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Time of India
27-06-2025
- Business
- Time of India
MNC mutual funds struggle to perform, lose 3% in 1 year. What's driving the underperformance?
Live Events With MNC theme based mutual funds losing out an average of around 2.94% in the last one year, a market expert mentions that as MNC funds have heavily invested in the underperforming sectors, their overall returns have naturally been impacted.'Over the past year, MNC funds have delivered returns much below their benchmarks. The Nifty MNC index has itself seen low returns. MNC funds invest mostly in companies that are part of the Nifty MNC index. This index is heavily weighted in two main sectors: FMCG at 35.13% and Capital Goods at 23.80%. Both these sectors have not done well over the past year,' Arjun Guha Thakurta, Executive Director, Anand Rathi Wealth Limited shared with to Thakurta, the Nifty FMCG Index, which fell nearly 3% over the past year, includes a 2.06% drop from April to May and a further 0.3% decline from May to June. Similarly, the S&P BSE Capital Goods Index fell around 2% in the past year and dropped 0.2% from May to June. Nifty India Manufacturing Index, which also reflects capital goods and industrial exposure, declined by nearly 5% over the last year and with MNC funds heavily invested in these underperforming sectors, their overall returns have naturally been impacted, Thakurta further adds that the MNC funds are also restricted to a relatively small universe of MNCs listed in India, which limits diversification and can lead to underperformance if the broader market rallies but MNC stocks do funds were the second biggest losing category in the said period after auto sector based funds lost 7.15% on an average in the same period. There were around five schemes in the MNC category that completed one year in the MNC Fund lost the most at around 9.75% in the last one year, followed by UTI MNC Fund which lost 2.68% in the said period. Aditya Birla Sun Life MNC Fund lost 1.65% in the mentioned lastly, SBI Magnum Global Fund and ICICI Prudential MNC Fund lost 0.59% and 0.04% respectively in the same time comparing the performance of MNC funds with that of Nifty50 where Nifty MNC has failed to beat Nifty 50 in 3 out of the past 5 years, and is lagging behind this year as well, Thakurta advises investors not to invest solely in any single sector, as it increases the concentration further advises investors to invest in broad based diversified equity funds such as market cap based funds and strategy based funds which gives exposure across the sectors, categories and market caps & helps to reduce the concentration risk associated with performance of any single sector and additionally strategy based diversification helps to ride across the market funds are benchmarked against NIFTY MNC - TRI which went down by 4.28% in the last one year. In the last three years, MNC based funds gave double-digit returns upto 17% with ICICI Prudential MNC Fund being the topper and SBI Magnum Global Fund offering the lowest return of around 13.36% returnA similar picture was seen in the returns offered by these schemes in the last five years. On the other hand, in the last three months, only two funds gave double-digit returns. Aditya Birla Sun Life MNC Fund and Kotak MNC Fund gave 12.24% and 10.68% returns respectively in the last three months. ICICI Prudential MNC Fund gave the lowest return of 5.96% in the last three observing the recent trends or returns offered by these funds, Thakurta said that the outlook for MNC funds remains cautious and while these funds appear to offer steady, long-term returns due to the strength of multinational companies, historical data suggests that strong outperformance is unlikely in the near term unless MNC stocks come back into favor or global conditions further added that even if these positive shifts occur, the performance of MNC funds is expected to remain cyclical rather than consistently strong and such funds are riskier than diversified funds due to their concentrated exposure therefore, investors are advised to avoid investing in a single sector and should opt for more diversified funds which invest across multiple sectors and market considered all MNC theme based funds. We considered regular and growth options only. One should always make investment decisions based on their risk appetite, investment horizon, and goals.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and twitter handle.
Economic Times
06-06-2025
- Business
- Economic Times
Nirmala Sitharaman backed consumption over capex. But guess who's making billions
Four months after Finance Minister Nirmala Sitharaman's Union Budget appeared to pivot policy focus towards consumption, the real winners in the market have emerged from an unlikely corner: capital goods. ADVERTISEMENT Despite a budget speech that dialed back aggressive infrastructure spending in favour of easing middle-class tax burdens and supporting household demand, capital expenditure stocks have not only held their ground but have outperformed. The BSE Capital Goods Index has soared 10% since Budget Day, trouncing the Nifty India Consumption Index, which managed a muted 3% rise, and even outperformed the Nifty 50's 5% climb. The rally in capital goods stocks has added a staggering Rs 1.85 lakh crore in market value. Leading the pack is Hitachi Energy India, with a 54% surge. Defence heavyweights like Bharat Dynamics (up 49%), BEL (33%), and HAL (26%) have also posted stellar returns. Other notable gainers include Schaeffler India, BHEL, Kaynes Tech, SKF India, GMR Airports, Suzlon Energy, and Inox Wind—all of which have clocked double-digit gains. Meanwhile, the consumption story hasn't lived up to the Budget's optimism. The Nifty India Consumption Index has underperformed broader markets. Varun Beverages and Colgate-Palmolive have posted double-digit declines.'The mix of cheaper starting prices, accelerating earnings, and stronger order pipelines explains why capital goods stocks have outperformed consumption,' Anoop Vijaykumar, Head of Equity at Capitalmind Mutual Fund told ET pointed to multi-year high order books at engineering firms and the RBI's OBICUS survey showing manufacturing capacity utilisation at 75.4% in Q3 FY25—the highest in six years—as signs that the industrial engine is firing on all cylinders. ADVERTISEMENT Also read | Sensex will hit 1.5 lakh by 2030 & 3 lakh by 2035! Raamdeo Agrawal makes big prediction 'Policy support for railways, defence, renewables and the PLI 2.0 schemes has not slowed; these programmes are multi-year and continue. Meanwhile, the consumption complex faces a softer near-term backdrop: rural volumes are only just turning positive, urban discretionary demand is normalising after two strong years, and the sector entered Budget season on richer valuations,' Vijaykumar added. ADVERTISEMENT Dhiraj Relli, MD & CEO of HDFC Securities, echoed the sentiment, calling the capital expenditure revival a "multi-year" phenomenon. 'Between FY21 and FY25E, private sector capex has grown at 19.8% CAGR. The momentum is likely to intensify in FY26, driven by domestic manufacturing, continued government infrastructure initiatives, and healthy corporate balance sheets,' he the flip side, Relli flagged that consumption faces headwinds from 'sluggish urban demand, delayed rural recovery, and persistent inflation.' While tax reductions and early signs of rural revival offer a glimmer of hope, margin pressure and steep valuations may limit upside. ADVERTISEMENT So is the capex story here to stay? Vijaykumar believes it is. 'The central government has already budgeted over Rs 11 lakh crore of infrastructure spending for FY26, while states and CPSEs have pencilled in similar growth. Private sector intent is also strengthening with new project announcements rising in double digits,' he said. With healthy corporate balance sheets and a banking system ready to fund fresh investments, 'the investment cycle is broadening rather than peaking.'Venugopal Manghat, CIO – Equity at HSBC Mutual Fund, is selectively bullish within capex. 'We like power, manufacturing and defence over roads and railways. Ongoing liquidity infusion by RBI, expected rate cuts, and regulatory easing should support NBFCs and banks,' he the consumption front, Manghat is cautious on staples. 'The sector has seen disruption from tech and new formats. With higher disposable incomes, households are shifting toward aspirational and discretionary spending,' he said. He sees greater opportunity in small-cap consumer discretionary plays, citing low penetration and a large unorganised-to-organised transition in the space. ADVERTISEMENT The scorecard since the Budget is clear: while policy seemed to back the consumer, the market has placed its bets on industrial India. And for now, capex is delivering the returns. Also read | Neither largecaps, nor smallcaps! India Inc's Q4 result season belongs to the middle order (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
06-06-2025
- Business
- Time of India
Nirmala Sitharaman backed consumption over capex. But guess who's making billions
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Four months after Finance Minister Nirmala Sitharaman's Union Budget appeared to pivot policy focus towards consumption, the real winners in the market have emerged from an unlikely corner: capital a budget speech that dialed back aggressive infrastructure spending in favour of easing middle-class tax burdens and supporting household demand, capital expenditure stocks have not only held their ground but have outperformed. The BSE Capital Goods Index has soared 10% since Budget Day, trouncing the Nifty India Consumption Index, which managed a muted 3% rise, and even outperformed the Nifty 50's 5% rally in capital goods stocks has added a staggering Rs 1.85 lakh crore in market value. Leading the pack is Hitachi Energy India , with a 54% surge. Defence heavyweights like Bharat Dynamics (up 49%), BEL (33%), and HAL (26%) have also posted stellar returns. Other notable gainers include Schaeffler India BHEL , Kaynes Tech, SKF India Suzlon Energy , and Inox Wind—all of which have clocked double-digit the consumption story hasn't lived up to the Budget's optimism. The Nifty India Consumption Index has underperformed broader markets. Varun Beverages and Colgate-Palmolive have posted double-digit declines.'The mix of cheaper starting prices, accelerating earnings, and stronger order pipelines explains why capital goods stocks have outperformed consumption,' Anoop Vijaykumar, Head of Equity at Capitalmind Mutual Fund told ET pointed to multi-year high order books at engineering firms and the RBI's OBICUS survey showing manufacturing capacity utilisation at 75.4% in Q3 FY25—the highest in six years—as signs that the industrial engine is firing on all cylinders.'Policy support for railways, defence, renewables and the PLI 2.0 schemes has not slowed; these programmes are multi-year and continue. Meanwhile, the consumption complex faces a softer near-term backdrop: rural volumes are only just turning positive, urban discretionary demand is normalising after two strong years, and the sector entered Budget season on richer valuations,' Vijaykumar Relli, MD & CEO of HDFC Securities, echoed the sentiment, calling the capital expenditure revival a "multi-year" phenomenon. 'Between FY21 and FY25E, private sector capex has grown at 19.8% CAGR. The momentum is likely to intensify in FY26, driven by domestic manufacturing, continued government infrastructure initiatives, and healthy corporate balance sheets,' he the flip side, Relli flagged that consumption faces headwinds from 'sluggish urban demand, delayed rural recovery, and persistent inflation.' While tax reductions and early signs of rural revival offer a glimmer of hope, margin pressure and steep valuations may limit is the capex story here to stay? Vijaykumar believes it is. 'The central government has already budgeted over Rs 11 lakh crore of infrastructure spending for FY26, while states and CPSEs have pencilled in similar growth. Private sector intent is also strengthening with new project announcements rising in double digits,' he said. With healthy corporate balance sheets and a banking system ready to fund fresh investments, 'the investment cycle is broadening rather than peaking.'Venugopal Manghat, CIO – Equity at HSBC Mutual Fund, is selectively bullish within capex. 'We like power, manufacturing and defence over roads and railways. Ongoing liquidity infusion by RBI, expected rate cuts, and regulatory easing should support NBFCs and banks,' he the consumption front, Manghat is cautious on staples. 'The sector has seen disruption from tech and new formats. With higher disposable incomes, households are shifting toward aspirational and discretionary spending,' he said. He sees greater opportunity in small-cap consumer discretionary plays, citing low penetration and a large unorganised-to-organised transition in the scorecard since the Budget is clear: while policy seemed to back the consumer, the market has placed its bets on industrial India. And for now, capex is delivering the returns.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
