Tuesday, 31 May 2016

Recurring deposit returns beat most equity MF schemes over past 2 years : 31 May 2016

The returns by India's several well known and most preferred equity mutual fund schemes could not keep pace with what recurring deposit - a plain vanilla banking product - offered to investors as Narendra Modi-led Bharatiya Janata Party (BJP) completes two years in office.The top 15 most-invested equity schemes by investors command a total asset size of Rs 1.31 lakh crore - a third of the mutual fund sector's total equity assets under management (AUM). This implies that investment of every rupee out of three rupees finds its way into these top largest schemes.Interestingly, this period witnessed benchmark key stock indices hitting an all time highs as BSE's Sensex surpassed 30,000 level while Nifty 50 touched 9,000 mark. However, the sharp fall in shares in FY16 since the highs of early 2015 marked with steep volatility washed away much of the gains of equity schemes.

For instance, an investment made in bank's RD with a monthly installment of Rs 1,000 in May, 2014 with an earning interest of 8.75% (then) would have turned into Rs 27,400 in May, 2016 - an absolute gain of 9.6% on a total cumulative deposit of Rs 25,000.During the same period, if a Rs 1000 systematic investment (SIP) was initiated in May, 2014, the value of the accumulated corpus (Rs 25,000) is hovering between Rs 24,750 and Rs 27,800. Among the 15 most invested equity schemes, hardly a handful could do better than a recurring scheme.On an average, these schemes had turned investors' cumulative investment of Rs 25,000 into Rs 26,332; implying an average return of 5.32%. In absolute term, the BSE Sensex surged 6.67% during this period.Though, recurring deposits are not strictly comparable to equity schemes which have a volatile and risky underlying asset - stock markets. Further, a period of two years is too short to judge performances of equity schemes. Nevertheless, it is interesting to see how these two investment instruments fared for the retail savers who put in smaller sum on a monthly basis.For instance, HDFC Equity - India's largest equity scheme - turned a Rs 25,000 of SIP investments (from May 26, 2014 to May 26, 2016) into Rs 24,753, an absolute loss of nearly 1%. While Reliance Equity Opportunities made an absolute loss of about 1.75% as the value of investment stood at Rs 24,563; HDFC Top 200 Fund kept the same corpus flat at Rs 25,016.The relatively better-performing equity schemes among the top largest ones include SBI Bluechip with an absolute return of 11% as it turned the collective sum of Rs 25,000 through SIP into Rs 27,766. Schemes like Franklin India Prima Plus and HDFC Mid-Cap Opportunities offered 10.5% and 10.75%, respectively, in absolute term as on May 26, 2016.

Value of investment of a Rs 1000 SIP from May 26, 2014 to May 26, 2016
SchemesSIP Investment* (Rs 25000)Absolute Return (%)AUM (Rs Crore)
HDFC Equity24753.00-0.9914706
HDFC To 20025016.000.0611990
ICICI Pru Value Discovery26703.006.8011904
BSL Frontline Equity26559.006.2411202
HDFC Mid-Cap Opportunities27690.0010.7610649
Reliance Equity Opportunities24564.00-1.7510544
ICICI Pru Focused Bluechip25998.003.9910398
Axis Long Term Equity27159.008.648245
Franklin India Prima Plus27632.0010.527424
Franklin India Bluechip26823.007.306950
IDFC Premier Equity270588.235999
SBI Bluechip2776611.065624
ICICI Pru Dynamic256262.55406
Reliance Growth Fund260744.35048
Reliance Tax Saver255592.234841

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Parag Patil is a technical analyst and trading system designer with stock excel programmer. I hope the articles and live chart of nse future and mcx on this Website will be as helpful and profitable to you . I try to update and post new articles tips everyday. My motto is to encourage the traders, so that they should able to understand the technique views behind the moment of stocks. I have deeply analyzed with many technical indicator with parameter and added to my amibroker afl. And even taken backtest report which is never being implemented. Any of the analyst expect me. Seeing all this you may understand that my views is more technical than commercial. If you are profited by my views I fill happy.

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