Mumbai: The average annual returns from the mutual fund schemes in the calendar year 2006 were 35%, with the top fund clocking 63%. The average returns of the top five averages were 60%.
Funds managers admit that a repeat performance may not be possible. So a variety of products are being designed to attract investment this season.
“Most funds did not beat the benchmark (indices) last year and we expect incremental returns over next few years,” said Mihir Vora, head of fund management—equities at HSBC Mutual Fund.
HSBC launched a unique opportunities fund trying to identify investment opportunities in ‘out-of-the-ordinary’ conditions, which are temporary and event-driven.
Lotus Mutual Fund, one of the new entrants, announced a Contra Fund, which in effect is also trying to spot a stock before the herd has identified it.
“Sensex at 14,000 is likely to create acrophobia (fear of heights) and that is why we have to position funds in the contrarian and mid-cap space,” said Tridib Pathak, chief investment officer, Lotus Mutual Fund.
Pathak is upbeat on the mid-cap potential and states that 62% of the large-cap companies today were mid-caps earlier and institutional investors put in 32% funds in mid-caps as on March 2006 against 19.4%, to support his case.
However, there is nothing highly inventive about the instances of unique opportunities with most funds giving instances of identifying a Tata Steel at the beginning of the upward metal cycle or a Pantaloon on the verge of a retail boom and a Reliance Telecom post de-merger, a mutual fund analyst said.
“Investors were in favour of fixed maturity plans last year as they were structuredproducts, positioned to compete with bank fixed deposits,” pointed out Ami Doshi, analyst with Credence Analytics talking about investor preference.
There will be more funds with new products as well as new fund houses launching the regular schemes as everyone would want to participate in the industry that is yet to capture a significant portion of total investible funds.
Of the 314 schemes launched last year, 261 were income funds showing a clear investor prejudice towards safe debt instruments and against risky equity.
“Funds are looking at variety after the experience of comparatively lower returnsin the pure equity funds,” said Doshi.
There is already a gold exchange-traded fund from the Benchmark Mutual Fund and funds have also filed for approval of real-estate mutual funds.