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Fund managers beat markets again in May 2010
June 10, 2010

The FEFI May 2010 Update


Author : iFAST Research Team



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Markets end may in red

The SENSEX and NIFTY closed May with losses of 3.50% and 3.63% respectively. However, the midcap indices from both BSE and NSE lost relatively more during the month. The BSE Midcap and CNX Midcap index both lost 4.87% and 3.79% respectively. Considering the performance of the indices, we think that the equity fund managers have done a marginally good job of managing the equity funds in May.

FEFI PERFORMANCE UPDATE

FEFI began May with 1908.11 points and ended the month losing 66.46 points at 1850 points. It was down 3.47% on a month-on-month basis. FEFI had been on a downward trend till the last week of May, hitting the month’s low of 1750.75 on 25 May 2010 and gaining close to 58 points in the next four trading sessions to close the month at 1850.37 points.

Chart 1: FEFI Performance for 2010


Table 1: FEFI Index levels

FEFI

Year-to-date (%)

Month-to-date (%)

31 December 2009 1831.56 - -
31 January 2010 1763.09 - -3.7%
28 February 2010 1745.48 -4.7% -1.0%
31 March 2010 1868.57 2.02% 7.05%
30 April 2010 1916.83 2.58% 4.66%
31 May 2010 1850.36 1.03% -3.47%

Table 2: Top 5 Equity funds on our platform in May

  

 

Sector Year-To-Date (YTD) Returns Month-To-Date (MTD ) Returns
UTI PHARMA & HEALTHCARE FUND- GROWTH Pharmaceutical 15.2% 3.2%
MAGNUM SECTOR FUND UMBERELLA-PHARMA- DIVIDEND REINVESTMENT Pharmaceutical 10.4% 2.9%
BSL COMMODITY EQUITIES FUND GLOBAL PRECIOUS METALS PLAN- GROWTH Overseas 2.5% 1.6%
RELIANCE PHARMA FUND- GROWTH Pharmaceutical 14.4% 1.3%
ICICI PRUDENTIAL FMCG FUND - GROWTH FMCG 1.7% 0.8%

Pharmaceutical funds have mostly done well in the month of May as investors chose defensive sectors with the market performance being negative. The Reliance Pharma Fund is our recommended Pharma Fund and has appeared in the top 5 funds list five times since October 2009. The UTI Pharma & Healthcare fund has given the highest YTD returns among all equity funds in India followed by the Reliance Pharma Fund. The BSE Healthcare and the CNX Pharma Indices have given MTD returns of 2.7% and 3.2% respectively and YTD returns of 9.4% and 9.2% respectively. Table 2 shows that all the Pharma funds in the top 5 list have outperformed the Pharma indices. The BSL Commodity fund – Global Precious Metals (GPM) plan has done well and has appeared in the top 5 list for the third time since October 2009. Due to the uncertainty in Europe, more money is being invested in safer instruments.    The depreciation in the Rupee by 4.5% in the month of May has also helped the GPM fund deliver better returns.

Table 3: Bottom 5 Equity funds on our platform in May
  Sector YTD Returns MTD Returns
HSBC MIDCAP EQUITY FUND- GROWTH Midcap & Smallcap -2.2% -8.0%
MIRAE ASSET GLOBAL COMMODITY STOCKS FUND- GROWTH Overseas -12.0% -8.4%
BSL COMMODITY EQUITIES FUND GLOBAL AGRI PLAN- GROWTH Overseas -14.5% -8.7%
JM TELECOM SECTOR FUND- GROWTH Speciality -12.1% -9.2%
JM BASIC FUND- GROWTH Speciality -13.6% -11.5%

The funds that invest mostly outside India have been the bottom performers in May. The continuing uncertainty within the Eurozone (especially Greece) took a toll on performance of overseas funds, even though the rupee depreciated sharply by 4.5% in May. The only telecom fund in India, the JM telecom fund also posted huge losses on m-o-m basis, as the stock prices of telecom companies fell on doubts of profitability post the 3G auction and additional payment of Rs 21,717 crores by the telecom companies for additional 2G bandwidth held by them.

Related Articles

Mutual Funds outperform equity markets in April
FEFI Closes FY 2009-2010 with a Bang!
Small and Mid-cap funds underperform FEFI in February 2010
FEFI falls 3.7% in January 2010
FSM All-Equity Fund Index (FEFI) rises 83% in 2009
FEFI rises again after a blip in October
FEFI Update - October
FEFI index methodology.

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iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.

 


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