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Equity Funds Limit Losses

Despite stock markets crashing in January, equity funds were able to put in a better performance and restrict their losses

While investors in equity markets are ruing the fact that January was a write-off as far as booking gains was concerned, yet those who sourced their investments through mutual funds, have reason to be less concerned.

Simply stated, their loss was restricted overall to 4 per cent, while the stock markets registered much greater losses. The negative impact was all-pervasive on them as, barring BSE Consumer Durables, which gained by a minuscule 0.37 per cent, all the other indices posted negative returns in January. While Sensex fell by 6.34 per cent, the worst performer was BSE Realty, which dipped by 9.22 per cent, while BSE Metal fell by 8.26 per cent.

Equity Diversified

After ending the last month of the year (December 2009) in the green by posting a return of 4 per cent, this category was not able to repeat the feat and shed almost all of those gains. January saw it fall by 4.19 per cent. Seen in conjunction with the category's robust returns for the entire 2009, when it gained by 84.44 per cent, this is surely a disappointing result.

The fall spanned the industry  - out of a total of 256 funds in this category, only four managed to stay in the green. But they too were positively borderline cases - ICICI Prudential Discovery Institutional I (0.39 per cent), ICICI Prudential Discovery (0.27 per cent) and both Plan A and Plan B of IDFC Premier Equity (0.17 per cent for both the funds).

The worst-performing fund in January was Religare AGILE with a negative return of 9.23 per cent, while JM Large Cap came second after posting a negative return of 7.38 per cent.

Biggest fund in this category, Reliance Growth, whose assets under management (AUM) stood at Rs 6,564.86 crore as on December 31, 2009, too went into the red, posting a negative 3.11 per cent returns.

Tax Planning

This second-biggest equity fund category’s fall was a little bit greater than the equity diversified category. Tax planning funds posted negative returns of 4.29 per cent. It too had a much healthier December return at 4.19 per cent, while in November it was even better at 6.73 per cent – for the entire 2009, it posted a return of 81.79 per cent.

The extent of the fall spanned each and every fund in the category - there was not even one left in the green as all 37 posted negative returns. The worst-performers were Birla Sun Life Tax Relief 96 and Franklin India Index Tax as their returns fell by 6.36 per cent and 6.12 per cent respectively.

The biggest fund in this category, Magnum Taxgain, whose assets under management (AUM) as on December 31, 2009 stood at Rs 5,264.85 crore also was awash in red with a negative return of 4.83 per cent. Its returns in December were 4.05 per cent and 7.20 per cent in November.


Equity FMCG, Equity Banking, Equity Pharma and Equity Technology remained in the red after posting a negative 1.68 per cent, 3.03 per cent, 3.10 per cent and 3.16 per cent returns respectively. For Equity Technology the fall was a big one as it had been a star performer in December when it clocked the highest return at 8.31 per cent, and 7.68 per cent in November.


The balanced funds category too was not able to save itself from a fall. However, it did restrict the losses to a greater extent than the equity diversified and tax planning categories. This category posted a negative 2.47 per cent return, after clocking decent numbers in December and November at 3.35 per cent and 5.1 per cent respectively. Its returns in 2009 were 57.06 per cent.

However, some of its constituent funds were able to stay in the green - ICICI Prudential ChildCare-Gift and HDFC Balanced after they posted 0.22 per cent and 0.04 per cent returns.

JM Balanced posted the worst performance with a negative return of 4.76 per cent.

HDFC Prudence, the biggest fund in this category with an AUM of Rs 3,370.08 crore as on December 31, 2009 however, posted a negative 1.79 per cent return in January. The latter was the best-performing fund in 2009 as it posted a return of 84.84 per cent.


Negative Nuances
     Returns (%)    
Category/Benchmarks    1-Month    1-Year
Equity: FMCG   -1.68   63.98
Hybrid: Equity-oriented (Balanced)   -2.47   59.50
Hybrid: Asset Allocation   -2.55   48.30
Equity: Banking   -3.03   85.38
Equity: Pharma   -3.10   106.56
Equity: Technology   -3.16   121.26
Equity: Diversified   -4.19   87.06
Equity: Tax Planning   -4.29   81.57
Equity: Speciality   -6.14   58.43
BSE CD   0.37   113.70
BSE Small Cap   -1.49   146.56
BSE Mid Cap   -3.10   121.31
BSE Bankex   -3.76   97.02
BSE Teck Index   -3.82   73.30
BSE Power   -3.98   70.81
BSE IT Index   -4.02   122.57
S&P CNX Nifty   -6.13   69.82
BSE Sensex   -6.34   73.57
BSE Metal   -8.26   212.97
BSE Realty   -9.22   109.84
As on January 31, 2010