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Stars Shine on Mid-cap, Infra Funds

Gains logged by realty, mid- and small-cap stocks were reflected in VR fund ratings

Massive stock market movements have wrought great changes in the performances of many funds and this has led to a great churning in the Value Research ratings system, affecting the star status across the board.

As a consequence of the much-needed confidence booster provided by the return of the UPA government at the Centre for a second term, diversified equity funds were gained to the tune of 30.65 per cent. This was the third consecutive month of gains for equity funds. BSE Realty (170.30%), BSE Metal (131.90%), BSE Consumer Durables (102.13%) and BSE Bankex (94.77%) have been the highest gainers in the past 3 months ended May 31, 2009. Moreover, it has been the small- and mid-cap stocks that have gained the most as reflected in the performance of the BSE Small Cap Index (92.74%) and the BSE Mid Cap Index (83.33%).

The market euphoria was also reflected in the Value Research Mutual Fund ratings for the month of May. Major changes in the ratings of funds based on infrastructure sector and related companies were seen as many of them moved up 2 positions. A lot of these funds had lost their positions in the past one year because the markets stayed volatile and mid-and small-caps were amongst the battered lot.



Major Rating Changes in Equity Funds
Scheme  VR Ratings    
  May-09  Apr-09  Change
Birla Sun Life Infrastructure Plan A **** ** 2
Canara Robeco Infrastructure ***** *** 2
DSPBR T.I.G.E.R. Reg ***** *** 2
Fidelity Tax Advantage ***** *** 2
ING Contra ***** *** 2
JM Basic *** * 2
Principal Large Cap ***** *** 2
Sundaram BNP Paribas CAPEX Opp Reg-D **** ** 2
Sundaram BNP Paribas CAPEX Opp Reg-G **** ** 2
Sundaram BNP Paribas S.M.I.L.E. Reg **** ** 2
Tata Equity PE ***** *** 2
Tata Infrastructure ***** *** 2

Another fund, Principal Large Cap Fund also got pushed upwards to 5-star status from a 3-star position. The fund has kept a higher than average allocation in financial sector (22.88%), while the category average was 15.2 per cent%. Gains of past 3 months in the banking stocks helped this fund.

However, there were funds that managed to lose. A fall of 2 positions was seen in case of ICICI Prudential Dynamic Fund, which fell from a 5-star to a 3-star rating. Although the fund had contained the fall in the previous year, it had increased its portfolio to debt allocation to 18 per cent in April, and gained a mere 20.15 per cent compared to the category average of 30.65 per cent.

While the existing funds in the VR ratings family were redefining their positions, 4 new equity funds also joined the family. All of these funds completed their 3 years in existence and hence qualified this month to join the ratings family. One fund that moved out was UTI Select Index which got merged with UTI Top 100 (erstwhile UTI Master Growth).



Additions to Ratings Family - Equity
Scheme  Ratings
Fortis Future Leaders *
Sundaram BNP Paribas Rural India Reg **
Templeton India Equity Income ****
Fidelity India Special Situations ****

Among the debt funds, which were the losers for the month, a few funds saw some major changes in their rating positions. While 3 funds moved up by 2 positions, 5 were down by as many positions. Among those which moved out were ICICI Prudential Flexible Income Premium, Tata Income Plus HI and Tata Dynamic Bond A. The latter two moved out because of their lower assets.



Major Changes In Ratings - Debt
Scheme  VR Ratings    
  May-09  Apr-09  Change
Birla Sun Life Savings Ret ** **** -2
HDFC Short-term *** ***** -2
Birla Sun Life Cash Plus Inst Premium *** ***** -2
Templeton India TMA Super Inst ** **** -2
Fortis Money Plus Reg ***** *** 2
DWS Cash Opportunities Cash 15 Days Plan **** ** 2
Tata Treasury Manager Retail **** ** 2
DWS Insta Cash Plus Super Inst *** ***** -2

Six new debt funds also got rated for the first time as they completed the required 18 months of existence.



Additions to VR Ratings - Debt
Name  May
ING OptiMix Income Growth MMFoF 30% Equity Option A *
SBI Short Horizon Short Term Retail *****
AIG India Liquid Inst ****
DSPBR Cash Manager Reg ****
DSPBR Cash Manager Inst ***
Principal Ultra Short Term Reg ****

All in all, there were 10 new members, while 4 left the family. Birla Sun Life Mutual Fund lost its lead in the number of elite funds, down from 18 to 9 as its 4-star rated funds were down from 14 to just 5. HDFC Mutual Fund and Reliance Mutual Fund are now the leaders in the number of elite class funds, with 14 funds each. However, when just the 5-star rated funds are considered, ICICI Prudential Mutual Fund leads this month as well with 6 funds, followed by Reliance Mutual Fund with 5 funds.



Star Rewards
AMC Short Name  *  * *  * * *  * * * *  * * * * *
AIG Global Inv - - 3 2 1
Baroda Pioneer - 1 2 - -
Benchmark 1 1 - 1 1
Birla Sun Life 3 6 22 5 4
Canara Robeco - 2 3 4 4
DBS Chola 3 2 5 3 1
Deutsche - 3 6 3 -
DSPBR 1 3 6 4 3
Escorts 1 - 1 - -
Fidelity 1 2 4 2 1
Fortis 3 2 3 - 3
Franklin Templeton - 6 17 9 3
HDFC - 9 12 13 1
HSBC 5 5 5 3 -
ICICI Prudential 2 8 13 5 6
IDFC 1 5 5 2 2
ING 3 - 10 2 2
J M 7 2 2 4 2
Kotak Mahindra 4 4 11 4 -
LIC 1 7 5 - 2
Morgan Stanley - 1 - - -
Principal 1 8 9 3 1
Quantum - - - 1 1
Reliance 1 1 3 9 5
Religare 1 2 2 1 -
Sahara - - 1 - 2
SBI 6 11 5 6 2
Sundaram BNP Paribas - 4 6 8 -
Tata 3 10 6 8 3
Taurus 1 2 2 1 -
UTI Mutual Fund - 10 14 10 3