INDIA - Investments 2009


After a turbulent 2008, this calendar year saw every asset class delivering good returns.

If you had invested Rs 10,000 each in equity, fixed income and gold through an investment vehicle such as mutual fund at the beginning of this year, your portfolio would today look like this on an average: Equities - Rs 18,000; Gold - Rs 12,100; and Fixed income - Rs 10,700.

That makes an average portfolio return of about 36 per cent! Equity, debt, gold, real estate, commodities…almost every asset class did provide an opportunity for investors to build wealth .

While equity was among the worst performing asset class of 2008, the bounce-back in 2009 was true equity-style. The average diversified equity fundgenerated an absolute return of 80 per cent this calendar year till date. This clearly outpaced the popular asset classes – debt and gold by a mile. And that was just the category average across 260 funds. Had you held any of the top 40 funds this year, your investments could have more than doubled.

Mid-cap funds

Funds that invest in mid-cap stocks generated a 100 per cent return (on an average), beating the plain vanilla fund by a good 20 percentage points.

Exchange Traded Funds (ETFs) - the Nifty Junior BeES - would have returned a 125 per cent return.

Yes, this index, often considered an ‘incubator' for large-cap stocks before they graduate to the Nifty, outperformed all other broad-based (non-sector) indices.

Investors who took focussed bets on certain sectors such as technology, pharmaceuticals and consumer goods, too, have been well-rewarded. The best technology fund, for instance, generated 135 per cent.

Adding sheen

Gold would have been the next best asset class in your portfolio, with the ETF version of the precious metal, returning about 22 per cent during the year. Gold ETFs generated marginally higher returns in 2008 compared with 2009.

Gold has managed two successive years of positive returns. Here again, funds that invest in gold mining stocks scored over the commodity itself.

AIG World Gold Fund and DSP BR World Gold leveraged their stock exposures to generate 48 per cent and 37 per cent respectively.

The performance of debt, normally retained to generate fixed returns, varied depending on the investment vehicle picked.

Had you locked into a simple bank fixed deposit in January, you would have earned a maximum fixed interest rate of 11 per cent annum this year.

In contrast, you would not have done as well if you had taken the mutual fund route.

Long-term gilt funds ended the year with an average NAV decline of 7 per cent, as a result of an increase in interest rates of long term instruments such as the 10-year government bonds, and the consequent decline in the price of these bonds.

On short-term debt funds, a 6-7 per cent return would have been possible.

With other assets too participating in the recovery-led optimism, commodities and real estate fared well.

The domestic commodity benchmark - MCX COMDEX for instance, rallied 67 per cent , thanks to the sky-rocketing prices of agri-commodities.

Here again, equities, through mutual funds, offered a simple yet powerful route to commodities. Mirae Asset Global Commodity Stocks delivered 89 per cent.

Residential real estate offered a rare combination of reasonable property prices and low interest rates.

While not all deals entered at the beginning of the year would have fetched capital appreciation, properties in select pockets of cities such as Gurgaon, Noida, Mumbai and Bangalore did see an appreciation of anywhere between 15 and 35 per cent during January-September.

source: Bidya Bala- hinduBusinessline