Amidst the discussion of fluctuations and limited returns in the stock market for the last two years, long-term data has brought good news for investors. In the last five years, 101 out of 310 equity mutual funds in India have doubled investors’ money or more. Not only this, there were also four mutual funds which doubled the investors’ money in just three years. However, experts say that taking investment decisions only based on past excellent returns would not be the right strategy.
These funds performed the best
ICICI Prudential Infrastructure Fund was at the forefront in five-year performance, giving a return of 188 percent. After this, SBI PSU Fund and LIC MF Infrastructure Fund gave returns of about 183-183 percent. Whereas Aditya Birla Sun Life PSU Equity Fund gave 179 percent return, DSP India TIGER Fund gave 176.51 percent return and Nippon India Power & Infrastructure Fund gave 174 percent return. In the midcap category, Motilal Oswal Midcap Fund performed brilliantly with 172 percent return.
If we talk about three years, HDFC Defense Fund remained at the forefront. It gave a return of 174.11 percent. That is, if an investor had invested Rs 1 lakh in it three years ago, his amount would have increased to around Rs 2.74 lakh. Apart from this, Bandhan Small Cap Fund, Quant BFSI Fund and LIC MF Infrastructure Fund also doubled investors’ money in three years.
Why did this sector shine?
Behind the success of these funds was the excellent performance of defence, infrastructure, PSU, healthcare, smallcap and financial services sectors. Increasing capital expenditure of the government, record increase in defense budget, national infrastructure pipeline and increasing global demand in the pharma sector strengthened the earnings of companies in these sectors. These sectoral and thematic funds got the benefit of this.
Is it still the right time to invest?
Firoz Aziz, Joint CEO of Anand Rathi Wealth, says that sectoral investment always runs on the basis of cycles. It is not easy to invest in any sector at the right time and make profits at the right time. Therefore, investing only after looking at the excellent returns of the last five years can be risky.
In fact, many of the funds which have performed well in the last five years have had very weak returns in the last two years. It is clear from this that after the boom in any sector, there can also be stagnation for some time.
What is your advice for investors?
Experts believe that the long-term growth story of the Indian economy is still strong, but one should not expect returns to be as fast as before. In such a situation, flexi cap, multi cap, large and midcap or diversified equity funds can be a better option for common investors. These funds invest in different sectors, which reduces the risk and the fund manager can also make changes in the portfolio according to the changing market environment. Before investing, the decision should be taken keeping in mind your financial goals, risk appetite and investment period.
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