In the last six months, only international funds have given positive returns.
In January this year, the stock market started falling. In the following six months, it has lost over 30 per cent.
Sample this: The BSE Sensex hit a high of 21,260 points on January 10. It closed on Thursday at 14,777 points. And this fall has not only hit direct stock investors, even mutual fund investors have also been affected.
The data on open-ended equity funds show that only a small cluster has managed to wriggle out with very little loss. From a thematic point of view, only global funds have given returns.
Riding the gold wave is DSP World Gold Fund, which invests in gold mining companies, with returns of 5.86 per cent. Other international funds like DWS Global Thematic Offshore and ING Global Real Estate Retail have returned 2.47 per cent and 1.44 per cent respectively.
All these are feeder funds or fund of funds that, instead of investing in stocks of companies abroad, invest in the fund of their parent asset management company or other funds with a good track record.
Said Suresh Soni, chief investment officer, Deutsche Asset Management, "Global funds are doing better now because the correction in world markets began as early as September 2007, when Indian markets were still in the party mode."
Even pharma funds have been doing better in the recent times after suffering for the last couple of quarters. Though their returns have been negative, they have been able to buck the trend largely because the sector is considered to be a good defence in falling markets.
Hemant Rustagi, chief investment officer, WiseInvest Advisors, said that sectors like pharma and FMCG did not participate in the earlier rally. Now, they are proving to be good defensive bets.
However, while a global flavour is a good idea for investors, financial planners would advise you to either use a good 20-30 per cent of your wealth to diversify into such funds, or just stay away.
This is because there is no point in taking small positions like 5-10 per cent where the returns are so little that the portfolio is not impacted in any manner.
"Investors should employ active fund management techniques to manage their money in these times. Do a monthly review to be in control of the situation," said Mukesh Dedhia, certified financial planner.
Also, while investing in global funds, look for different regions to create a properly diversified portfolio. This will help reduce the overall risk element.