Equity funds, which delivered robust returns in the last few years, have witnessed a steep decline amid the latest rout in the market, a report by Business Standard said.
As per the report, the data from Value Research shows that out of a total of 513 equity schemes, nearly 372 schemes have given negative returns in the last one year.
It added that around 16 MF schemes that shed over 20 percent in the last one year are largely in the international category of funds. Apart from international funds, the other top laggards include funds from the small-cap, equity-linked saving schemes (ELSS), and some from pharma the sector, noted the BS report.
"On average, international funds have given negative returns of 17 percent in the last one year, while pharma and banking funds are down by 12.5 percent and 8.1 percent respectively," it said.
In the last few months, equity markets have seen sharp correction aid concerns regarding liquidity tightening, surging crude prices and rising interest rates. Before this latest correction in the markets, domestic equities were on a roll as cheap liquidity fuelled the rally. In 2020, BSE Sensex surged 15.75 percent while in 2021 it increased by nearly 22 percent. However, in the last three months, the index is declined by 9.60 percent.
Trideep Bhattacharya, chief investment officer- equities at Edelweiss Asset Management told BS, “After a strong year of equity returns in 2021, equity markets are currently in a consolidation phase. This is in sync with our view that we expect 2022 to be an investment year from an investor point of view as equity markets are adjusting to change in interest rate regime globally, supply chain challenge-driven inflation and geopolitical issues.”
As per the report, market participants advise investors to stay on course and not redeem the investments at loss.
“With so much happening around, this is a bad time for investors to be adventurous. Instead, investors should use this opportunity to clean up their portfolios and figure out a better way to manage their investments going forward. To be successful, investors must have these three things - long-term investment horizon, meaningful diversification, and disciplined process,” said Vaibhav Porwal, Co-founder, dezerv — a wealth management company told the market daily.
Meanwhile, the best performing funds in the past 1 year have been the CPSE exchange-traded funds (ETF), which has risen around 23 percent, followed by Canara Robeco Smallcap Fund added 18.39 percent in this time.
"Until now equity funds have continued to see net inflows for the past few months and even the systematic investment plan (SIP) book has remained strong. But with weak returns and an unpredictable future, market players are worried about the flows into the equity funds in the months to come," the report further stated.