Commodity funds beat benchmarks

Sneha Padiyath Mumbai | Updated on March 03, 2011


Mutual fund investors who put their money in commodity, IT and healthcare-focused schemes have reasons to smile. These schemes have done well over the last six months.

These schemes have outperformed the BSE Sensex and the Nifty, which gave out a return of 1.32 per cent and 0.92 per cent, respectively.

Of the top 10, four are commodity schemes, two are healthcare, two are IT-focussed, one is an international equity scheme, and one is focussed on emerging markets.

The top 10 funds have given returns in the range of 27.04-5.64 per cent.

Commodity schemes invest in stocks of international commodity companies. These schemes invest in stocks of companies as diverse as agriculture, petroleum, and metals.

The top three performing funds have been from the Birla Sun Life AMC family; Birla Sun Life Commodities Equity fund – GMC, Birla Sun Life Commodities Equity Fund – GA and Birla Sun Life International Equity Fund, which have given returns of 27 per cent, 20.88 per cent and 18.05 per cent, respectively, during the six months.

However, these schemes have seen lower or negative returns over the last one-month-to-three month period, but have outperformed BSE Sensex and the NSE Nifty.

The top three schemes have retained their position in the three-month period and gave returns of 11.96 per cent, 8.07 per cent and 7.91 per cent, respectively. However, in the last one month, the returns generated by them have slipped to 1.7 per cent, -1.44 per cent and 1.01 per cent, respectively.

Equity funds have generally been poor performers in the past few months with the markets being highly volatile. Of the 250 equity schemes, only about 10 schemes have generated positive returns in the last six months.

There are 17 commodity-focussed schemes. Commodity stocks benefit from rising prices.

Both IT schemes saw their returns slip from double-digits to negative single-digit during the last six months. Analysts have blamed appreciating rupee for the poor performance. However, that still doesn't account for negative returns, as the BSE IT index during the same period saw an increase of 4 per cent.

The worst affected have been the pharma and healthcare schemes, which have gone from the range of 5-7 per cent returns over the six-month period to 9 per cent in the three-month-period and -3 per cent in the last one month.

“In the last one or three-month periods, the major reason for their poor performance has been the lower than expected performance of the global economy. People expected the developed economies to do recover. Inflation levels haven't been high in these economies,” said Mr Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio.

According to a Chennai-based investment advisor, commodity funds offer diversification to retail investors. However, the performance of these schemes would vary as they are cyclical in nature.

Published on March 03, 2011

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