Why have mutual funds in India performed so poorly in the past?
It is incorrect to think that all mutual funds have performed poorly. If one looks at some income funds, they have come with reasonable returns. It is only the performance of equity funds, which has been poor. Their poor performance has been amplified by the closed end discounts that is units of these funds quoting at sharp discounts to their NAV due to poor market sentiments resulting in an even poorer return to the investor. Returns provided by a fund depend on several factors. One is the underlying objective of the fund. An equity fund investing in diversified stocks will give commensurate returns to the individual stock performance and is far less risky than say a sector fund, which would invest its entire corpus in a particular sector. The performance of such a fund depends on Government policies, subsidies, incentives, import / export restrictions etc. given to that sector. Time frame of investment – A particular mutual fund must be selected and kept invested for the ideal time p
