India’s diversified equity funds outperformed the broader markets in May and recorded their best monthly performance in five years, as stocks rallied on hopes of an economic revival after the Narendra Modi-led Bharatiya Janata Party (BJP) won a decisive election mandate.
Equity funds clocked an average return of 11.57 percent in the month, the highest since May 2009 when funds rose 30.2 percent, data from fund tracker Lipper, a Thomson Reuters company, showed. In comparison, the BSE Sensex rose 8 percent.
Though blue-chip stocks gained, high exposure to better performers in the mid- and small-cap segment, and sectors such as financials and infrastructure, helped schemes outperform the broader markets, experts said.
“Exposure to companies in the infrastructure-related areas such as construction, engineering companies and asset owners helped these funds to outperform,” Nobutaka Kitajima, chief investment officer for equity at LIC Nomura Mutual Fund, said via e-mail.
“As the economy gains momentum, it is expected that the mid-small cap companies would benefit more than large-cap counterparts.”