October turned out to be a tough month for the equity markets, with benchmark indices and broader indices posting significant losses. Despite the challenging environment, a vast majority of open-ended equity-diversified mutual funds managed to limit the damage, outperforming their respective benchmarks.

According to a report by PL Capital, 80% of the 240 open-ended equity diversified funds outperformed their benchmarks in October.

Mutual Funds vs Benchmarks
The broader indices saw a sharp decline during the month:
Nifty 50 TRI dropped by 6.12%,
Nifty Midcap 150 TRI lost 6.43%,
Nifty Small Cap 250 TRI fell by 3.58%.
In comparison, mutual funds across categories posted relatively smaller declines.

Category-Wise Outperformance
Largecap Funds
Around 84% of largecap funds outperformed their benchmarks.
Top performer: DSP Top 100 Equity Fund – Reg(G) with an AUM of Rs 3,433 crore, which fell by only 4.42%, compared to the steeper decline in indices.
Motilal Oswal Large Cap Fund – Reg(G) followed, dipping by 4.87%.

Large & Midcap Funds
About 85% of these funds outshone their benchmarks.
Leading the category was Motilal Oswal Large & Midcap Fund – Reg(G), down 3.93%, with an AUM of Rs 3,690 crore.
SBI Large & Midcap Fund – Reg(G) posted a fall of 4.36%.

Flexi Cap Funds
This category had 86% of funds outperforming benchmarks.
Noteworthy performers included the Parag Parikh Flexi Cap Fund – Reg(G), which delivered the highest returns of -3.03%, and the Helios Flexi Cap Fund – Reg(G), which fell 3.21%.

Smallcap Funds
Despite being more volatile, 60% of smallcap funds managed to outperform their benchmarks.
Smallcap funds emerged as the best-performing category, losing the least among all.

Increased Investor Participation
Investor confidence in equity funds surged despite market headwinds. According to data from the Association of Mutual Funds in India (AMFI), net inflows into equity funds hit a record high of Rs 41,886.69 crore in October. The overall Assets Under Management (AUM) of mutual funds grew by Rs 16,355 crore, reaching a total of Rs 67.25 lakh crore.

Category-Wise Insights
Smallcap Funds: Outshined other categories with the lowest average losses compared to benchmarks, proving to be relatively resilient.
Largecap Funds: Bore the maximum brunt of the market decline, reflecting their direct exposure to large-cap indices.

The performance of mutual funds in October reflects the importance of professional fund management, especially in volatile markets.

Categories like Flexi Cap and Small Cap funds demonstrated their ability to mitigate risks during market downturns. The record inflows into equity funds suggest that investors are focusing on long-term growth, leveraging corrections to build their portfolios. Performance varies significantly across funds, even within the same category. Choosing funds with a proven track record and consistent management can make a difference.

*Inputs from Moneycontrol*

Story first published: Saturday, November 23, 2024, 12:40 [IST]