The Hindu Business Line : Investors in petro funds strike it rich

PETRO funds have emerged as the leaders among all sector-specific categories, beating their rivals in the technology, pharma and FMCG domains by wide margins.

Investors in petro funds who had entered three months ago are already richer by nearly 23 per cent on an average.

In comparison, the others have turned in modest performance: Tech funds have gone up by 19 per cent, pharma by 18 per cent and FMCG by 14 per cent. The average diversified equity fund incidentally has provided slightly more than 23 per cent during this period.

The performance of the two petro funds (run by UTI and JM) is being attributed to superior returns generated by the stocks that constitute their portfolios, the chief of them being Reliance Industries, BPCL, ONGC and IPCL. These stocks, as fund circles indicate, have provided decent returns even to those who had invested in them in recent times. And these have also commanded good volumes on the exchanges, thanks to the market's interest in them.

"Oil & gas and petrochemical continue to look good with a medium-term perspective," notes Ms Jyoti Vaswani, fund manager for JM Basic, a scheme that has traditionally relied heavily on Reliance Industries, among other counters. Reliance, the top holding for UTI Petro as well, has been one of the best performers in recent times, with over 100 per cent returns in the last one year.

Other fund managers also underline the merits of the sector from the ordinary investor's point of view. "The energy sector has been one of the most attractive areas for investment, with a lot of institutional money going into it," maintains Mr Rushabh Sheth, who manages Kotak Mahindra MF's equity funds, adding that no professional investor can ignore energy stocks even now.

It may be mentioned here that the petro funds have also provided decent returns over a one-year period - 128 per cent and 79 per cent respectively by UTI Petro and JM Basic. The two schemes have also given several dividends. JM Basic, for instance, has declared nearly 300 per cent so far since its launch in May 1997, the record date for the latest round of payout being January 18. The fund gave a total of 105 per cent in 2003.

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