Mutual Funds Asset Class Returns 30Jun2022
(Update 31Dec2022 for this blog is available)
This is an update of an earlier blog
published on 08Apr2022. I present the data as at the end of 30th of June, 2022. The data contain select categories of mutual funds in
India, numbering fifteen, from equity, debt and commodity (gold) categories.
Table 1: Asset return matrix - annual returns (top to bottom returns in 2021) > YTD or year-to-date returns till 30Jun2022 >
Please click on the image to view better >
What Table 1 reveals is:
- asset class returns are cyclical in nature
- for example, gold did better than other asset classes in 2016, 2019 and 2020; but did worse in 2021, 2015 and 2014
- among equity, small cap funds did better than others in 2021, 2020 and 2014; but did poorly in 2019 and 2018
- asset classes (or mutual fund plans) that did well in 2021 have given poor returns in 2022 (till 30Jun2022)
- it is better to look at consistency of annual returns, along with latest trailing returns, rather than looking at just latest trailing returns--while comparing various mutual fund plans
- Liquid mutual funds used to provide decent returns (providing protection against inflation) till middle of 2019; but have been providing poor returns since the middle of 2019 eroding the purchasing power of cash substantially
(the blog continues below)
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Important information relating to SEBI categorization and rationalization of mutual fund plans introduced in 2017:
SEBI circular dated 06Oct2017
SEBI circular dated 04Dec2017
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Table 2: Asset return matrix - trailing returns (10-year returns top to bottom) >
Please click on the image to view better >
What Table 2 reveals is:
- Small-cap equity funds have provided best returns on a 10-year trailing returns basis, though they have lost heavily in the past six months
- Gold, equity international and arbitrage funds have provided poor returns on a 10-year trailing basis
- Year-to-date, credit risk (debt) funds have provided the best returns
- Equity international funds have done the worst in calendar year 2022, as Nasdaq and other international stock indices have done worse than Indian stock indices
- Gold is able to provide some downside protection during 2022
- The last column provides amount of assets held by each mutual fund category as on 30Jun2022
- By comparing AUM (assets under management) numbers, prospective investors can gauge the relative popularity of each asset class among investors
- Multi asset allocation funds invest in a combination of equity, debt and gold plans and as such they provide average to above-average returns (among all the mutual fund classes presented here) consistently under 3-year, 5-year and 10-year trailing periods
- Of all the categories, liquid funds have the highest AUM
To sum up, investors should glean the data carefully before investing in various mutual fund plans. Debt funds, like, liquid funds tend to offer high liquidity though the returns are not great.
Equity funds are likely to provide best returns on a long term of more than five years, though in the short term (as we have seen in 2022) they are more likely to provide stomach-churning returns. For a substantial number of investors, a combination of liquid, debt and equity returns may provide optimal returns on a long-term basis.
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Additional data
Table3: Asset return matrix -- annual returns - same as Table 1, but in alphabetical order >
Table4: Asset return matrix -- trailing returns - same as Table 2, but in alphabetical order >
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Read more:
Global Bond Yields and Asset Prices
Global Market Data 30Jun2022
Slowest Growth in India's Real Per Capita Income
Why is India Falling Behind Bangladesh?
How Rates and Ratios are Moving
Slowing Foreign Direct Investment to India
A Rundown on Prince Pipes & Fittings
Primer on Credit Rating Scales
When Will Foreign Investors Stop Selling Indian Stocks?
Do Paint Stocks and Crude Oil Tango?
Weblinks and Investing-------------------
Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.
CFA Charter credentials - CFA Member Profile
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He blogs at:
https://ramakrishnavadlamudi.blogspot.com/
Twitter @vrk100
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