Money on the markets

Equity fund investors had a lot to cheer about in the last seven months.

Stock market enthusiasts had almost given up hope after losing an average 52 percent in 2008, when the benchmark Sensex recorded its first annual fall after six years of gains. But a rally since the start of March has bought the smiles back.

By September 30, as many as 10 equity funds more than doubled their net asset values as fund managers bought into the global panic, data from global fund tracker Lipper, a Thomson Reuters company, showed. During the same period 145 Indian equity funds outperformed the 30-share Sensex, which returned 73 percent.

Domestic tax saving funds, which manage nearly 200 billion rupees ($4.3 billion dollars), also rose with the tide. The nation’s largest such fund, SBI Magnum Tax Gain, surged 83 percent.

Tax funds provide investors with an avenue to save up to 33,000 rupees in Income Tax, although the invested amount remains locked in for a period of three years.

SBI’s smaller rival, Birla Sun Life Tax Relief 96, was a step ahead. The fund, which manages 10.3 billion rupees, leapt 90 percent in the nine months to September.

The open-ended scheme also gave an annualised 35.3 percent return during Sept 1996 – 2009, making it the world’s best-performing equity fund for that period, according to Lipper global data.

While equity funds may have given stellar returns in the past three quarters, analysts are hopeful that the stock market rally will continue for the rest of the year, helping investors recoup catastrophic losses suffered during 2008.

After seeing funds crash and recover, what is your approach now to investing in stocks via this medium?