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Tech Funds Gain

While equity funds gained the most in the week ended October 8, 2004, pharma funds failed to repeat their September's performance. The week also saw many mid-cap funds declaring dividends

Equity Funds

After lagging behind their benchmarks in September, all equity funds categories, except FMCG, outperformed their benchmarks in the week ending October 8, 2004.

In anticipation of good quarterly results of IT heavyweights, technology funds lead from the front to return 3.20 per cent against the 2.07 per cent return of the benchmark BSE IT Index. Petroleum funds zoomed an average 2.95 per cent, followed by tax planning and diversified funds that gained 2.40 and 2.39 per cent, respectively.

Pharma funds, which were September's top performers started the first week of October rather unimpressively to give a negative average return of 0.90 per cent against the negative 1.01 per cent return of benchmark BSE Healthcare Index. FMCG funds' category lost 0.60 per cent against the 0.17 per cent gain of benchmark BSE FMCG Index.

Debt Funds

On the debt side, MIPs (0.22 per cent), floaters (0.08 per cent) and debt ultra short-term (0.08 per cent) funds' category delivered positive returns, while gilt short-term, debt short-term, gilt medium and long-term and debt medium-term lost 0.02, 0.17, 0.5 and 0.26 per cent, respectively.

Highlight of The Week

The week ending October 8, 2004, also saw many mid-cap funds declaring dividends following a mid-cap rally in the past one year. While Franklin India Prima declared a 35 per cent dividend, Birla Mid Cap Fund and UTI Mid Cap Fund would pay 12.5 and 10 per cent dividend.

A Word of Caution

While mid-cap funds rallied in September, investors should not get overboard here. Extreme volatility rules the world of mid-cap funds. In good times, they travel high but when they fall, they sink deep. We at Value Research are comfortable with a portfolio having maximum 30 per cent exposure to mid-cap funds. Beyond that begins the corridor or uncertainty.