Equity diversified funds decline 3.6 per cent in May | Value Research Sectoral funds belonging to defensive sectors like FMCG and Pharma managed to register gains

Equity diversified funds decline 3.6 per cent in May

Sectoral funds belonging to defensive sectors like FMCG and Pharma managed to register gains

The Indian equity market experienced a roller coaster ride during May. For the second time during a month in calendar year 2010 equities witnessed a fall, the first being in January, when the Sensex fell around 6.3 per cent. Both the benchmark indices Sensex and Nifty declined nearly 3.5 per cent and 3.6 per cent in May. Heavy sell-off across the globe was witnessed in reaction to the Euro zone debt worries and liquidity tightening in China. Foreign institutional investors, who invested Rs 8,415.9 crore in April, pulled out around Rs 9,975.4 crore from equities in May on account of global uncertainties.

Moving in tandem, the equity diversified category of mutual funds plunged nearly 3.6 per cent in May. This marked the end of their winning streak during the preceding two months. The category posted returns of 6.1 per cent in March and 2.7 per cent in April.

Sectoral indices: FMCG and Pharma rein
In May, all the major indices ended in the red, except for defensive sectors such as FMCG and Healthcare. Both these defensive sectors managed to land in the positive terrain and grew nearly 3.6 per cent and 2.7 per cent respectively in May. BSE Bankex was hit the most among all the sectoral indices, slipping around 4.5 per cent during the month.
The other low-performing indices were BSE IT and BSE Auto which declined nearly 3.4 per cent and 1.3 per cent respectively.

Equity Diversified: only two funds up
Out of 256 diversified funds, only two funds ended the month in the green. All the rest 254 funds ended the month in the red. The top quartile of the month was occupied by two funds, namely Religare PSU Equity and HDFC Growth, as they were able to contain their downside. These funds posted a return of 1.36 per cent and 0.05 per cent respectively. Religare PSU Equity and HDFC Growth have asset under management (AUM) of Rs 235.14 crore and Rs 1,291.96 crore respectively.
Among the top losers were JM Basic and Bharti AXA Focused Infrastructure, which posted a decline of nearly (-)11.5 per cent and (-)9.8 per cent respectively.

Tax planning: all funds down
The category average return in Tax Planning was (-)3.7 per cent. All the 37 funds in this category ended the month in the red.
The top three losers in this category were Bharti AXA Tax Advantage, Bharti AXA Tax Advantage Eco and DWS Tax Saving. They slipped around (-)9.6 per cent, (-)9.5 per cent and (-)6.4 per cent respectively.
Magnum Taxgain, the biggest fund in this category with AUM of Rs 5,521.5 crore as on May 31, 2010 posted a decline of (-)3.01 per cent in returns.

Sectoral: Pharma and FMCG lead
Equity FMCG and Equity Pharma were the best-performing categories in May. They registered gains of 2.5 per cent and 2.4 per cent respectively. The five-year trailing returns of these two categories stood at 19.8 per cent and 20.8 per cent respectively.
The worst performer during the month was Equity Technology. It declined nearly (-)4.1 per cent. Birla Sun Life New Millennium, which posted (-)5.7 per cent returns, was worst hit in this category.

Hybrid Equity Oriented (Balanced)
This category posted a negative return of (-)2.3 per cent as against a positive return of 2.16 per cent in April. The one-year trailing return of this category registered a return of 20.8 per cent. The top two performers in this category were Edelweiss Absolute Return Equity and HDFC Balanced, which had returns of 0.5 per cent and 0.3 per cent respectively during the month.
The two worst performers were LICMF Balanced and Escorts Balanced, which posted returns of (-)6.1 per cent and (-)5.6 per cent respectively.

Fund Category  1-Month  1-Year  5-Years
Equity: FMCG 2.5 58.04 19.8
Equity: Pharma 2.4 79.99 20.8
Hybrid: Asset Allocation -1.65 7.72 13.69
Hybrid: Equity-oriented -2.3 20.8 16.36
Equity: Banking -2.84 32.61 25.38
Equity: Index -3.4 17.48 18.9
Equity: Diversified -3.57 28.32 20.16
Equity: Tax Planning -3.7 27.64 18.19
Equity: Technology -4.06 61.7 16.09
Equity: Speciality -4.91 16.57 19.6
Fund Benchmarks  1-Month  1-Year  5-Years
BSE FMCG Index 3.6 42.16 19.89
BSE Healthcare Index 2.7 59.79 15.15
BSE Auto -1.3 67 22.25
S&P CNX 500 -3.2 18.06 18.16
BSE IT Index -3.4 72.63 13.51
BSE 200 -3.5 21.4 19.33
BSE Sensex -3.5 15.86 20.34
BSE 100 -3.6 18.65 20.21
S&P CNX Nifty -3.6 14.33 19.5
BSE Bankex -4.5 29.04 22.88

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