposed to deliver alpha i.e. excess return than a passively managed index/benchmark.
The third best performing fund category is pharma fund. This category contains 9 funds. The average return is 5.33% in October 2019. The best gain was delivered by SBI Healthcare Opportunities Fund (7.18%) while Tata India Pharma & HealthCare Fund (3.3%) was the lowest. The pharma fund category average of 5.33% is lower than 5.89% rise of the S&P BSE Healthcare TRI.
Of late, consumption has become a major fund theme. Consumption oriented fund category average stood at 4.37% in October, which is the fourth best among all the categories. Quant Consumption Fund proved to be the best scheme with a 6.46% return while ICICI Prudential Bharat Consumption Fund - Series 2 sported the poorest return of -0.21%. The 17-fund consumption fund category delivered an average of 4.37%, which is higher than 3.94% clocked by S&P BSE CD TRI.
MNC funds, which bet on listed Indian arms of multinational companies, showed a lot of promise in October. There are 4 MNC equity mutual funds in India. MNC funds reported an average return of 4.1% this month. But the chasm was wide between the best and worst funds even in this category. Aditya Birla Sun Life MNC Fund delivered a handsome 6.58% return while the poorest return was from ICICI Prudential MNC Fund (1.06%).
The month of October 2019 saw the rise of midcap equity funds. Midcap funds have faced a lot of investor flak recently due to a seemingly never-ending correction in midcap stocks. The category average of midcap funds stood at 3.85%, lower than 5.4% gain in the S&P BSE Mid Cap TRI. There are close to 3 dozen midcap funds. The best return in October was reported by Quant Mid Cap Fund (8.33%) while Baroda Midcap Fund was the poorest performer with a measly 0.91% gain.
Largecap funds delivered a steady 3.6% category average return in October. The category average is lower when compared to 3.88% rise in S&P BSE Sensex 50 TRI. The largecap fund universe is the largest with as many as 121 schemes, including actively managed schemes and passively managed index funds and ETFs. The best performer was Quant Focused Fund with 6.25% while the poorest performer was HDFC Equity Opportunities Fund II 1126D May 2017 (1) with just 0.71% gain.
Just behind the largecap fund category is the large & midcap fund category. The category average of large & midcap fund is 3.59%, which is lower than the 4.04% return notched up by S&P BSE 250 Large MidCap TRI. With as many as 25 funds in this category, the best performer was Quant Large and Mid Cap Fund (6.12%) while Essel Large & Midcap Fund (0.84%) came the last.
Banking focussed mutual funds delivered an average 3.55% return in October. The category average is lower than the 4% gain clocked by S&P BSE Finance TRI. There are 22 banking focussed funds. Kotak PSU Bank ETF redeemed its position and delivered a scorching 9.21% gain in October. LIC MF Banking & Financial Services Fund was at the bottom with a mere 0.71% gain.
The ELSS category, popularly known as tax-saving schemes, has over 60 funds in the basket. The category average was 3.38%, which is lower than the 4.03% rise reported by the S&P BSE 200 TRI. Nippon India Tax Saver (ELSS) Fund was the best with over 8% gain while Sundaram Long Term Micro Cap Tax Advantage Fund Series V was at the bottom with a measly 0.97%.