The Hindu Business Line : Mutual fund schemes with power sector exposure sparkle

Mumbai, Dec 31 Mutual fund schemes targeted at investments in power sector stocks have emerged as the market leader in terms of growth in net asset values in 2007, according to Mr Lokesh Nathany, national head, wealth management & PMS, Almondz Global Securities Ltd.

For instance, Reliance Diversified Power Sector Fund (RDPSF) posted a 126-per cent growth, while ICICI Prudential Power logged 48 per cent. However, UTI Energy Fund disappointed with a negative growth of 42 per cent.

RDPSF, Mr Nathany said, had picked Jindal Steel and Power, Reliance Energy and Jaiprakash Associates as its top picks and these have performed very well in the market.

Jindal Steel and Power has gained from a low of Rs 2,000 in March 2007 to a 52-week high of Rs 16,590 on December 13. Reliance Energy moved up from Rs 448 in March to Rs 2,218 in December.

“India’s power and upstream energy sectors need investments to the tune of $120–150 billion over the next five years. The Government has taken up 33 more power projects with 21,424 mw generation capacity. This throws up great opportunity for power companies,” Mr Nathany said.

Schemes specific to the banking, FMCG, pharma, MNC and IT sectors rank below the power sector in terms of performance..

The performance of banking-based schemes has surprised investors as these are considered conservative investments, he said. Reliance Banking Fund grew by 75 per cent and for the UTI Thematic – Banking Sector Fund it was 66 per cent.

The top-three FMCG sector funds were ICICI Prudential FMCG Fund (42 per cent return), Birla Sun Life Buy India Fund (36 per cent) and SBI Magnum Sector Umbrella – FMCG (24 per cent).

Except for Reliance Pharma Fund (43 per cent), other pharma schemes such as UTI-Pharma & Healthcare, JM Healthcare Sector Fund, Franklin Pharma Fund and SBI Magnum Sector Umbrella – Pharma Fund posted single-digit annual growth.

Among MNC-focused funds, Kotak MNC Fund topped with a return of 34 per cent followed by UTI MNC Fund (31 per cent) and Birla MNC Fund (22 per cent).

Technology was a big disappointment. However, DSP Merrill Lynch Technology Fund posted a growth of 56 per cent even as the second-best Birla Sun Life New Millennium Fund registered 18 per cent.

ICICI Prudential Technology Fund and SBI Magnum Sector Umbrella – Infotech Fund returned 7 per cent and 5.6 per cent respectively.

The tech funds which posted negative returns include Franklin Infotech Fund (-16 per cent), UTI-Software Fund (-11 per cent) and Kotak Tech Fund (-0.99 per cent).

Looking forward, Mr Ravindranath Easwaran, head (Retail), SBICap Securities, said, “Mutual fund investors cannot expect such windfall returns next year as the climb for the market from a bigger base may be at a slower pace. One can expect about 15-20 per cent returns.”

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