Leading our list of five is a fund that most people thought was a loser. Looks are not always what they appear. The MF was actually just sticking to its high ethical ground. This fund house’s belief that its way would victory put it on the top of the heap. Now, on to the list..

1. Reliance Mutual Fund

The new manager Reliance Mutual Fund has come into its own after years of trailing the likes of Franklin Templeton, HDFC and Prudential ICICI. According to AMFI’s March-end figures, Reliance MF is the leading confidential MF player in terms of corpus, and second only to UTI MF overall.

Launched in 1995, Reliance MF had a tough time in the early years. Its two flagship equity funds, Reliance increase and Reliance Vision, showed insipid performance till 2001. It was only in 2002 when, after a modify in fund management, the schemes started to turn around. And so did the fund house’s chance.

In 2002, both Growth and Vision summit the charts and still continue with their sterling performances. Reliance MF has urbanized the art of picking up unheard-of companies that turn out to be multi-baggers. In recent years, the fund home has open unconventional sector funds and has complete well.

2. Benchmark Mutual Fund

Not many funds have launched index funds in India, and those that did normally made a low-key entrance into that space. And then comes Benchmark MF in 2001, which made no bones about the fact that it was going to launch only directory funds.

standard is also the country’s first and only fund with solely passively managed schemes. The MF does not believe in active management; rather, it believes that indexing and quantitative fund management is the way to go.

Set up by Rajan Mehta and Sanjiv Shah, the fund’s philosophy is to remain invested in the index and let it do its own thing. Says Mehta: “Over the last three years, the gap of out-performance by actively managed funds over the indices is reducing. It does not mean that fund managers have run out of ideas, but there are some structural changes like better corporate disclosures and the increasing number of up to date and professional shareholder in the market.

“Owing to this, the ability to add value becomes less, which is why indexing is a much more sustainable strategy over the longer term.”

As we’ve seen elsewhere in the world, the more the markets mature and become efficient, the trickier it becomes to outperform the index.

3. Quantum Mutual Fund

Keep beginning new schemes. Size matters and bigger is better. Rule 2: Woo distributors to increase collections and to overtake competition. Rule 3: Bargain about commission with the distributor but don’t worry about it too much; at the end of the day, it is the customer who pays.

“Mutual funds should be bought, not sold,” says Ajit Dayal, director, Quantum MF. And that’s the foundation of the all-new Quantum. Launched in February 2006, the fund house has deliberately chosen to avoid deal out its schemes from end to end distributors, a first in this industry. The only way you can buy Quantum schemes is to download the forms from the company site or by asking them to courier the forms to you.

Avoiding distributors in peak markets could prove costly, because they can sell schemes aggressively and help the fund mop up huge collections. Which is possibly why Quantum Long-Term Equity Fund collected just Rs 11 crore. Not that they are complaining. “We’ll be very happy after five years when we’ll be able to demonstrate the cost savings more obviously,” says Dayal.

Incidentally, the fund is also among the very few open-ended equity schemes to levy high exit loads on early withdrawals. Yes, Quantum seeks to set an example of how mutual funds should be approached, but this means that it will take it several years before it can accomplish its mission. We’ll keep you posted.

4. Fidelity Mutual Fund

It’s the big daddy of mutual funds, and when Fidelity entered the Indian market last year, investors and analysts sat up and took notice. The first launch, Fidelity Equity Fund, collected Rs 1,460 crore (Rs 14.6 billion), among the largest inflows till then. The fund is now one year old, and has passed its first test with flying colors, with returns of 78.9 per cent.

So, what’s the difference between Fidelity and other MFs, save size? What caught our attention one year ago, and still does, is the fact that Fidelity does not encourage investors to wander in and out of its schemes. It maintain to monitor all admission and exits, and if it feels that an investor is making frequent entries and exits into its fund, it will disallow those flows. “Frequent churning has a negative impact for obtainable, long-term saver,” says Ashu Suyash, head - Fidelity MF.

Fidelity claims that since beginning, it hasn’t yet come across any example of investors who churn excessively, but the policy still stands, perhaps as a deterrent. But what about investors who exit soon after the fund was listed? Or maybe even in the first year itself?

5. Franklin Templeton Mutual Fund

In the 1990s, most equity funds launched were either closed-end or plain vanilla branch out equity schemes. go into Franklin Templeton. They launched India’s first equity scheme, Templeton India Growth Fund, based on the concept of ‘value investing’.

India’s liberalization process, which started in the early 1990s, had picked up momentum towards the middle of that decade and Indian companies that had grown till then in a controlled environment were now waking up to the realities of competition not just within the country, but also from abroad.

Though, in its early days, TIGF did not do well due to the impact of the South Asian crisis on companies in 1997 and the increased interest in technology stocks. The fund stuck to large-cap stocks and stayed away from mid-caps.

Though it lost out to its more aggressive peers during the technology boom of 1998-99, it came into its own during 2000-01, when marketplace crashed. In 2000, when markets lost 20 per cent and the diversified equity funds category lost 30 per cent, TIGF lost just 2 per cent. In 2001, the fund was in the top 10; it lost 10 per cent, while Sensex lost 18 per cent.

Related Posts

• How to Know the Best Mutual Funds to Invest With
• You Must Know about Mutual Fund
• Best Guide For Selecting the Right Mutual Funds
• What is Mutual Fund?