The losers
Funds with big stakes abroad
The global funds category, which includes funds that invest at least 35% of their assets abroad, was the worst performing category this year. In fact, this category comprised of the only funds to deliver negative returns in 2014. Mirae Asset Global Commodity Stocks was the worst performing fund with an aggregate return of -8.84% in 2014. Australian mining companies like BHP Billiton and Santos Ltd where major drags on performance of the fund. The only other two funds to close the year in red were Deutsche Invest I Top Euroland and L&T Global Real Assets.
The Top 5 in this space returned 16% on an average and included funds with exposure to the U.S. market - JP Morgan US Value Equity, PineBridge US Equity and ICICI US Bluechip. Tata Growing Economies Infrastructure and Birla Sun Life Global Real Estate were the other top performers in this category.
Funds invested in technology
In 2013, technology funds grabbed all the attention with a category average of 52%. Last year they were not that favoured and delivered a modest 22%. Not bad when viewed in isolation, but quite poor when compared to other categories. Stocks like Bharti Airtel and Infosys were a major drag on these funds.
Funds playing defensive
“Up, up and away” is the phrase that perfectly captures last year’s equity story. While some sectors delivered returns less than others, the market on the whole gained significantly in 2014. In such a situation, any fund that banked on defensives suffered.
This is best exemplified by the FMCG category of funds. The category returned an average of 22% this year and is the worst performing category, preceded only by the global funds category. The two major detractors for this segment were the footwear segment and the packaged foods segment. ICICI Prudential FMCG and SBI FMCG were naturally hit.
Funds invested in tobacco and alcohol
A subset of a defensive strategy, fund managers invest in tobacco and alcohol stocks due to the relative demand inelasticity of these companies’ products. Unfortunately, the strategy backfired as these companies did not fare particularly well in 2014. ITC and VST Industries returned 17% and 16%, respectively, while alcohol giant, United Spirits delivered a modest 10% return.
The poor performers hit with these stock allocations were Religare Invesco AGILE (17%) and HSBC Dynamic (26%), both in the large-cap space, and Religare Invesco Equity (24%) in the Flexicap space.
