The Hindu Business Line : ICRA announces MF rankings

On the debt side, the toppers are: IL&FS Gilt Fund (Category: Gilt - Long Term), Birla Gilt Plus Liquid Plan (Gilt - Short Term), HSBC Income Fund Investment Plan Regular (Debt - Long Term) and Reliance Short Term Dent Fund (Debt - Short Term). LIC MF Liquid Fund is the best performer among liquid products, a press note issued by the rating agency has stated.

On the diversified equity side, Alliance Basic Industries Fund (among `aggressive' schemes) and HSBC Equity Fund (among `defensive' schemes) are the two best names. The newly-restructured Birla India Opportunities Fund has been selected as the top scorer among tech funds. Birla Equity Plan has been chosen in the ELSS category.

HDFC Prudence Fund, Alliance Monthly Income and UTI Nifty Index Fund have topped the balanced, MIP (Marginal Equity, in ICRA's parlance) and index categories.

The agency's note quotes Mr P.K. Choudhury, MD of ICRA, who has stated that the classifications are based on the schemes' asset allocation and investment patterns. "This is different from the traditional offer document based scheme classification. The classification on the basis of asset allocation and investment pattern holds more relevance as these two factors determine the risk level of MF schemes", he has observed.

The size of a scheme has played a key role, as large size lends stability to it during periods of high redemption pressure. Credit, therefore, was accorded to large-sized schemes. Average maturity was also a major issue for debt, gilt and liquid products. Schemes with higher average maturity were susceptible to higher interest rate risks as compared with schemes with lower average maturity.

Further, the ones with low portfolio turnover were given higher credit compared to those with higher turnover. The other parameters that ICRA Online used included risk-adjusted returns, portfolio concentration and liquidity. Maximum weightage was accorded to risk-adjusted returns.

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