And how the mighty have fallen! It is human nature that makes us relish the downfall of something that has been standing high for a long time. We love seeing Australia lose in cricket and we love it when Nadal manages to beat the top seeded Federer again and again. But if you are a banking fund investor, this is one downfall story that you won’t enjoy.
The Equity Banking Funds category has been in the news for a lot of right reasons lately. It has been amongst the top performing categories for some time now. The category was the top performer for the month of April 2008, generating returns worth 12.4 per cent. But after the month of May 2008, the category has come back in the news for the wrong reasons. In the past month, Equity Banking funds posted negative returns of an unbelievable 10.6 per cent. This was a far cry from the fund’s earlier performance and this sudden downfall is the aftereffect of economic slowdown (due to rising oil prices and inflation) and the vertically inclined interest rates.
While Equity Banking languished at the bottom of the table, Gold ETFs ruled at the top. The Gold ETF category has a similar turnaround story like Equity Banking, but with a positive feel to it. The category which posted negative returns of 6 per cent in April became the best performing equity category with 6.5 per cent returns in May.
Following the Gold ETF category in May was Equity Technology holding the second spot with 1.4 per cent returns. Even though the category posted positive returns, it didn’t fare well in reality. The Equity Technology funds had posted returns of 12 per cent in April, hence in effect losing over 10 per cent in the past month.
As the above mentioned figures suggest, the equity funds didn’t have a month writing home about. Almost all equity categories posted negative returns with only three ending the month in green. Apart from Gold ETFs, Technology and Pharma funds posted positive returns, albeit of a negligible 0.6 per cent. The Equity Pharma category is the best performing category of the three month period between 28th February and 31st May.
The performance of the other equity categories is nothing short of depressing. The Equity Diversified category delivered negative returns of 4.9 per cent. Equity Auto and Equity Tax Planning were the other poor performers with negative returns of 5 per cent and 5.6 per cent respectively.
As far as the debt funds are concerned, all categories posted returns in a narrow range. Infact, debt fund with lower maturity posted higher gain than medium and long-term bond and gilt funds.
In conclusion, we can be positive and say that things can only get better in the coming times. But that might not happen with the global economic scenario looking bleak. And as always, all we, as investors, can do is keep our fingers crossed and hope for the best.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
