The Hindu Business Line : Close-ended funds turn in patchy performance

Kolkata June 6 Close-ended funds, which as a class have staged a comeback in recent times, have lately delivered intermittent results, not all of them managing to smartly ride the frequent ups and downs in the market.

Returns in Wide Range

The returns generated by close-ended products - a number of them were launched in the past one and a half years - range widely, with a few providing negative scores in the past six months.

For some of the others, modest, single-digit figures have been evident.

The first set, those with negative or nearly negative performance, includes the likes of Kotak Twin Advantage Series III and Tata Equity Management Fund, both of which were launched in mid-to late 2006, a review done by distribution firm SKP Securities has noted.

Pointing out that the close-ended genre has made a reappearance of sorts after a long gap, the distributor has also referred to the large number of schemes that have lately hit the market.

Multiplicity

As things stand, the close-ended segment is quite varied, thanks to the multiplicity of products that have been brought about.

As for the funds launched last year, the returns scenario is generally patchy. However, a select group has indeed turned in double-digit numbers. Tata Capital Builder (August 2006), for instance, has over 16 per cent to its credit.

Standard Chartered Enterprise Equity (May 2006) and ING Vysya C.U.B. are also among the better performers with nearly 24 per cent and 37 per cent respectively.

Considering their one-year returns, some of the other noteworthy scores have come, courtesy funds such as ICICI Prudential Fusion, HDFC Long Term Equity and Franklin India Smaller Companies.

These have provided 25.12 per cent, 17.89 per cent and 13.95 per cent respectively.

Of particular relevance is the variety of exit windows that the funds in question provide; some allow exits during the last seven working days of select months, while select others permit such moves on the 25th of every quarter ending month.

A few like LIC India Vision and Tata SIP - Scheme I allow exits on select days of the week/month.

More to arrive

Close-ended products, already an increasing tribe, are expected to grow in strength, mutual fund circles point out.

More fund houses are said to be lining up newer offers, lending credence to the belief that the close-ended category is far from waning.

"These schemes have generated the interest of investors from all classes... also, fund houses have been in the forefront to launch these with innovative and varying features", SKP Sec has maintained.

It may be mentioned here that a number of players have in the last few days sent offer documents to SEBI. Besides fixed maturity plans, these include JM Interval Fund and Sundaram BNP Paribas Fixed Income Interval Fund. Kotak Mahindra MF has mooted a banking exchange traded fund. - Nilanjan Dey