UTI returns below bank FDs in long term

the general refrain that long term return on equity is better than earnings from debt instruments like bank fds and investments in government securities (which give returns of around 10 per cent) does not appear to be true, at least in the case of uti. a close look at the performances of various uti schemes proves that the country's largest mutual fund has failed in its role to minimise the risk of investing in equity market, even in the long term horizon.the performance of almost all uti schemes over the past 10 years has been disappointing. what's worse, this poor performance does not even have much correlation with the market movements. if a scheme is launched with the market at its peak and subsequently it slides, returns are generally bad. but in the case of uti, several schemes failed to give good returns despite the fact that they hit the market at a time when the sensex was quoted at a much lower level compared to the present 3300-mark. this means that uti, as a mf, failed to beat the sensex even in the long term. for example, master equity plan (mep) 1992, launched in january 1992 when the sensex was at around 2000 points, has given an annual return of 2.92 per cent only. at present, the scheme's nav is only rs 13.24 and the current size of the fund is rs 327 crore. the nav of mep '94, launched in december 1993, when the index was hovering around 3300, stands at rs 7.88. according to data on the uti site, the scheme's cumulative return over the past 8 years was minus 3.02 per cent. the nav of another scheme mep '97, launched on november 22, 1996, when the sensex was at around 2900 is rs 8.50. the compounded annual loss of those who invested in the scheme in november 1996 is 3.36 per cent. uti's mep '99 seems to be the only exception. the scheme, launched on january 1, 1999, when the sensex was at 3300 points, has offered a return of 27.49 per cent. this could primarily be attributed to the fund's small size, i.e. rs 2.50 crore. the condition is not very different in the case of morgan stanley growth fund, launched in january 1994. this fund had generated a lot of interest among investors and had mobilised over rs 900 crore. the scheme's current nav is rs 11.71. after adjusting all the payouts in the form of dividend, the fund has given a return of 4.42 per cent since inception. this clearly shows that in the long term (of more than seven years), there is hardly any equity scheme which has managed to beat the return offered by bank fds. however, in the medium term (of three to five years), there are some schemes like alliance equity and birla advantage which have given double digit annual returns. but here again, a large number of private funds have shown negative returns.