One year old close-ended schemes offer mixed returns

It's been one-and-a-half years since the wave of close-end equity schemes started in late 2013. Several players rode the wave well till recently and sector witnessed not less than 70 new launches since then.

Despite being heavily criticised by the media fraternity as well as other fund houses (which preferred not to jump in this game of garnering assets) as these funds offered bundled trail commissions to distributors in advance, there was no deceleration in pace of their launches.

Lets look at how these funds, which have completed at least one year since launch, have performed. There are 16 close-end equity schemes (other than RGESS) which have a track record of at least one year till now, shown by data available from fund tracker Value Research.

Out of these, four schemes (all from the stable of Sundaram Mutual Fund) under the Select Micro Cap series have given a massive returns of between 114% and 118% as on 13 April. Such an outperformance has far exceeded the respective benchmark index - S&P BSE Small Cap Index. The benchmark's one year return stands at about 59%.

The next four funds are - one each from Axis MF and SBI MF and two from Reliance Mutual Fund. All have outperformed benchmarks. Their one-year return is between 57% and 75% while their benchmarks gained between 35% and 51%. 

The next five high performing close-end equity schemes are - one from IDFC Mutual Fund (Eq Opportunity Fund) and four from ICICI Prudential Mutual Fund (3 are the value series and 1 is equity savings fund). The returns these funds have generated over the last one year varies between 51% and 58%. Their benchmarks have returned 32-37%.

These are followed by two funds from Birla Sun Life Mutual Fund under its focused equity series, giving returns of 49-51% against the benchmark return of 33%. The last in the category comes from IDFC MF under equity opportunity series - the only scheme to have under-performed its benchmark by more than 4%.

Lets juxtapose these figures with what the open-ended equity schemes provided to investors. To begin with, only two could offer returns in excess of 100% in the last one year. Three schemes gave returns of 90-100% while five schemes offered 80-90%. Majority of the schemes (90) have shown reasonable returns of 40-60% while nearly 60 schemes could return less than 40% in the last one year.