Global Mutual Funds disappoint, give negative returns; domestic funds outperform their foreign peers

Domestic Mutual Funds usually invest in the Indian equities. However, there are certain funds which invest in offshore equities as well like Facebook, Netflix and Alphabet. Zee Business’ Senior Research Analyst Varun Dubey  brings an interesting research which tells where the investors are making more money – India or overseas.

Dubey said that Mutual funds who have invested in overseas equities have suffered losses of 30-35 per cent. There are many funds who have incurred losses including PGIM Emerging Fund, Kotak Global, Edelweiss US Tech fund, Axis Global, HSBC Global, Mirae Asset and others, he said. All these funds have given negative returns between 25 and 35 per cent, Dubey said.

Out of 69 global funds, 48 have given negative returns. There are 50 such global funds who are 1 year or older, he further said. All these funds have been investing in overseas stock for quite sometime. Meanwhile, there are 19 funds which are new and none of them have given positive returns.

These global funds invest in overseas stock in entirety and nothing in India, the research analyst said.

There are many reasons for this. One is that the funds put significant amounts in tech stocks which have seen considerable beating resulting in losses. Moreover, the weakness in Rupee also played a spoilsport resulting in lower returns.

Even if the value were to remain same, the returns would still be negative.

It was a mistake to invest in overseas stock, Dubey said.

He also explained how mutual funds who invested in domestic stocks have performed during this time. He said that the returns would have been to the tune of 20—25 per cent if the money was spent in domestic stocks.

He said that there have been several small and mid cap stocks which have seen strong rally like Gujrat Narmada which has seen 121 per cent growth, Bharat Dynamics, Latent View etc.

The Small Cap funds have earned very good returns. Even mid cap funds have given annual returns of 25 per cent during this period.

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Even funds which have invested in blue chip / large cap stocks have also seen returns of almost 25 per cent, Dubey said.