The calendar year for Indian stocks began on a high note, but looks can be deceiving. So far, the year has been of volatility, unpredictability, pessimism, divergence, and optimism. Markets crashed in March but then started rising when no one expected it to. The Nifty is still down 4.3% for the year so far. The defining feature of equity market performance, however, has been the sharp divergences across and within sectors and companies. If Healthcare and Technology sectors did well, Financials, the preferred sector of the market over the last few years, has borne the maximum brunt of COVID. For equity mutual fund funds, the job was difficult. New leaders of the market meant that the funds with old bets failed to create alpha. In this article, we will take a review of the Year To Date (YTD) performance of funds and shed light on both the winners and losers. Read on.

Pharma healthcare funds rock

Before we begin a look at individual funds, here is a table on how different categories performed YTD. We have given the average return of each category, along with the best and worst fund return to get a wholesome understanding of the situation. In many categories, the best fund and the worst fund have completely different returns, underlining the tough situation for fund managers to deliver alpha. Overall, we studied returns of 560 equity funds (regular plans) with growth option across 18 categories.

As you can well understand, Largecap funds, Multicap funds, Tax-saving funds are not in the top list even if you include the first 50 schemes. The healthcare stocks are the toast of this year. Laurus Labs, Granules India, Ipca Labs, Dr. Reddy’s Labs, Divi’s Labs, Aurobindo Pharma, Alembic Pharma, Biocon, Alkem Lab, Lupin, Sun Pharma, GSK Pharma, etc. were noted outperformers. Naturally, sector/thematic funds with out-sized healthcare exposure were the top performers. In fact, in 10 months of this year so far, top schemes were up 45-60%.

The top YTD equity funds list begins with DSP Healthcare Fund up 59.65%, followed by Mirae Asset Healthcare Fund up 55.78%. Quant Small Cap Fund was the lone smallcap fund in the top-10 list, with 51.86% gain. After Quant fund, the dominance of pharma & healthcare schemes resumes with ICICI Pru Pharma Healthcare & Diagnostics Fund up 51.26%, UTI Healthcare Fund up 49.84%, SBI Healthcare Opportunities Fund up 47.15%, Nippon India Pharma Fund up 45.87%, and Tata India Pharma & Healthcare Fund up 45.54%. The only other non-pharma healthcare fund in the top-10 list is PGIM India Global Equity Opportunities Fund up 49.98%.

Tech (that) funds

Another category, or rather sector, that has done well in 2020 is IT/technology funds. In India IT stocks, the best performers were Persistent Systems, Mindtree, L&T Infotech, Infosys, HCL Tech, Mphasis, Coforge, Wipro, TCS, etc.

ICICI Pru Technology Fund is the best with 42.90%, followed by ABSL Digital India Fund up 36.86%, Motilal Oswal NASDAQ 100 ETF up 36.19% (which is a passive product based on tech play), Motilal Oswal NASDAQ 100 FoF up 34.55%, Franklin Technology Fund up 34.5%, Tata Digital India Fund up 32.27%, SBI Technology Opportunities Fund up 26.91%.

Themes that worked

Some of the Global gold funds, China country-specific funds, Smallcap funds, Midcap funds and Responsible Investing funds also figure in the top performers’ list.

Edelweiss Greater China Equity Offshore Fund is in the overall top-10 list with a 37.44% return. DSP World Gold Fund is up 33.76%. Apart from Quant Small Cap, other smallcap funds that have fared well are BOI AXA Small Cap (up 30.28%), Canara Robeco Small Cap Fund (20.44%), Principal Small Cap Fund (up 15.61%), etc.

A few Midcap funds also figured in the performers list. Midcap funds were thrashed ever since mid and smallcap stocks were dumped since January 2018. Hence, the recovery in 2020, comes at a good time. Apart from PGIM Midcap Opportunities Fund, Quant Midcap Fund up 15.09%, BOI AXA Midcap Tax 1 up 15.03%, Baroda Midcap Fund up 11.52%, and UTI Midcap Fund up 10.53% are examples of out-performers.

Lastly, Responsible Investing as a theme has worked well. While many new funds were launched this year, the older schemes have shown good performance in the YTD period of this calendar year. Nippon India ETF Shariah BeES up 19.53% and Taurus Ethical Fund up 14.02% are two schemes that stood out.

Laggards

The article would be incomplete without discussing the laggards in the equity fund universe. PSU funds, Banking funds, European thematic funds, and Infrastructure funds were placed at the bottom of the YTD returns chart. The worst ones logged 30-50% losses.

Laggards from different categories include Kotak PSU Bank ETF down 50.28%, Nippon India ETF PSU Bank BeES down 50.23%, HSBC Brazil Fund down 43.97%, CPSE ETF down 30.56%, HDFC Infrastructure Fund down 30.25%, BHARAT 22 down 28.74%, UTI Banking & Fin Services down 27.75%, Franklin Feeder Franklin Euro Growth Fund down 25.17%, and DSP World Energy Fund down 20.10%.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at [email protected].

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