As we put together all the advice that we are being flooded with in the new year about investment strategies, market outlooks, favorite sectors, etc., let’s do a quick recap of the year gone by. For most investors the year 2011 was rather inopportune due to the volatile nature of the global markets. We review the performance of the mutual funds industry to get an overview of where the money flowed, what soared and what fell.
Industry Update
The Indian mutual fund industry lost AUM of around 2.38%, i.e., close to Rs. 14,900 crores in absolute terms in the year 2011. Gold ETFs topped the chart with an increase of 160% in its asset base, clearly an asset class where investors found shelter during uncertain times. FIIs, unlike 2010 where they pumped in huge sums of money, turned out to be net sellers to the tune of US $0.36 billion in 2011.
Fund category-wise break-up of AUM:
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Income |
2,97,937 |
2,98,569 |
0.21% |
Equity |
1,81,224 |
1,40,612 |
-22.41% |
Balanced |
19,486 |
14,556 |
-25.30% |
Liquid/ Money Market |
88,681 |
1,20,713 |
36.12% |
Gilt |
4,103 |
3,121 |
-23.93% |
ELSS Equity |
27,011 |
20,630 |
-23.62% |
Gold ETF |
3,516 |
9,153 |
160.32% |
Other ETFs |
1,730 |
1,515 |
-12.43% |
Fund of Funds- Overseas |
2,626 |
2,533 |
-3.54% |
Total |
6,26,314 |
6,11,402 |
-2.38% |
Popular Products in 2011
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MF Regulations in 2011
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Which Asset Class Played Out in 2011, Equity or Debt?
In the chart below, we look at the average 1-year performance of various fund classes in the year 2011. 
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A pictorial representation of the graph to highlight the most favored asset class:
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Equity Markets Update
A slew of adverse events weighed on the performance of Indian Equity markets; popularly known as the barometer of the economy, BSE Sensex lost close to 25% in the year 2011. Unlike the trend over the last 2 years, Equity markets turned tables with bears tightening the grip over bulls. A series of events completely rippled the markets last year; stubbornly high WPI, volatile industrial growth (IIP numbers), uncertainty across global economies, rising oil prices adding to the woes of current account deficit and FII outflows only aggravated the situation.
The broader indices, i.e., BSE Sensex and CNX Nifty managed to hold their values at fairly decent levels when compared to BSE Midcap and BSE Small cap Index which shed close to 34% and 43% respectively in the year 2011.
FMCG is the only sector which seemed to be spared by the bears; the index rose by close to 10% which also presents a case for the top performing fund among the entire list of equity funds belonging to this category. Real Estate and Capital Goods sector suffered losses close to 52% and 48% respectively pulling down the performance of infrastructure funds in the equity space. |
Top Performing Equity Funds in 2011:
ICICI Prudential FMCG Fund-Growth |
15.01 |
ING Global Real Estate Fund -Growth |
9.36 |
Birla Sun Life International Equity Fund- Plan A-Growth |
7.89 |
SBI Magnum FMCG Fund |
6.20 |
Fidelity Global Real Assets Fund- Growth |
3.07 |
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Debt Markets Update
The 10-year G-Sec yield saw an upward trend during the year 2011; it increased by 63 bps from 7.92% seen in the beginning of the year to close at 8.55% in December 2011, peak levels witnessed at 8.97% on November 14, 2011. In the debt space too, a string of events played out in the year 2011.
In order to tame high inflation government kept on increasing the policy rates, which in turn created upward pressure on the short term rates. Repo rate and Reverse repo rates both at 8.5% and 7.5%, increased by 225 basis points in the year 2011. Tight liquidity conditions also resulted in 1-year Certificate of Deposit (CD) and Commercial Paper (CP) touching phenomenal rates.
Debt scenario last year made short term funds among the most favored categories for investors; FMPs too locked in the high CP, CD rates available in the market. |
Top Performing Debt Funds in 2011:
Canara Robeco InDiGo Fund- Growth |
14.78 |
Sahara ST Bond Fund- Growth |
14.02 |
Tata Fixed Income Portfolio Fund Plan C3-Growth |
13.04 |
Peerless Short Term Fund- Growth |
12.96 |
Sundaram Select Debt-Short Term Asset Plan- Growth |
12.71 |
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Conclusion:
The year 2011, in terms of asset class, was clearly the year of Gold and Debt funds. A further drill-down shows that the short term funds, ultra short term funds, Gold ETFs and FMPs led the race. In the Equity segment, FMCG and Global funds managed to perform amongst the entire list of equity funds. In the context of Mutual Fund industry regulations, there was reason to cheer as SEBI reached out to foreign investors.
On that note, we bid goodbye to the poor investor sentiments in 2011 and look forward to give impulse to another challenging year ahead!
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