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Performance


The best and worst equity funds of 2014

2014 has been an interesting year, to say the least. Talking of recession, the Eurozone is an ongoing crisis that will be grabbing headlines in 2015. In the summer of this year, a barrel of Brent crude was changing hands at $115. It can now be obtained for half that price. Israel launched a military offensive in the Gaza Strip, China and Japan have been sabre-rattling over islands, and jihadists rose to claim territory in Iraq and Syria.

Despite such global tensions dominating investor mood, the domestic equity market scaled new highs. The growth cycle has moved from slowdown to a recovery mode, though whether or not growth picks up will depend on the government’s reform-based approach.

Most equity funds outperformed their benchmarks and delivered handsome returns, some even upwards of 90% in some cases. Here we list the winners and the losers. The performance numbers are as on December 26, 2014. The portfolios are on November 30, 2014.


The losers OF 2014

Funds with big stakes abroad

The global funds category, which includes funds that invest at least 35% of their assets abroad, was the worst performing category this year. In fact, this category comprised of the only funds to deliver negative returns in 2014. Mirae Asset Global Commodity Stocks was the worst performing fund with an aggregate return of -8.84% in 2014. Australian mining companies like BHP Billiton and Santos Ltd where major drags on performance of the fund.

The Top 5 in this space returned 16% on an average and included funds with exposure to the U.S. market - JP Morgan US Value Equity, PineBridge US Equity and ICICI US Bluechip. Tata Growing Economies Infrastructure and Birla Sun Life Global Real Estate were the other top performers in this category.

Funds invested in technology

In 2013, technology funds grabbed all the attention with a category average of 52%. Last year they were not that favoured and delivered a modest 22%. Not bad when viewed in isolation, but quite poor when compared to other categories. Stocks like Bharti Airtel and Infosys were a major drag on these funds.

Funds playing defensive

This is best exemplified by the FMCG category of funds. The category returned an average of 22% this year and is the worst performing category, preceded only by the global funds category. The two major detractors for this segment were the footwear segment and the packaged foods segment. ICICI Prudential FMCG and SBI FMCG were naturally hit.

Funds invested in tobacco and alcohol

A subset of a defensive strategy, fund managers invest in tobacco and alcohol stocks due to the relative demand inelasticity of these companies’ products. Unfortunately, the strategy backfired as these companies did not fare particularly well in 2014. ITC and VST Industries returned 17% and 16%, respectively, while alcohol giant, United Spirits delivered a modest 10% return.

Performance