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Suresh Parthasarathy

BL Research Bureau

The market rally of 2009 has pushed the returns of several diversified equity funds into the triple digits, with 41 of the 176 diversified schemes clocking an absolute one year return of 100 per cent plus. About 56 per cent of the funds outperformed the Nifty for a one-year period. Of the 176 diversified equity funds, 79 trailed the respective bellwether indices.

The major factors that aided fund returns during this period were lower cash levels and the low base effect. Exactly one year ago, the BSE Sensex was hovering at 8,451 points and this low base helped one year returns look good.

The return divergence between the best and the worst in the category was very wide. Principal Emerging Bluechip Fund was the top performing fund with its NAV seeing a meteoric rise of 164 per cent for a year. The DBS Chola Advantage fund finished at the bottom of the table, with a return of 43 per cent. Among the top ten schemes, large cap funds and mid and small cap shared the honours equally.

It needs mention that the Nifty has trailed broader indices such as S&P CNX 500 for a one year period. The number of schemes that outpaced the broader benchmark S&P CNX 500 was thus low for one year.

But the number of index outperformers has improved over past six months, showing that funds, after being slow to participate have caught up in recent months. A total of 120 out of 176 diversified schemes outpaced the CNX 500 over the past six months. Schemes that had higher exposure to mid and small cap stocks have been outperformers in this period. Tata Science and Technology Fund, the top six month performer, has generated an absolute return of 48 per cent and it outpaced the CNX 500 by 23.5 percentage points. The JM Large cap fund clocked a return of 11.7 per cent was at the bottom of the table. In the past six months, sectors such as IT, FMCG and pharma performed exceedingly well and clocked a return over 45 per cent.

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