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Midcap Funds Lose in Free Fall January
February 16, 2011

We bring you an update on FEFI performance as well as the best and worst performing funds on Fundsupermart.com.


Author : iFAST Research Team



Untitled Document

FEFI PERFORMANCE UPDATE

FEFI began January with 2168 points and closed the month at 1956 points losing 212.4 points, or down by 9.79% on a month-on-month basis. FEFI was on a downward trend many days in January and the month’s closing figure is also the lowest value in January.

As seen in chart 1, FEFI outperformed the BSE SENSEX for many months in 2010; this outperformance continued during the downturn of January. In January, FEFI has given a negative return of 9.79% while SENSEX fell by 11.13% and on a one year basis; FEFI has given a return of 10.95% in comparison to 11.42% returns from SENSEX. 

MARKET UPDATE

All the equity indices lost value in January, with SENSEX and NIFTY losing 11.13% and 10.25% respectively. Even broad based indices like BSE 100, BSE 200, BSE 500 and CNX 500 gave negative returns in the range of 10.33% and 10.46%. The BSE Midcap and Small Cap indices performed worse than the SENSEX with BSE Midcap Index falling by 11.97% and BSE Small cap Index falling by 12.33% in January.

Chart 1: Comparative performance of FEFI with SENSEX 


FII infows turn negative

Foreign Institutional Investors (FIIs) unlike most months of 2010, decided to withdraw funds from the equity market, selling equities worth $1.4 billion in January. Emergence of positive data from US economy and India related factors like a) the concern of economic growth being hampered by RBI and b) reversal in the Wholesale Price Index (WPI) Inflation have caused the FII pullout. The inflation was on a downward trend from May 2010 until November 2010, however, the YoY inflation increased from 7.5% in November to 8.4% in December 2010. The reversal in inflation also means that RBI will continue with rate hikes again this year.

Table 1: FEFI Index levels

FEFI

Year-to-date (%)

Month-to-date (%)

31 December 2010 2168.51 - -
31 January 2011 1956.11 -9.79% -9.79%

TOP 5 FUNDS ON FUNDSUPERMART.COM

Funds focusing on the overseas category have been the top performers for the equity segment in the month of January. Tata Growing Economies Infrastructure fund and Mirae Asset Global Commodity Stocks fund are the two overseas funds that have performed well in comparison to most equity funds on our platform. The global indices returns for January were a mixed bag. The returns from the global indices ranged from 5.65% from Russia to -7.95% in Indonesia. However, the Indian Rupee depreciating by 2.69% in January has increased the returns of overseas fund by 2.69

Edelweiss Absolute Returns fund is the best performing equity fund on our platform for January. Although the Edelweiss Absolute Returns fund in January had equity exposure of 68%, this fund’s exposure to Nifty futures to the tune of -19% acted as a hedge for the equity exposure, additionally the fund had exposure to money market instruments to the tune of 12.55% and other investments (CBLO & Net Receivables) to the tune of 19.66%. Some of the losses in equity segment were offset by returns from the Nifty futures and the returns from the Money market instruments and other investments.

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

  Category Month To Date Year To Date
EDELWEISS ABSOLUTE RETURN FUND Speciality -2.44% 11.33%
TATA GROWING ECONOMIES INFRASTRUCTURE FUND PLAN A Overseas -2.67% 11.02%
MIRAE ASSET GLOBAL COMMODITY STOCKS FUND Overseas -4.00% 13.17%
FRANKLIN PHARMA FUND Pharma -4.52% 30.96%
RELIANCE NATURAL RESOURCES FUND Speciality -4.62% 7.09%

BOTTOM 5 FUNDS ON FUNDSUPERMART.COM

Midcap and Small cap category funds have taken two spots in the bottom performing list. The negative performance of these funds is so severe that HSBC Midcap equity fund has not given any returns over the past one year, whereas JM Emerging Leaders fund has given negative returns over an entire year.


Table 3: Bottom 5 Equity funds on our platform in November

  Category Month To Date Year To Date
HSBC MIDCAP EQUITY FUND Midcap & Small Cap -14.75% 0.13%
JM BASIC FUND Infrastructure -15.34% -22.33%
JM EMERGING LEADERS FUND Midcap & Small Cap -16.19% -6.74%
CANARA ROBECO EQUITY TAX SAVER ELSS -16.64% -4.25%
MAGNUM EQUITY FUND Diversified -17.84% 2.78%

JM Basic fund was one of the bottom performing funds for 2010, continued with its negative performance in January. This fund lost 15.34% in January alone and has lost over 22% since January 2010.

SBI Magnum Equity fund was the bottom performing fund on the platform with -17.84 returns in January alone. This negative performance has almost wiped out the performance that this fund had given in 2010.

Related Articles

Technology funds make a comeback in December
Overseas funds shine in November
Pharma funds top performers for October
Banking funds steal the show in September
Precious Metals, Media and Banking Funds are top performers of August
Banking funds shine in July
FMCG, Media and MNC Funds rule the roost in June
Fund managers beat markets again in May 2010
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.


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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