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Top mutual funds at half time
July 16, 2010

Indian markets have given positive performance in the first half of 2010. Here, we will take a closer look at the top and bottom performers during this period.


Author : iFAST Research Team



Untitled Document

Category: Equity

In the first half of 2010, the Indian equity markets have performed the best among the BRIC (Brazil, Russia, India, and China) countries. India is the only country in the BRIC group that has managed to give a positive performance in the first half of 2010. The Indian equity markets represented by the SENSEX have managed to give 1.4%, while the equity indices in Russia, China and Brazil have managed to give -6.7%, -7.9% and -14.4% respectively.

The Consumer durables, FMCG, Pharma and Auto sectors have been able to deliver double digit returns. On the contrary,  the Real estate and Metal & Mining sectors have given double digit negative returns. The overall broad indices like BSE 100, BSE 200, CNX 500 and BSE 500 have given returns in the range of 1.35% to 3.65% in the first half of 2010. The BSE Midcap index has given 6.42% returns while the BSE Small Cap index has given 8.54%.

Pharma windfall

Coming to the top performing funds for the first half, it is no surprise that Pharma sector funds are the best performers at the half time. Top funds list on a month-on-month (m-o-m) basis over the past 6 months  has included Pharma sector. These funds have delivered more than 20% returns as investors have pursued Pharma companies on both defensive play as well as the expectation of huge growth potential of Indian companies in the US generic market in the coming years. Dividend Yield, FMCG and Banking funds have also performed well in the first half of 2010.

Table 1: Top 10 equity funds on our platform for H1 2010

  Sector 1H returns 2010
FRANKLIN PHARMA FUND- GROWTH Pharmaceuticals 22.4%
UTI PHARMA & HEALTHCARE FUND- GROWTH Pharmaceuticals 22.1%
RELIANCE PHARMA FUND- GROWTH Pharmaceuticals 21.9%
BSL MNC FUND- GROWTH Specialty 21.1%
MAGNUM SECTOR FUND UMBRELLA-PHARMA- GROWTH Pharmaceuticals 17.1%
TATA DIVIDEND YIELD FUND- GROWTH Dividend Yield 16.1%
RELIANCE BANKING FUND- GROWTH Banking 15.8%
ICICI PRUDENTIAL FMCG FUND - GROWTH FMCG 15.7%
HDFC MID-CAP OPPORTUNITIES FUND- GROWTH Midcap & Small Cap 15.6%
BSL DIVIDEND YIELD PLUS- GROWTH Dividend Yield 15.2%
Source: iFAST Compilations

Mostly all overseas funds and especially overseas funds that invest into commodities stocks have done poorly. Both the MSCI Word Index and the Rogers International commodity index are down by 10.88% and 9.89% in USD terms. With Rupee appreciating by just 0.16% in the first half of 2010, much of the poor performance of commodity stock funds can be explained by the bad performance of commodities in the first half of 2010.  Apart from overseas funds, unique or specialty  funds   like telecom sector fund, Natural Resources fund were also poor performers for the first half.

Table 2: Bottom 10 equity funds on our platform for H1 2010

  Sector 1H returns 2010
JM MID CAP FUND- GROWTH Midcap & Small Cap -3.0%
FRANKLIN ASIAN EQUITY- GROWTH Overseas -4.6%
JM TELECOM SECTOR FUND- GROWTH Specialty -5.5%
RELIGARE AGILE FUND- GROWTH Specialty -7.4%
RELIANCE NATURAL RESOURCES FUND- GROWTH Specialty -7.4%
JM BASIC FUND- GROWTH Infrastructure -8.8%
BSL INTERNATIONAL EQUITY FUND PLAN A- GROWTH Overseas -12.7%
MIRAE ASSET GLOBAL COMMODITY STOCKS FUND- GROWTH Overseas -13.1%
BSL COMMODITY EQUITIES FUND GLOBAL MULTI COMMODITY PLAN- GROWTH Overseas -14.0%
BSL COMMODITY EQUITIES FUND GLOBAL AGRI PLAN- GROWTH Overseas -18.1%
Source: iFAST Compilations

Category: Debt

Again, MIP and income funds have been the top performing debt funds in the second quarter of 2010 (April-June) and first half of 2010 (January-June). Six out of the top 10 debt funds are MIPs. The MIP funds have been able to deliver higher returns than SENSEX. 

Due to exposure to equity, the MIP funds have also done comparatively better than pure debt funds. The returns from the debt portfolio are limited as the yields have risen since the beginning of the year. The income funds (in the Table 3) have gained because they moved early out of the short-term securities due to expectations of  liquidity crunch. The yields have risen the most in the shorter term than the longer term. 

Table 3: Top 10 debt funds on our platform for H1 2010

  Sector 1H returns  2010
HDFC MULTIPLE YIELD FUND PLAN 2005- GROWTH MIP 6.5%
HDFC MULTIPLE YIELD FUND- GROWTH MIP 5.8%
TATA MIP PLUS FUND- GROWTH MIP 5.0%
IDFC SUPER SAVER INCOME FUND MEDIUM TERM PLAN A- GROWTH Income 4.9%
HDFC MF MIP LONG TERM PLAN- GROWTH MIP 4.9%
CANARA ROBECO MONTHLY INCOME PLAN- GROWTH MIP 4.8%
DWS TWIN ADVANTAGE FUND- GROWTH MIP 4.4%
DWS PREMIER BOND FUND- GROWTH Income 4.2%
KOTAK BOND DEPOSIT- GROWTH Income 4.2%
KOTAK BOND REGULAR- GROWTH Income 4.1%
Source: iFAST Compilations

Except for Liquid and Gilt funds, funds from all the debt categories figured in the bottom 10 funds. Rate hikes by the RBI and the liquidity crunch post the 3G auction have raised the yields in the bonds and more sharply in papers with maturity up to 1 year. The two factors mentioned above have majorly contributed to the poor performance of the debt funds. But unlike the first quarter of 2010, no debt fund this time has given a negative performance.

Table 4: Bottom 10 debt funds on our platform for H1 2010

  Sector 1H returns  2010
TATA DYNAMIC BOND FUND OPTION A- GROWTH Income 1.5%
HSBC FLOATING RATE FUND SHORT TERM PLAN- GROWTH Floating Rate 1.5%
DSP BLACKROCK SAVINGS MANAGER FUND MODERATE- GROWTH MIP 1.5%
MIRAE ASSET ULTRA SHORT TERM BOND FUND- GROWTH Ultra Short Term 1.5%
TATA MONTHLY INCOME FUND- GROWTH MIP 1.4%
DWS MONEY PLUS FUND- GROWTH Ultra Short Term 1.4%
MIRAE ASSET SHORT TERM BOND FUND- GROWTH Short Term 1.3%
DSP BLACKROCK SAVINGS MANAGER FUND AGGRESSIVE- GROWTH MIP 1.2%
L&T TRIPLE ACE- CUMULATIVE Income 1.1%
MORGAN STANLEY ACTIVE BOND FUND- GROWTH Income 1.0%
Source: iFAST Compilations

Conclusion

Markets have been volatile in the first half of 2010, as a slew of disappointing economic data emerged mainly from the Europe, US and China. Also, investors continue to worry that austerity measures will mean substantially weaker growth for the European region in the coming years.

As negative investor sentiment continues to dominate the global financial markets, there appear to be few catalysts which may reignite investor interest at this juncture. More clarity on the European debt situation and its impact on European financial institutions may be a near-term catalyst, with the EU's Committee of European Banking Supervisors expected to announce results of a stress test on 23 July.

However, things are still looking bright for India. The SENSEX crossing 18,000 points along with IMF raising the GDP growth forecast to 9.4% from earlier 8.8% are indicators of good times ahead but poor monsoon and high inflation can play havoc with the economy and the markets. Since the markets are currently trading closer to 18,000, there can be moderate corrections in the coming months which the investor can exploit by using SIPs.



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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