These MFs cushioned your fall during market slump… And those that couldn’t Factors such as rising inflation, weakness of Rupee, rising interest rates and ongoing Russia-Ukraine conflict have impacted different sectors and different segments of the stock markets.
July 02, 2022 / 07:57 AM IST
Stock markets have seen sharp correction in the past few months. The frontline indices -- S&P BSE Sensex and CNX NSE Nifty -- have fallen about 13% each from their previous highs hit on April 4. The correction has been due to a range of factors, including weakness of rupee, rising interest rates, rising inflation, uptick in prices of Crude Oil, ongoing Russia-Ukraine conflict and concerns over resurgence of Covid-19 cases. Recent developments have affected different sectors and different segments of the stock markets. Here, we look at how different categories of equity mutual funds -- sector-oriented, theme-based and market-cap based -- have been affected during this market correction.
Technology funds have been the worst-hit in recent market correction with category average returns of negative 19.71 percent since April 4. IT majors get bulk of their revenues from US and global economy and there are worries of recession in US.
Energy and Power Funds have delivered category average returns of 17.96 percent.
International funds have seen category average returns of negative 13.98 percent since April 4. Investors can use the correction to average down their buying costs as SEBI has allowed international funds to temporarily buy overseas-listed stocks. International funds that had sold overseas-listed stocks since February 1 to meet investor redemptions, can reinvest to the extent of their selling since then.
The broader markets have seen much more pain in recent market correction compared to frontline market indices. The Small Sap funds have delivered category average returns of negative 13.21 percent.
The Thematic Funds category has a range of funds offering different investment themes -- ESG, Business Cycle, Commodities, Manufacturing, etc. The Thematics delivered average returns of negative 12.81 percent in recent market correction.
The Flexicap Fund delivered category average returns of negative 12.67 percent since April 4.
Multicap Funds, which are required to invest a minimum of 25 percent each in large cap, mid cap and small cap stocks, have delivered category average returns of negative 12.39 percent.
Large & Mid Cap Funds, which are required to invest a minimum of 35 percent each in large cap stocks and mid cap stocks, have delivered negative returns of 12.11 percent since April 4.
Large Cap Funds have delivered negative returns of 11.66 percent.
Mid Cap Funds have delivered negative returns of 11.59 percent since April 4. The companies starting from 101st to 250th in terms of market cap ranking fall in the mid cap universe of stocks for mutual funds. Mid Cap Funds are required to invest at least 65 percent of their corpus in these stocks.
Banking and Financial Services Funds have delivered negative returns of 11.51 percent since April 4. Analysts are positive on banking and financial services sector as it delivered decent earnings in Q4, thanks to moderate credit growth and improving asset quality.
Infrastructure Funds have delivered negative returns of 11.10 percent in recent market correction.
Pharma & Healthcare Funds have delivered negative returns of 10.54 percent. The slowdown in US generics market has weighed on the pharma stocks, but India and emerging market-focused pharma companies are in a better-position as these markets are showing growth opportunities.
Service sector funds have delivered negative returns of 10.11 percent.
MNC Funds, which invest in stocks of Multi National Companies, have category returns of negative 8.09 percent.
Consumption funds have delivered category average returns of negative 6.26 percent. Analysts say there has been improvement in jobs and incomes and this should help in unlocking the pent-up consumer demand. The recent fall in Crude Oil prices should also benefit FMCG companies, as it would bring down their input costs.