Top MFs of 2012 and how they will perform in 2013

As the New Year begins here's taking a look at the best mutual funds of 2012 and what you should do with them in 2013.

Year 2012 has been reasonably good year for Indian equity market with indices returning close to 27 per cent as we venture into the year 2013. Funds primarily focussed on banking and FMCG and mid cap stocks lead the charts.

We look back at top performing funds for the year 2012 and what holds for them in the year 2013.

Banking funds

Banking funds lead the charts with funds such as ICICI Prudential Banking and Financial Services Fund – RP (G), Reliance Banking Fund (G), Sahara Banking and Financial Services (G), UTI Banking Sector Fund (G), Religare Banking Fund – RP (G) returning impressive returns after a dismal 2011.

Funds with holdings as private sector banks such as HDFC Bank, ICICI Bank, Indus Ind Bank, Yes Bank and SBI in public sector banks did well.

With the interest rates likely to soften, though at much slower pace than anticipated earlier, banking sector funds are expected to do well in the coming year. NPAs of public sector banks will be under scanner all throughout 2013.

Courtesy: Investment-mantra.in

Here's a look at the top MFs of 2012 and how they are likely to perform in the New Year:

Top performers

• ICICI Prudential Banking and Financial Services Fund – RP (G)
• Reliance Banking Fund (G)
• Sahara Banking and Financial Services (G)
• UTI banking Sector Fund (G)
• Religare Banking Fund – RP (G)

FMCG funds

FMCG funds continued to do well in the year 2012 with stocks such as ITC, HUL continued to do well. SBI Magnum FMCG Fund (G) with top holdings as ITC and HUL was the top performer.

With the Indian consumption story intact and turbulence at global and domestic front persisting, this sector is expected to continue doing well, though it may not give same returns as 2012 due to high valuations.

Top performer:

SBI Magnum FMCG Fund (G)

Mid and small cap funds

Mid and small cap funds also made a mark in 2012 with funds such as Prinicipal Emerging Bluechip Fund (G), SBI Magnum Emerging Business Fund (G), Axis Mid cap Fund (G) doing fairly well.

Much of the success is attributed to fund manager and his team as 2012 market was stock pickers' market. Quality mid cap funds should continue to do well. Investors are advised to stick with mid cap funds with consistent performance across all market cycles.

Top performers

• Principal Emerging Bluechip Fund (G)
• SBI Magnum Emerging Businesses Fund (G)
• Axis Mid cap Fund (G)

Conclusion

Investors are advised to stick with quality diversified mutual funds through systematic investment plans (SIP) as they will have greater flexibility do well across all market cycles. Invest in sectoral funds only if you understand and track sector well and can plan timely profit booking.