Mutual funds — 2022 wasn’t great, but will it affect your investment strategy in 2023? | Jobs Vox

Mutual funds are a good investment for anyone looking for diversification in their portfolio. Read this to understand how the MF industry will look like in 2022.

In the year As 2022 draws to a close, mutual fund (MF) investors have nothing to cheer about. It has been a year of low returns, worrisome expectations and multiple realities. It was difficult for many mutual fund schemes and categories. Large-scale stock-specific rallies and the volatility of international events in the Indian stock market have had a significant impact on the performance of MFS. At the same time, value stocks outperformed growth stocks and accordingly categories like value funds (8 percent) outperformed other equity mutual fund categories in 2022.


Large cap heavy categories such as flexi cap category underperformed (up 2 per cent) while mid and small cap oriented categories such as multicap (6 per cent) provided better returns, said Saurav Basu, Head – Wealth Management, Tata Capital.

“In terms of sector/thematic funds, IT funds were the top losers (-21 per cent), followed by FMCG (22 per cent) and banking and financial services (16 per cent). In the debt category, credit risk, short duration and medium duration funds have fared well. They have worked out the situation (implementation on December 19, 2022),” Basu said

Debt funds fared no better, rising 225 bps and offering only modest returns. Central banks realized that excess liquidity created inflation and quickly witnessed it by raising rates and reducing liquidity.

The best performing funds were liquid and overnight funds, but it made people realize that sometimes safety works too.

Here are the MF scheme returns in 2022:

MF Scheme Returns – CY 2022
Equity – Large Cap 3.80%
Equity – Mid Cap 4.24%
Equity – small cap 3.11%
Arbitration funds 3.55%
Loan funds 3.70%
Gilts Fund 1.85%
Short term fund 4.18%
liquid fund 4.65%
Night fund 4.50%

((Source: TRUST Mutual Fund)

On the other hand, mutual funds currently have around 6.05 crore (60.5 million) SIP accounts where investors invest in schemes.

The following are the details of new SIPs registered and discontinued during FY 22-23: (SIP Count in Lakh)

month Total number of Advanced SIP accounts Registered new SIP number Terminated/Expired SIP No SIP AUM Crore Contribution of SIP Crore
April 22 – November 22 604.57 163.21 86.37 6,83,852 1,00,581
November 22 604.57 21.77 10.50 6,83,852 13,306
October 22 593.30 19.73 10.20 6,64,781 13,041
September 22 583.77 23.66 11.50 6,35,286 12,976
August 22 571.61 21.13 11.46 6,39,787 12,693
July 22 561.94 17.42 10.37 6,09,296 12,140
June 22 554.89 17.93 11.45 5,51,189 12,276
May 22 548.41 19.75 10.36 5,65,706 12,286
April 22 539.02 21.82 10.53 5,78,086 11,863
April 21 – March 22 527.73 266.36 111.17 5,76,358 1,24,566

The way forward

Given the global market uncertainty and the outperformance of Indian markets relative to global markets, Basu of Tata Capital believes that individuals should invest in SIPs/in a staggered manner.

“Mid and small cap oriented categories look more attractive than large caps for future allocation and investors can look at multicap category to take exposure to mid and small cap stocks. To deal with volatility, investors can also look at balanced advantage funds that manage equity. Allocation to volatility,” said Basu.

He thinks debt funds are also favorable because yields are at attractive levels and markets have priced in most rate hikes. Investors can look at increasing duration (categories like mid-duration and corporate bond funds) and for higher returns, investors can look at products like target maturity funds in their debt portfolios and ensure that their investment horizon matches the duration of the fund.

Meanwhile, proper asset allocation is also important.

TRUST Mutual Fund CEO Sandeep Bagla said stocks are overvalued and the best earnings growth is already baked into market valuations.

High interest rates and tight liquidity, both domestically and internationally, could provide a headwind to equity returns. Bond yields have risen, offering investors higher yields and potential for capital gains if inflation starts to decline. Therefore, it could be a difficult year for investors.

“It is appropriate to allocate more to debt funds and create a proper asset-allocated portfolio where modest return expectations are expected,” Bagla said.

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