Robust inflows from foreign portfolio investors, or FPIs, helped Indian equity markets scale record high. FPIs have invested a net Rs 60,358 crore into equities between November 3-27, 2020. This has helped Sensex gain 11% in November.
The market is also riding high on the back of earnings revival in 2QFY21, sustained accommodative stance of central banks, lower than anticipated contraction in current fiscal, positive leading indicators and optimism over potential vaccine for COVID-19.
Consequently, most equity mutual fund categories have delivered handsome returns in November 2020.
Top-performing fund categories in November 2020
We looked at the category average performance of open-ended actively managed, including sector/thematic funds, for November month.
Financial services sector funds topped the chart in November 2020 with 21.08% category average return. “Financial services stocks started performing from mid-October 2020 when banks started talking about growth in housing-related lending. These stocks were hammered due to the asset quality issues and the overall slowdown in the economy. Banks are of the view that asset quality problems are not as big as the market is perceiving,” says Shreyash Devalkar, Senior Fund Manager, Axis Mutual Fund.
Infrastructure funds delivered the second-highest return at 12.77%. “There has been a strong recovery in metals, cement and infrastructure related companies in the mid and small cap space. Some FII buying was also seen in this sector,” says Vinod Jain, Founder, Jain Investment.
Category average performance of equity funds
With a broad-based recovery in the market, most categories of funds delivered double-digit returns in November 2020.
Top performing funds (1 year)
Over a 1-year period, (November 2019-November 2020), healthcare and technology funds delivered the highest return at 55.77% and 44.76% return, respectively, as investors flocked to safety amid the pandemic led sell-off in most sectors.
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International funds gaining traction
Off late, international investing is gaining momentum among investors. Assets under management in the global funds category has more than doubled from Rs 3,282 crore in April 2020 to reach Rs 6,782 crore in October 2020. Funds with exposure to regions and themes such as the U.S, China, technology stocks, consumer cyclical, mining have particularly done well over a one-year period.
All in all, most categories of funds delivered positive returns in November 2020.
