3 Equity Funds offered strong returns in 2020
From May 2020, the phenomenal rise in equity markets has helped 3 equity funds recover much of their lost ground. Moreover, a few of these schemes had waited for years with portfolios whose hopes hinged on a broader market recovery.
IDFC Tax Advantage Fund:
This is an ELSS scheme. The scheme had not really set the charts on fire in the equity tax saving category. As per the reports, the IDFC Tax Advantage scheme‘s 5 years returns stood at 17.90% as compared to 15.50% for the category on average. In three-years, It has generated nearly 9.17% returns. However, the average return is at 10.16%. Further, on a one-year basis, the scheme produced over 34.40% returns as against 26.28%.
A source said that investment in mid and small-cap stocks remains one of the significant factors for its revival. Moreover, the scheme’s weighted average market capitalization is Rs. 41,040 crores. As per the source, the scheme holds nearly 24% of its portfolio in small-cap companies.
Further, the small and mid-cap company valuations remain discouraged towards the end of the calendar year 2019. The officials of the scheme said that improved balance sheets, better earnings growth prospects and an improved liquidity environment may result in good corporate profits.
| 1-year returns(%) | 2020 returns (%) | 2019 returns (%) | 2018 returns (%) | |
| IDFC Tax Advantage Fund | 34.52 | 18.07 | 1.95 | -9.35 |
| Category average | 25.22 | 16.16 | 8.26 | -5.33 |
| SBI Contra Fund | 48.81 | 30.60 | -1.03 | -14.26 |
| Category average | 38.26 | 16.43 | 2.39 | -8.53 |
| Nippon India Focused Equity Fund | 38.90 | 16.15 | 7.00 | -12.67 |
| S&P BSE 500 Index | 29.53 | 18.41 | 8.98 | -1.80 |
SBI Contra Fund:
SBI contra fund performed below to the profit levels for a long time. The heavy allocation to small and mid-cap companies is the major reason behind the SCF scheme performance. As per the records, the SCF scheme reported a nearly 14% reduction.
The officials of the fund house said that they remained observed a broad-based rally. However, the scheme has hardly tried to generate positive returns in 2018 and 2019.
Further, in early CY2020, some small-cap companies started showing early signs of profit growth. SCF had 51% of its portfolio in mid and small-cap stocks in its recent portfolio.
Nippon India Focused Equity Fund:
Nippon India Focused Equity Fund net asset value decreased by 12.67% in 2018. It has lost nearly 1.80% by the S&P BSE 500 index. On a one-year basis, the scheme produced nearly 38.90% returns as opposed to 29.53% for the benchmark index.