Mutual fund performance review: The best and worst funds of 2018

Schemes investing in technology funds were a saviour for investors throughout 2018 as the domestic equity market wiggled through uncertainties and multiple domestic as well as global headwinds.

At a time when most mutual fund categories including largecap, midcap, and smallcap suffered due to secular market movement, IT funds surprised by staying put.

Outflow of portfolio money by foreign institutional investors and rising crude oil prices hurt domestic stocks through the year.

According to the data on Ace MF, the technology sector funds delivered eye-popping returns in the year gone by. Among the best-performing funds, Tata Digital India Fund topped the chart across 2,500 schemes, delivering as high as 26 percent returns between January and December 2018, while the benchmark Nifty IT Index delivered 24 percent return during this period.

The IT sector has been riding on good earnings show by the IT giants in India. The depreciating rupee in the last few months boosted the fortunes of the technology sector.

From Jan 1 until Dec 31, the rupee plunged 9.5 percent against the dollar to 69.76 per dollar touching a low of 74.45. On Jan 1, 2018, the Indian rupee was at 63.68 a dollar.

The top 10 funds in the IT category have given phenomenal returns, ranging from 11 percent to 20 percent, in a year.

Another category that emerged among the top 10 schemes, were exchange-traded funds, or ETFs.

In the year gone by, the worst of the lot were infrastructure, smallcap and midcap funds.  The worst hit scheme was HSBC Infra Equity Fund that delivered negative 34 percent average returns. This was followed by Sundaram LT Micro Cap Tax Advantage Fund that gave 29.5 percent average returns during the period under review.

Infra funds underperformed in tandem with the disappointing performance of the infrastructure sector which is facing liquidity and funding crunch.