International Funds Fare Badly

International funds have failed to match the outstanding performance of their domestic counterparts in 2014. The category trailed all other categories of mutual funds except for gold funds by a wide margin and managed to offer only 2.56 per cent average returns to investors in the past year. During the same period, diversified equity funds offered an average return of over 30 per cent and mid- and small- cap funds gave an average return of 74 per cent. Ten mid- and small-cap funds posted returns above 85 per cent, with micro-cap funds leading the pack. Even debt funds with a longer-term maturity like gilt and income funds have generated an average return of 16 and 13 per cent on hopes of a rate cut amid moderating inflationary pressures. Most domestic equity mutual fund schemes have posted a phenomenal performance in 2014 as the market touched an all time high. There was a turnaround in the economy after the general elections. Macroeconomic variables turned favourable with oil prices falling, reduced inflation rates, markets breaking new records every day and overall improved sentim