Indian mutual funds give high returns

TOI

In the medium to long term, Indian mutual funds have rewarded their investors better than any other fund in the world. Whether we look at a time period of 10 years, five or three years, the majority of the ten best performing equity-oriented funds in the world are from India.

Over a 10-year period, Indian funds have grabbed 8 of the top 10 ranks. Over the last five years, they account for 7 of the top 10 and six over a 3-year period.


MF data back India story

Russian MFs are the only non-Indian funds to figure in the list of top 10 performers over 10-year or 5-year periods, a report by Lipper, a leading market research agency, said. In the list of top funds in the 3-year category, however, they had to make way for funds from Korea and Norway.

If one takes a short-term view, there is no Indian fund among the top 10 global performers over the last year (November 1, 2005 to October 31, 2006). Interestingly, the period was among the best periods ever for the Indian markets, with the sensex rising by 64.2%.

The best performer over the five- and ten-year periods is Reliance Growth Fund, which had given a compounded annual return of 71.38% and 35.21% in the last 5 and 10 years respectively against the sensex’s 34.10% and 15.14% respectively.


All returns have been calculated in dollar terms. In rupee terms, this means that if you had invested Rs 1 lakh in Reliance Growth Fund as on October 31, 1996, your investment would have increased by over 20 times to Rs 20.42 lakh.

And, if you had invested the same amount in 2001, the amount would have increased by around 15 times to Rs 14.79 lakh. The other top seven Indian funds in 10 years have also given compounded annual returns of over 30%. In the 5-year period, the returns remained in the range of 57-70%.

In the back drop of around 34% and 15% returns from sensex during the 5- and 10-year period, the returns given by Indian mutual funds could be seen as very good, said a merchant banker.

However, according to Morgan Stanley Capital International (MSCI) index, over the 10-year period, the Russian market has performed better. While Russia’s MSCI index improved by 22.29% in the last 10 years, the Indian index went up by 18.65% per annum compounded annually.

The Indian Economy grows at a good pace, and promises continued growth over the long term, and this despite the problems in agriculture and the Left's uncompromising stance on disinvestment and privatization. The stock market boom then is due partly to the large sums invested by overseas funds and financial institutions, partly by the increasing stock and fund investment by individual Indian investors, but mostly due to the good performance of Indian companies and the regular high returns posted by them. Now if government policies actually began helping economic growth or if agriculture contributed a little more to this economic boom, this good news would turn into great news.

As of now individual investment in the Indian Stock Market from overseas can only be made through a mutual fund——this is a list of those mutual funds. Indians living or working overseas can however invest directly in mutual funds and shares by opening an NRE (non-resident external) account with a bank in India, converting their foreign currency into Indian Rupees, do their buying/selling and convert their Rupee returns back into that foreign currency.

Other foreign investors can avail of ADRs (American Depository Receipts) and GDRs (Global Depository Receipts) issued by Indian Companies in overseas markets. The following companies have thus far issued these ADRs/GDRs:

Ashok Leyland, Bajaj Auto, Bombay Dyeing, Reliance Energy, CESC, Core Healthcare, Crompton Greaves, DCW, Dr. Reddys, EID Parry, EIH Ltd., Gas Authority of India Ltd, Garden Silk, GE Shipping, GNFC, Grasim Industries, Gujarat Ambuja, HDFC Bank, Himachal Communications, Hindalco, ICICI Bank, Indian Cement, Indian Hotels, IPCL, Indo Rama, Indo Gulf Fertilizers, Infosys Technology, ITC Ltd, Jain Irrigation, JCT, Larsen & Toubro, Mahindra & Mahindra, MTNL, NEPC, India Pentamedia Group, Ranbaxy Laboratories, Raymond, Rediff.Com, Reliance Industries, Sanghi Polyester, Satyam Computer, Satyam Infoway, SAIL, SIEL, Silverline, Te S.I., Viscose, SSI, SBI, Sterlite, Tata Power, Tata Tea, Tata Motors, Tata Motors, Tube Invest., United Phosphorus, Usha Martin, UTI Bank, VSNL, Wipro, Wockhardt Ltd.