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6 mutual funds that flourished in a flat market

Last updated on: November 1, 2012 19:05 IST

6 mutual funds that flourished in a flat market

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Morningstar.in

Benchmark indices today are where they were five years back. But that has not been a deterrent for these equity funds, which topped their respective categories.

Five years can be a long time in stock markets. Back in October 2007, stocks were in the midst of multi-year unfettered run.

The world of mutual funds was different, too, as individual investors queued up to buy stock funds in hordes -- sometimes without giving much thought to merits of the funds in question -- to take part in the party of outsized stock returns.

And then, the bull market ended abruptly to give way to a savage bear run brought on by the onslaught of the global financial crisis of 2008, which would go on to wipe out investor confidence, and also returns in a way that the stock market -- while witnessing bouts of extreme volatility and price swings every year since -- is still to reasonably get its head back above water.

Consider this: on October 16, 2007, the Bombay Stock Exchange's benchmark Sensex closed at 18,577.70. On October 16, 2012, it was perched at 18,610.77.

In this article, we shortlist equity funds from various Morningstar categories (large-cap, small/mid cap and ELSS) that topped their peers and posted the most robust gains during the period. Readers must note this article only features a list of funds that turn up after a specific criterion search and is not meant to be construed as a recommendation for the funds mentioned.

Courtesy 


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Large cap mutual funds:

1. ING Dividend Yield -- Growth

Five-year return: 11.82 per cent per annum

The fund gradually made a seamless transition from being a mid-value fund in late 2007 to a large-growth offering today, picking up handsome returns each of those years, and not even once underperforming the category average or the benchmark.

While year-to-date performance for the fund has been nothing to write home about, it is banking on consumer discretionary, consumer staples and financial stocks to help repeat its superior performance of several years.

Note: The graphic used on this slide and the slides that follow show one-year returns


Photographs: Rediff MoneyWiz
Tags: ING

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2. Quantum Long-Term Equity -- Growth

Five-year return: 9.71 per cent

Quantum Mutual Fund's flagship fund, which often features in lists of top performers by virtue of its five-year-straight, top-quartile performances, has pursued a rewarding value-investing philosophy and an interesting cash strategy.

In the years, 2009, 2010 and 2012 (year-to-date), when stocks are on the upward trajectory, it lightens up on its holdings, and its cash position--on average--goes into double digits. During downturns such as 2008 and 2011, the fund uses that cash to pick up stocks it perceives to be selling at bargain prices.


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Small/Mid Cap

3. ICICI Prudential Discovery -- Growth

Five-year return: 12.43 per cent

The fund has followed a steady value strategy, investing in stocks the manager believes are trading a discount to their historical and peer values. The approach didn't do well in 2007 when the fund lagged the benchmark CNX Mid Cap by 37 per cent, and when pricier stocks hit a purple patch.

But since the downturn, it has notched up impressive performances, outscoring the competition in each of the years after 2007.


Photographs: Rediff MoneyWiz
Tags: ICICI , CNX

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4. Birla Sun Life MNC -- Growth

Five-year return: 12.32 per cent

The fund's heavy consumer-stocks focus and underweight on cyclical and sensitive stocks has worked for it.

The defensive approach did not help in up markets (its five-year month-end upside-capture ratio stands at 76.17) but it managed to protect the downside in bear markets very well (which is captured in its downside-capture ratio of just 54.38).


Photographs: Rediff MoneyWiz

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Equity Linked Savings Scheme

5. Taurus Tax Shield -- Growth

Five-year return: 7.49 per cent

Over the five-year period, Taurus Tax Shield was slightly more volatile than peers (standard deviation of 33.70 compared to 29.23 for the average peer) but made up for the risk by outscoring the competition handsomely.

Part of the performance boost was due its 2007 calendar-year performance, when it jumped 111.69 per cent while the BSE 200 rose only 51.24 per cent.


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6. ICICI Prudential Tax Plan -- Growth

Five-year return: 7.43 per cent

After a below-average 2007 and a middling 2008, the fund bounced back sharply in the 2009 and 2010 rally where often its value-buying, going-against-the-grain strategy worked for it--the fund currently has zero exposure to consumer defensive stocks (as defined in the Morningstar categorisation), which are a favourite with many managers.


Photographs: Rediff MoneyWiz
Tags: ICICI

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