Equity mutual funds deliver up to 17% return in May led by international funds. Should you go global?

Equity mutual funds have offered up to 17% return in May with international funds leading the return chart, an analysis by ETMutualFunds showed. There were 609 funds in the said time period.

Out of 609 funds, 556 funds gave positive returns of which 11 funds gave double-digit returns in May. Around 53 funds gave negative returns in the said time period and lost up to 7%.

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Mirae Asset Global X Artificial Intelligence & Technology ETF FoF offered the highest return of around 17.10% in May, followed by Nippon India Taiwan Equity Fund which posted a return of 14.75% and Edelweiss US Technology Equity FOF which gave 14.15% return.

Invesco India – Invesco Global Consumer Trends FoF and HSBC Global Emerging Markets Fund gave 12.24% and 12.18% respectively in the said period. Quant Teck Fund, a tech sector based fund, delivered a return of 10.55%, followed by Aditya Birla SL US Equity Passive FOF and Navi Nasdaq100 US Specific Equity Passive FOF which gave 10.43% and 10.22% respectively.

Mirae Asset NYSE FANG+ETF FoF offered a return of 7.79% in May, followed by Quant Focused Fund which posted a return of 7.71%. Kotak Healthcare Fund and Quant Large & Mid Cap Fund gave 7.37% and 7.27% respectively.

Domestic or international : Which one to choose now?

Nilesh D Naik, Head of PhonePe Mutual Funds shared with ETMutualFunds that currently, global investors have a strong preference for markets building or enabling AI infrastructure. Consequently, markets like the US, Korea, and Taiwan have performed very well and countries like India, which are seen as potential long-term beneficiaries of AI application, have been out of favour with these global investors.However, given the recent rally and expensive valuations in some of these best-performing markets, investors need to be cautious and avoid being carried away by recent performance. While global diversification is beneficial, this may not be the best time to aggressively invest in these expensive markets at current valuations, Naik further said.

He also said that investors should first determine a comfortable allocation to global markets – a 10-15% exposure could be a sensible starting point for most.

Quant Commodities Fund and Quant Healthcare Fund gave 6.48% and 6.47% respectively. Mirae Asset S&P 500 Top 50 ETF FoF posted a return of 6.35% in May.

HDFC Defence Fund, the only actively managed sector based on defence sector, posted a return of 6.06% in the said period. Quant Infrastructure Fund and Quant Momentum Fund posted a return of 5.70% and 5.66% respectively in May.

Helios Mid Cap Fund, Quant Small Cap Fund, and DSP World Mining Overseas Equity Omni FoF delivered a return of 4.83% each. Kotak Small Cap Fund posted a gain of 2.98% in May. Helios Flexi Cap Fund delivered a return of 2.97% in the mentioned time period.

Kotak ELSS Tax Saver Fund was the last one to deliver positive returns as the fund posted a gain of 0.02% in May.

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Negative performers

HSBC Brazil Fund lost the most of around 6.75% in May, followed by ICICI Pru Strategic Metal and Energy Equity FoF which lost 3.29% in the same period. SBI PSU Fund and ICICI Pru PSU Equity Fund were down 1.28% and 1.16% respectively in the same period.

Parag Parikh Flexi Cap Fund and Parag Parikh ELSS Tax Saver Fund gave negative returns of 0.38% and 0.36% respectively in the said time period. HSBC Large Cap Fund lost 0.01% in May.

What strategy to follow?

Naik said in the current environment, it is advisable to opt for a SIP route to systematically build this exposure, rather than investing a lump sum all at once and more importantly, it is crucial to consider longer-term data when assessing the relative performance of markets.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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