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Equity Funds March Ahead

Though the equity markets closed almost flat last week, equity funds continued their march ahead. Barring petro funds, all the equity categories outperformed their respective benchmarks comfortably

Though the equity markets closed almost flat last week, equity funds continued their march ahead. Barring petro funds, all the equity categories delivered positive returns and outperformed their respective benchmarks comfortably.

The bond market was under pressure as a result of the sharp rise in international crude oil prices and Fed rate hike. However, bond funds did well to improve on their last week's performance.


The Leaders:
FMCG funds continued their dream run and rewarded investors with a return of 3.09 per cent to comprehensively beat the 0.69 per cent return of their benchmark BSE FMCG Index. Prudential ICICI FMCG and Franklin FMCG gained 5.12 and 3.73 per cent, respectively. Magnum FMCG added 0.41 per cent.

The Laggards: With the international crude oil prices touching $66 a barrel, petro funds ran out of gas. The two-fund category lost an average 1.71 per cent last week.

Diversified and tax-planning funds: Diversified equity funds added an average 1.47 per cent, while tax-planning funds gained 2.62 per cent last week. Both beat the 0.17 per cent return of the benchmark Sensex.

Top-5 diversified equity funds: Prudential ICICI Emerging STAR (5.01 per cent), Canemerging Equities (4.67 per cent), Sahara Mid-Cap Fund (4.59 per cent), Alliance Buy India (4.46 per cent), and Magnum Emerging Businesses (4.20 per cent).

Bottom-5 diversified equity funds: Taurus Discovery Stock (-1.47 per cent), GIC Fortune '94 (-1.37 per cent), ING Vysya Select Stocks (-0.77 per cent), UTI Master Plus '91 (-0.35 per cent), and LICMF Sensex Advantage (-0.19 per cent).

Top-5 tax-planning funds: Libra Taxshield '96 (5.86 per cent), Sahara Tax Gain (5.34 per cent), Magnum Taxgain (5.17 per cent), HDFC Taxsaver (4.08 per cent), and HDFC Long Term Advantage (4.03 per cent).

Bottom-5 tax-planning funds: Escorts Tax Plan (-0.97 per cent), Franklin India Index Tax (0.12 per cent), Alliance Capital Tax Relief '96 (0.54 per cent), UTI Equity Tax Savings (0.86 per cent), and Franklin India Taxshield (1.40 per cent).

Among rest of the equity categories, auto funds gained an average 1.49 per cent, while pharma funds shot up 2.99 per cent to outperform the 2.28 per cent return of the benchmark BSE Healthcare Index. Technology funds added 1.08 per cent to beat the 0.41 per cent loss of the benchmark BSE IT Index.

Equity oriented hybrid funds, which normally maintain 60:40 equity, debt ratio, gained 1.27 per cent last week.


Medium-term debt funds added 0.06 per cent, while medium and long-term gilt funds managed 0.01 per cent last week. Debt short-term (0.12 per cent), floaters (0.11 per cent), ultra short-term (0.10 per cent) and short-term gilt (0.08 per cent) funds delivered positive returns. MIPs gained an average 0.41 per cent.

How They Fared
Objective  Return
Equity: Tax Planning 2.62
Equity: Diversified 1.47
Equity: Pharma 2.99
Equity: Auto 1.49
Equity: Banking 2.49
Hybrid: Equity-oriented 1.27
Equity: FMCG 3.09
Equity: Technology 1.08
Hybrid: Monthly Income 0.41
Equity: Petroleum -1.71
Debt: Medium-term 0.06
Debt: Short-term 0.12
Debt: Floating Rate 0.11
Debt: Ultra Short-term 0.1
Gilt: Short-term 0.08
Gilt: Medium & Long-term 0.01
Sensex  0.17
BSE IT  -0.41
BSE HC  2.28
BSE FMCG  0.69