The Capital markets in India have witnessed a marked shift in the last few years. The Association of Mutual Funds in India (Amfi), which has completed 25 years this month, is of the view that this is largely due to the mutual fund industry, which has been instrumental in channelling retail savings into the capital markets in a big way. However, those who have continued to invest in mutual funds through systematic investment plans (SIPs) for five-10 years have largely seen single-digit returns.
Of the total universe of 247 schemes, which includes equity funds and thematic equity funds, SIPs of nearly 130 schemes have given single-digit returns in the last 10 years. Even in the five-year period, SIPs of around 200 schemes have given returns of less than 10%. The average SIP returns of large cap funds for the five-year period was at 7%, while BSE Sensex gave returns of 7.80% in the same time frame, revealed Value Research data as on August 24.
Large cap schemes such as Taurus Largecap Equity Fund, Franklin India Bluechip Fund, JM Core 11 and Tata Large Cap, among others, have given SIP returns of less than 5% in the five-year period. Market participants said weak performance of equity schemes was due to the concentrated rally in the equity markets in the last two-three years.
Amfi chairman Nilesh Shah said, “The steady shift in savings pattern in favour of equities through SIP in mutual funds has resulted not only in a significant rise in the Indian equity ownership, but also contributing as a strong counterbalance, to foreign institutional investors.”
However, in the past two months, inflows through SIPs have come down.