October 2008 has been a month that investors, listed companies, fund houses and everyone related even remotely to the Indian capital markets would like to quickly forget. To say that the month has seen the markets with more wild swings than ever would be an understatement. The month saw the markets experience one of the worst weeks in history and the Sensex touched lows it had last seen in 2006.
Predictably, mutual funds, especially equity funds, witnessed huge losses during the month as well. A look at the gyrations seen in the Value Research Fund Ratings personifies the state the markets were in.
As many as 13 funds lost their elite 5-star status in October. Out of them, three were equity diversified funds, namely DWS Alpha Equity, Magnum Comma and Magnum Contra, which lost its 5-star status for the first time in three years.
The fall from the 5-star club was the worst for two funds, Canara Robeco Liquid Plus Retail and HDFC Prudence, which slipped down two steps.
On the other hand, 12 funds got promoted to the prestigious 5-star list, but of them, only one was an equity fund – UTI Dividend Yield. The fund achieved the 5-star rating for the first time in its life. However, the most significant upgrade was that of ING Liquid Plus Inst, which went four steps up the ladder and LICMF Balanced, which went two steps up.
As far as the new members of the fund rating family are concerned, there were nine of them. Four of these are equity diversified funds - IDFC Premier Equity, Sundaram BNP Paribas CAPEX Opp Reg, Birla Sun Life Top 100 and Magnum MultiCap. Both IDFC Premier Equity and Sundaram BNP Paribas CAPEX Opp Reg has straightaway been given the 5-star.
Amongst the fund houses, the honours were shared by Birla Sun Life Mutual Fund and ICICI Prudential Mutual Funds. Both fund houses had six funds in the elite 5-star list. Closely following them are Sundaram BNP Paribas and UTI Mutual Fund with four 5-star funds each. The most number of 4-star funds (11), were held by ICICI Prudential, Franklin Templeton and Tata Mutual Fund. When the 4 and 5-star funds were taken together, ICICI Prudential again emerged as the winner with 17 funds.
All in all, there were 62 upgrades and 68 downgrades while 341 funds maintained a status-quo.