The Sensex, stock market index for BSE, and the Nifty, stock market index for NSE, are proximate to their all-time high records. However, investors in equity mutual funds are disappointed due to the unexpected boost in these indices because of few blue-chip stocks.
Over the past six months, Sensex proved to be the best performing emerging market index with a gain of 4.8 percent. A few blue-chip stocks are responsible for this record-breaking boost in this stock market index. However, mutual fund schemes underperformed during this period.
The mid- and small-cap shares, which have significantly influenced the mutual fund portfolio values of the past four years, are weakening, resulting in underperformance of the MF schemes.
The average returns of the large-cap mutual funds schemes were about 0.97 percent, in the past six months, based on the data available from Value Research. On an average, the multi-cap category funds invested in stocks considering all three large-, mid- and small-cap stocks are down 5.18 percent.
The mid-cap mutual fund category giving up about 11.4 percent in the same period has been disappointed the most.
Five stocks, namely, HDFC Bank, Kotak Mahindra Bank, Infosys, TCS, and Reliance Industries boosted the indices. These five blue-chip stocks accounted for about 66 percent of the 50-stock Nifty’s rally from 10,000 to 11,000 in this year 2018.
In the past week, the Sensex scaled high record and reached an all-time high of 36,699.5. But, the Nifty improved just 1 per cent from its lifetime high record of 11,171.5 which the NSE stock market index hit on January 29, 2018, according to report from The Economic Times.
The MF managers stay positive and feel that the mutual funds market will improve. The market must advance due to improved “earnings performance,” after the recent issues in the market starts to reduce, said Manish Gunwani of Reliance Mutual Fund, based on another report from The Economic Times.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]