VR Logo

Slipping Back

Against the trend of the previous week, all equity funds categories underperformed their benchmarks

Equity Funds

Better than expected quarterly results from IT heavyweights Infosys and Wipro saw tech funds continue to do better than diversified equity funds. However, the category's performance was not as good as the previous week. The category average return was 0.03 per cent against the 2.72 per cent gain by the benchmark BSE IT Index.

Against the trend of the previous week, all equity funds categories underperformed their benchmarks, with diversified equity funds shedding 2.24 per cent against the negative 1.56 per cent return of BSE Sensex. Tax planning funds' also lost 2.23 per cent, while pharma funds shed 1.56 per cent, against the negative 1.29 per cent return of benchmark BSE Healthcare Index.

FMCG funds continued to lose this week also and ended the week down 1.30 per cent. Petro funds were down 0.94 per cent. Hybrid equity-oriented funds category too ended the week down 1.46 per cent.

Debt Funds

In the debt funds' categories, notwithstanding the prevailing volatility in the Indian bong market, debt: short-term (0.07 per cent), gilt: short-term (0.08 per cent), debt: ultra short-term (0.08 per cent), floaters (0.09 per cent) and debt: medium-term (0.10 per cent) delivered positive returns. However, MIPs and gilt: medium and long-term lost 0.25 and 0.03 per cent, respectively.

Highlight of The Week

Initial public offer of Reliance Mutual Fund's two new schemes' (Reliance NRI Equity and Reliance NRI Income), first funds targeted at NRIs, opened on Saturday. Of late, NRIs have emerged as a big source of money for the domestic mutual funds.

The IPO period will continue till November 1. As per the offer document, the NRI Equity scheme would invest 65-100 per cent in equity or equity related instruments of companies drawn from the BSE 200 Index, and up to 35 per cent in debt and other money market instruments. The other fund, NRI Income scheme, would invest 100 per cent in debt instruments. It may be mentioned here that NRIs already have option to invest in the most of the Indian funds on repatriable basis.

A Word of Caution

One should not confuse stock IPOs with a fund IPO. A new fund has no track record and investing in a fund's IPOs is like driving into an unknown territory. It has no past but definitely has an uncertain future. At Value Research, we suggest investors to invest only in those funds who have weathered the ups and downs of the stock market successfully.