2019 Performance Report of Goalwise Recommended Mutual Funds


P.S. Performance reports for previous years can be found here: 2018, 2017, and 2016.

Stock market performance in 2019

2019 continued the trend of Large Caps outperforming Mid Caps and Small Caps. While the large cap index Nifty 100 TRI delivered positive returns of 11.83%, the Nifty Midcap 150 TRI was flat for the year and the Nifty Small Cap 250 TRI was in the red at -7.26%.

Benchmark-Returns-2019-Nifty-100-Nifty-500-Nifty-Midcap-150-Nifty-Smallcap-250

Source: Nifty Index Dashboard Dec 2019

Mutual Funds category performance in 2019

Given how the stock markets performed in 2019, let's see how the average Mutual Fund did.

It is important to note that Equity Mutual Funds are not meant to provide some fixed or minimum returns every year. Their objective is to invest in the stock market and do better than their benchmarks eg Nifty or Sensex. So their returns will be closely linked to how the stock markets performed and they can be evaluated only by how well they did in relation to the general stock market.

Below are the average returns of Mutual Funds for 2019 in Large Cap, Multicap and ELSS categories (these are the three equity fund categories we recommend on Goalwise).

Equity-Mutual-Fund-Category-Returns-2019
Source: Value Research Online

Large Cap Funds

The average Large Cap Mutual Fund under-performed its benchmark Nifty 100 TRI for the third consecutive year!

This means that it has become quite difficult for the average fund manager to find opportunities in the large cap space to outperform the benchmark index.

Noticing this trend last year itself, we had started recommending an index fund in addition to active Mutual Funds in our large cap category. Index funds give returns that match the benchmark and are much cheaper than active Mutual Funds (expense ratio for an index fund is ~0.1% whereas that for an active fund is typically 1% i.e. 10 times!).

Multicap Funds

The average Multicap fund gave returns of 9.78% as compared to 8.97 % of the benchmark (Nifty 500 TRI) - a meagre outperformance of less than 1%. Here too, the outperformance has declined the in last few years. In fact, over the last 5 years, the average Mutlicap fund has done worse than the Nifty 500 TRI benchmark. If this continues, index funds in this space will also become popular in the coming years.

ELSS Funds

The average ELSS fund gave returns of 8.26% and since they are typically multicap funds, they have underperformed the multicap benchmark of Nifty 500 TRI (8.97%).

Now let's look at how Goalwise recommended Mutual Funds did in 2019.

Goalwise recommended Mutual Funds performance in 2019

Equity

This was a great year for Goalwise investors. :)

9/10 of Goalwise's recommended equity funds outperformed their respective benchmarks by 2-8%!

This is quite a fortunate result. It is even more remarkable given the fact that the average Mutual Fund did not do too well compared to its respective benchmark in 2019.

Here are the individual and average fund performances for Goalwise recommended funds:

Goalwise-Equity-Mutual-Fund-Returns-for-2019-1

If you have been investing with Goalwise, the actual CAGR number that you see on your dashboard could be higher/lower than those shown above depending on when you started investing and the exact dates of your investments (SIP, lumpsum etc) over time.

Debt

On the debt side, we again did better than your FD and twice as good as your savings account.

More importantly, 2019 witnessed a number of debt downgrades and defaults but none of our recommended debt funds were hit as we choose only the funds with the highest credit quality (even if that means compromising somewhat on returns). At Goalwise, we believe debt investments are meant to keep your money safe and not to chase returns.

Goalwise-Debt-Mutual-Fund-Returns-for-2019

As we always maintain, results in any given year are driven partly by luck and partly by our selection process. Where there is good luck there can be bad luck too (e.g. 2018). In the long term, good and bad luck should even out and we should expect the results from our selection process which may not be as good as what happened this year but still better than the average.

Recommendations for 2020

We have already updated our recommendations for 2020. There are very few changes as most of the funds were doing well.

P.S. Performance reports for previous years can be found here - 2018, 2017 and 2016.