May 2009: Equity Funds Performance Review

Jun 10, 2009
Mutual funds activity remained robust during the month. Fund managers cut cash exposure in their portfolios to tap the strong stocks rally and invested around Rs 23 billion.
 

The Indian equity markets remained buoyant in May, driven by the positive election outcome post the clear victory of the Congress led UPA government.

Stocks surged as investor expected major economic reforms from the newly formed government. The rally was also boosted by a strong surge in foreign inflows, which amounted to over Rs 200 billion in one month alone, the highest in the current calendar year.

The strong rally benefited the frontline indices, which registered over 28% returns during the month. Mid and small cap stocks outperformed their large cap counterparts and posted approx 38% return, as measured by the CNX Mid Cap Index.

Mutual funds activity remained robust during the month. Fund managers cut cash exposure in their portfolios to tap the strong stocks rally and invested around Rs 23 billion.

Investor favoured infrastructure led stocks with expectations of strong reforms from the forthcoming budget. The realty, metals and consumer discretionary stocks posted over 50% gains during the month, followed by the banking and power stocks.

The fast moving consumer goods stocks were the least performers during the month.

India Large Cap

The rally in frontline indices boosted performance of large cap equity funds. The Morningstar India Large Cap category delivered 28.3% average return, in line with the category benchmark, the BSE Sensex Index. Out of 129 funds, 56 funds outperformed the category average with Escorts Growth registering the highest one-month return.

India Small/Mid Cap

The India OE Small/Mid Cap category outperformed its large cap category peers and registered 35.1% return as investors favoured mid and small cap stocks, owing to their favorable relative valuations.

Out of 71 funds considered, 34 funds beat the category benchmark during the month. Within this category, Taurus Infrastructure registered the highest return of 61.9%, followed by JM Basic, which posted 60.2% return. Religare Equity gave the least return of 16.1% during the month.

India ELSS

The India ELSS category registered 30.8% return in May, underperforming its benchmark, the BSE 200 Index, which registered 32.4% return. Bharti AXA Tax Advantage registered the highest return within this category with 42.8% return. Among laggards, Principal Tax Savings and DWS Tax Saving posted the least return of 21.7% and 23.8% respectively.

India Moderate Allocation

The India Moderate Allocation category includes funds, which invest up to 70% in stocks and the rest in debt and money market instruments. During the month, this category registered 18.9% return, owing to strong equity gains.

Out of 44 funds, 23 funds outperformed the category average for the month. Escorts Balanced was the best performing fund in this category. In May, the fund delivered 32.2% return. Among laggards, Baroda Pioneer Children Gift posted the worst return of -0.1%.

India Conservative Allocation

The India Conservative Allocation category includes funds, which invest up to 30% in stocks and the balance in debt and money market instruments. In May, this category posted 4.5% return. Out of 58 funds available for sale, 24 funds outperformed the category peers.

Birla Sun Life Asset Allocation Moderate delivered the highest return of 18.1%, followed by UTI Childrens Career Bond, which delivered 16.8% return. Among the laggards, DWS MIP Plan A was the worst performing fund and registered 0.6% negative return.

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