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Equity Funds Lag Sensex Performance

The stock market pace scorched funds

The mutual fund industry’s performance chart for its equity diversified schemes has failed to match up to the pace of markets in the recent times. The same was evident on Monday, 4th May. While they have not lost by a huge margin, yet funds have not been able to beat the performance of stock market indices.

While Sensex crossed the 12,000-point mark on Monday, a peak that was last seen in October 2008, clocking a gain of 6.41 per cent, Nifty too rose by as much as 5.18 per cent. Thereby, Indian stock markets have continued to keep their gaining streak going and enter the month of May with a bang.

With the mutual fund managers not being particularly aggressive, the main driver of these gains on May 4 became the foreign institutional investors (FIIs). Reflecting this fact were the numbers -- FIIs were net investors in equities worth Rs 1,417.28 crore (sold off Rs 2,347.30 worth and bought Rs 3,764.58 worth) on the day.

The domestic institutional investors (DIIs), that includes mutual funds, managed to actually enter negative territory -- they sold off more than they bought. The net amount invested was a negative Rs 92.60 crore (bought Rs 1,155.64 crore and sold Rs 1,248.24 crore).

The open-end equity diversified funds’ category managed to deliver approximately a 4.16 per cent gain. Of the total 204 funds whose returns are available for this one-day period, only two managed to deliver more than six per cent. The fund of the day was Templeton India Equity Income (6.67%) and following it was Reliance Equity Opportunities Regular (6.26%). Apart from these, 36 funds managed to deliver returns above five per cent. One fund, Religare AGILE that works on a mathematical model, went the other way to deliver negative returns of 7.86 per cent.

Even when the Sensex registered a gain of 17.26 per cent over the one-month period ending May 4, 2009, that is highest in almost 10 years, of the 196 funds only 19 funds have been able to deliver monthly returns above 17 per cent. As far as the average return of equity diversified funds is concerned, then, over this one-month period, they generated a gain of around 14 per cent.

The reason that is holding back the diversified equity funds from matching stock market gains is probably the high cash allocations they are still clutching onto, which is restricting their gains -- they are continuing to sit on the fence thinking this rally may not last considering that most economic data is still in negative territory, worldwide.

Top Performers of the Day
MF Scheme 1-Day Return*
Templeton India Equity Income 6.67
Reliance Equity Opportunities 6.26
Reliance Equity Opportunities Inst 6.26
Bharti AXA Equity Reg 5.96
Bharti AXA Equity Eco 5.95
LICMF Sensex Advantage 5.88
Sundaram BNP Paribas Select Focus Reg 5.84
HDFC Index Sensex Plus 5.83
Sundaram BNP Paribas Select Focus Inst 5.83
Baroda Pioneer Growth 5.78
Baroda Pioneer Diversified 5.71
JM Multi Strategy 5.70
Baroda Pioneer Global 5.64
DBS Chola Opportunities 5.63
SBI Bluechip 5.61
Escorts Leading Sectors 5.58
Fidelity International Opportunities 5.56
UTI Opportunities 5.56
Fortis China-India 5.55
Mirae Asset India Opportunities Regular 5.48
Mirae Asset India Opportunities Institutional 5.43
DBS Chola Growth 5.39
Franklin India Opportunities 5.26
Reliance Vision Inst 5.24
Reliance Vision 5.24
AIG India Equity Inst 5.22
AIG India Equity Reg 5.21
HDFC Top 200 5.18
LICMF Growth 5.18
Sundaram BNP Paribas Growth Reg 5.17
Birla Sun Life Frontline Equity 5.16
Reliance Quant Plus Inst 5.12
Reliance Quant Plus Retail 5.12
Morgan Stanley Growth 5.11
Birla Sun Life Equity 5.10
Sundaram BNP Paribas India Leadership Reg 5.08
JM Equity 5.07
DBS Chola Contra 5.06
UTI Services Industries 5.05
BSE Sensex Index 6.41
NSE Nifty Index 5.18
*Returns as on May 4, 2009

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