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Tax-planning Funds Continue to Lead

Tax-planning funds retained their leading position and became the largest beneficiaries of the equity market rally. The 20-fund category gained 2.54 per cent to outperform the 1.61 per cent gain of the Sensex

Equity Funds
The week ended December 31, 2004, was no different from the previous week. The BSE Sensex scaled new peaks on the New Year eve and crossed the psychologically important 6,600 mark. Nifty too surged over the week to close at 2080.50 points. Consequently, equity funds rallied, with all the categories (except pharma funds) outperforming their respective benchmarks.

Tax-planning funds retained their leading position and became the largest beneficiaries of the market rally. The 20-fund category gained 2.54 per cent to outperform the 1.61 per cent return of the 30-stock BSE Sensex. Last week, the category had returned nearly 3 per cent.

Among the tax-planning funds, Canequity-Tax Saver gained the most—the fund added 5.85 per cent in the week. Diversified funds too beat the Sensex with a category average return of 2.25 per cent.

After returning over 2 per cent last week, petroleum funds put up an average show this week—the two fund category gained just 0.40 per cent.

Pharma funds though improved on their last week's performance, but failed to follow benchmark. The five-fund category returned 1.88 per cent against the 2.80 per cent gain of the BSE Healthcare Index.

FMCG funds improved on their last week's performance to beat the benchmark by a good margin. The three-fund category gained 1.29 per cent to outperform the 0.55 per cent return of the benchmark BSE FMCG Index.

Technology funds too beat their benchmark. The seven-fund category gained 1.16 per cent against the 1.13 per cent return of the benchmark BSE IT Index.

Equity oriented hybrid funds too cashed in on the rally in the equity markets. The category gained 1.46 per cent in the week.

Bond Funds
Barring Gilt Medium & Long-term funds, all bond funds delivered positive returns in the week ended December 31, 2004.

While cash funds gained 0.10 per cent, income funds ended the week up 0.21 per cent. Debt Short-term funds, which were down 0.50 per cent in the week ended December 24, 2004, added 0.12 per cent. MIPs (0.48 per cent), floaters (0.10 per cent) and gilt short-term funds (0.03 per cent) also delivered positive returns. Gilt Medium & Long-term funds lost 0.20 per cent over the week.

How They Fared
Objective  Return
Equity: Tax Planning 2.54
Equity: Diversified 2.25
Equity: Pharma 1.88
Hybrid: Equity-oriented 1.46
Equity: FMCG 1.29
Equity: Technology 1.16
Hybrid: Monthly Income 0.48
Equity: Petroleum 0.40
Debt: Medium-term 0.21
Debt: Short-term 0.12
Debt: Floating Rate 0.10
Debt: Ultra Short-term 0.10
Gilt: Short-term 0.03
Gilt: Medium & Long-term -0.20
BSE Sensex 1.61
BSE IT Index 1.13
BSE Healthcare Index 2.80
BSE FMCG Index 0.55