The Hindu Business Line : FMCG funds top list of performers, gilts at bottom

WITH the calendar year drawing to a close, it seems that short-term gilt funds are set to end up at the bottom of the heap, while on the equity side, petro funds will surely close the 12-month period with the least impressive performance.

The list of good performers is headed by FMCG funds, which have given an average 65 per cent-plus as on December 2, followed by tax-savers with 57 per cent or so during the same one-year phase.

These trends, indicate mutual fund circles, are likely to be relevant for the whole year even if calculations are made towards the end of December.

Short-term gilt schemes, on the other hand, have provided a mere 4.38 per cent, a figure that depicts this asset class as one with the most run-of-the-mill showing.

In fact, gilt funds of all categories have recorded the most uninspiring numbers.

On the equity front, sector-specific products have given at least 19 per cent, with petro funds occupying the last rung.

Some of the others, including funds dedicated to segments such as auto, infotech and banking, have given over 48 per cent, 43 per cent and 42 per cent respectively, according to data compiled by Value Research.

The performance numbers notched up by various fund categories actually provide an insight into the state of the markets, feel fund houses.

Says Mr Sandesh Kirkire, CEO, Kotak Mahindra MF, these reflect the upsurge seen in sectors such as FMCG, while gilt products have borne the brunt of negative sentiments in the g-sec market.

FMCG companies, it is pointed out, have lately seen a turnaround and portfolios of equity funds that have invested in them have generally benefited from their presence.

The three FMCG funds (managed by Franklin Templeton, SBI and Prudential ICICI) have given returns in the 31-96 per cent range.

"There are far too few pure sector products. What you have mostly are sectoral allocations by diversified funds," says Mr Sanjay Sachdev, CEO of Principal MF, adding that the gains recorded by diversified schemes are also worth reviewing in this regard.

That gilt funds have fared poorly in recent times is not at all a surprise for fund managers — although this has led to much dissatisfaction among investors. These funds are said to have faced major challenges throughout the year in their effort to produce the desired results, it is pointed out.

Other debt-oriented products have suffered too, a trend that is amply reflected in their one-year performance.

Single-digit scores have been turned out by the entire range of debt funds, including the short-term varieties. Short-term institutional debt, with 5.95 per cent as on December 2, has emerged at the top.

Investors' interest in these funds has generally dwindled, sources indicate, adding that the apparent lack of interest is seen in lower assets under management.

However, some sections of the market are still said to be interested in floaters, thanks to the role that floating rate instruments play in managing the impact of adverse movements.

A number of fund houses are trying to make use of popular sentiments on this front by launching new products.

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