Large-cap funds go past ’08 highs

Y O U R MONEY

29 MFs At Levels Last Seen When Sensex Was At 21,000

Coimbatore: The sensex may be well short of the 21,000-mark it achieved in January 2008. But many large-cap oriented mutual funds (MFs) have raced past the highs they achieved two years ago when the stock markets hit their peak during the previous bull rally. 

    In all, 29 of the 200-odd open-end diversified equity MFs, a majority of which focus on large-cap stocks, have recorded growth compared to January 9, 2008, when sensex was trading above the 21,000-mark. 
    While mid-cap and smallcap MFs, which have beaten benchmark indices by a huge margin in the past year, have been the flavour of the season, funds that have a high exposure to large-cap stocks have been the first to breach their previous highs. 
    "Small and mid-caps (stocks) are always a bit volatile. But value stocks have done a lot better in the last two years,'' says Sankaran Naren, CIO, equity, ICICI Prudential MF. "Large cap comprises low beta (less volatile) stocks. They offer stable returns in the long run,'' says Gopal Agrawal, head, equity, Mirae Asset Global Investments. "Since they are less risky than small and mid-caps, money first comes to the large-cap space during the early stages of recovery,'' he says. 
    The net asset values (NAVs) of most diversified mid-cap and small-cap oriented funds — that have given a staggering 150% to 186% returns since March 9, 2009, the beginning of the current market rally — are still quoting below their previous highs. NAVs of many top performing funds of the past year are 8.7% to 32.6% lower than the peaks hit in January 2008 when sensex breached the 21k-mark for the first time, analysis shows. 
    However, large-cap funds have come up with a better show. Though they are yet to recover fully from the market meltdown of late 2008, more than 15 of these funds have posted 3% to 9% returns. Incidentally, NAVs of many large-cap oriented funds are now at a 52-week high, data with Value Research, a firmthat tracks MFs, shows. 
    Despite their recent stellar performance mid-cap and small-cap stocks, which have surged 130% and 101%, respectively, in the past year (till April 23), are still a long way off from recouping their losses. While the BSE-100 index is 17.5% short of its January 2008 high, the small-cap and mid-cap indices are a good 30.8% and 26.5% lower than their previous peaks. Large-cap stocks have also fallen at a smaller pace than their peers in the small and mid-cap space during the market meltdown.