In the last one year, the equity market gave solid returns. Those who booked profits early seem to be on the opportunity-losing side while those who had faith in equity were rewarded. However, from the past eight months, we have seen investors ignoring equity mutual funds, which can be observed from the outflows and redemption data. However, those investors, who had moved out of the mutual funds to invest in stocks, did miss the exceptional returns generated by the mutual funds in the last one year (May 1, 2020, to April 30, 2021). In this article, we have listed seven such funds that gave returns of over 100 per cent in the last one year. This means that these seven funds doubled the wealth of mutual fund investors in the last one year.
Trailing Returns (per cent)
Quant Small Cap Fund
ICICI Prudential Commodities Fund
Quant Infrastructure Fund
ICICI Prudential Technology Fund
Quant Tax Plan
Kotak Small Cap Fund
Quant Active Fund
Out of 995 mutual funds (equity, debt & hybrid), 25 per cent of the funds gave returns of above 50 per cent while 97 per cent of the funds gave positive returns. However, considering inflation of 7 per cent, it would be interesting to know how many funds were able to match or beat the inflation. So, almost 731 funds out of 995 funds (73 per cent) were able to beat inflation. Hence, we can clearly say that those who exited mutual funds have surely missed the wealth that it had created in the past one year.
We believe that one should exit mutual funds only in three scenarios, (a) If your financial goal is nearing, (b) carrying out re-balancing activity (which should be done at least annually for better results), and (c) if the fund is no longer performing as expected. Apart from this, there should not be any reason for exiting mutual funds. Doing so would sooner or later prove to be a matter of regret.