The year 2024 was a rollercoaster for the Indian stock market, leaving many investors disappointed. The last quarter was particularly tough, with sharp declines impacting stock portfolios. Mutual fund investors, too, faced a challenging year, as several schemes posted negative returns. Let’s take a closer look at five mutual fund schemes that underperformed last year, causing losses for investors.
1. Quant Quantamental Fund’s Poor Performance
The Quant Quantamental Fund saw an XIRR (Extended Internal Rate of Return) of -9.61% in 2024. SIP (Systematic Investment Plan) investors faced significant losses:
- Investment Example: If you had started a SIP of ₹10,000 per month in January 2024, you would have invested a total of ₹1,20,000 by year-end. However, the value of your investment would have dropped to ₹1,13,934.98.
- Impact: A loss of over ₹6,000 for SIP investors highlights the fund’s struggle to generate returns during a volatile market.
2. Quant Consumption Fund’s Negative Returns
The Quant Consumption Fund delivered disappointing results in 2024, with an XIRR of -9.66%. This was one of the funds that saw a significant dip in value, adversely affecting SIP investors:
- Investment Example: A monthly SIP of ₹10,000 would have resulted in a total investment of ₹1,20,000. By the end of December, the fund’s value would have fallen to ₹1,04,848.37.
- Takeaway: Investors who relied on this scheme for long-term goals had to deal with substantial losses.
3. Aditya Birla Sun Life PSU Equity Fund’s Underperformance
The Aditya Birla Sun Life PSU Equity Fund was another scheme that failed to perform in 2024. It recorded an XIRR of -11.13%, making it one of the poorest performers among equity funds:
- Investment Example: An investor contributing ₹10,000 monthly through SIPs would have seen their total investment of ₹1,20,000 shrink to ₹1,02,955.77.
- Market Impact: The sharp decline in PSU (Public Sector Undertaking) stocks contributed to the fund’s poor performance.
4. Quant ELSS Tax Saver Fund’s Decline
Tax-saving funds like the Quant ELSS Tax Saver Fund also couldn’t shield investors from losses in 2024. The fund posted an XIRR of -11.88%, which affected investors looking to save taxes and build wealth:
- Investment Example: With a SIP of ₹10,000 per month, investors would have put in ₹1,20,000 over the year. By December, the fund’s value would have fallen to ₹1,02,469.90.
- Key Concern: Despite being a tax-saving scheme, the fund’s returns failed to deliver stability.
5. Quant PSU Fund’s Severe Losses
Among all the funds, the Quant PSU Fund saw the steepest decline, with an XIRR of -20.28% in 2024. This fund caused significant financial stress for its investors:
- Investment Example: A SIP of ₹10,000 per month would have resulted in a total investment of ₹1,20,000. However, by year-end, the value of the investment would have plummeted to ₹90,763.91.
- Major Losses: Investors saw a decline of nearly ₹29,236, the highest loss among the five schemes.
Key Factors Behind the Underperformance
Several reasons contributed to the negative returns of these mutual fund schemes in 2024:
- Stock Market Volatility: The last quarter of 2024 witnessed significant fluctuations in the Indian stock market, impacting mutual fund NAVs (Net Asset Values).
- Sector-Specific Challenges: Funds with high exposure to PSU and consumption sectors faced headwinds, leading to underperformance.
- Global Economic Factors: Global economic uncertainties and rising interest rates put additional pressure on equity markets.
- Fund-Specific Issues: Poor stock selection and lack of timely portfolio adjustments by fund managers worsened the situation.
Lessons for Investors
The performance of these funds offers important lessons for investors:
- Diversification: Avoid over-reliance on a single sector or fund type to reduce risk.
- Long-Term Perspective: Focus on long-term goals rather than short-term market movements.
- Fund Analysis: Regularly review fund performance and compare it with benchmarks and peers.
- Professional Advice: Seek guidance from financial advisors to make informed decisions.
- Risk Assessment: Understand the risk associated with mutual fund schemes before investing.
How to Move Forward in 2025
As 2025 begins, investors can take steps to rebuild their portfolios and mitigate losses:
- Rebalance Portfolios: Shift allocations to more stable funds or diversified equity funds.
- Consider Index Funds: Passive funds can offer steady returns with lower risk.
- Explore Debt Funds: For risk-averse investors, debt funds provide safer alternatives.
- Stay Informed: Keep track of market trends and policy changes to adjust investment strategies.
- Patience is Key: Allow time for markets to recover before making drastic changes.
