Ever since the sub prime lending worries hit the US markets on July 26, 2007, there has been global sell-off in equity markets across the globe. Indian markets too have been spooked with the Sensex losing 11.3% till August 21, 2007, while the Nifty has slipped 11.8% despite intermittent recovery attempts. So, how have mutual funds been performing in these jittery markets?
| Index | 26-Jul-07 | 21-Aug-07 | Returns |
| BSE TECk | 3,914.22 | 3,358.81 | -14.2 |
| BSE IT | 5,001.24 | 4,294.86 | -14.1 |
| BSE Auto | 5,096.44 | 4,475.14 | -12.2 |
| BSE SENSEX | 15,776.31 | 13,989.11 | -11.3 |
| BANKEX | 8,185.52 | 7,324.30 | -10.5 |
| BSE-MIDCAP | 6,790.50 | 6,134.23 | -9.7 |
| BSE HEALTHCARE | 3,788.36 | 3,430.42 | -9.5 |
| BSE FMCG | 1,930.08 | 1,799.05 | -6.8 |
| S&P CNX NIFTY | 4,619.80 | 4,074.90 | -11.8 |
| CNX Midcap | 6,226.35 | 5,519.75 | -11.4 |
Among the 27 tax saving schemes, Sahara Tax Gain (down 12.3%) was the sole under-performer, while the top three ELSS funds that lost the least were Escorts Tax Plan (down 5.6%), JM Equity Tax Saver Fund (down 5.9%), and HDFC Long Term Advantage Fund (down 7.7%).
Table I - Equity Funds that under-performed the Sensex
Table II - Equity Funds that lost less than 6%
Several funds taking advantage of arbitrage opportunities in the derivatives market succeeded not only in beating the market but also churning out positive returns. These included UTI SPrEAD Fund, JM Arbitrage Advantage Fund, SBI Arbitrage Opportunities Fund, Standard Chartered Arbitrage Fund, Lotus India Arbitrage Fund, ICICI Pru Equity & Derivatives Fund - Income Optimiser (Retail Option), and JM Emerging Leaders Fund.
| Arbitrage Funds | 26-Jul-07 | 21-Aug-07 | Returns |
| UTI SPrEAD Fund (G) | 10.90 | 11.01 | 1.0% |
| JM Arbitrage Advantage Fund (G) | 10.88 | 10.99 | 1.0% |
| SBI Arbitrage Opportunities Fund (G) | 10.74 | 10.84 | 1.0% |
| Standard Chartered Arbitrage Fund - Plan A (G) | 10.58 | 10.67 | 0.9% |
| Lotus India Arbitrage Fund (G) | 10.22 | 10.32 | 0.9% |
| ICICI Pru Equity & Derivatives Fund - Inc Optimiser (G) | 10.73 | 10.81 | 0.8% |
| JM Emerging Leaders Fund (G) | 12.66 | 12.70 | 0.3% |
However, DBS Chola Hedged Equity Fund (down 12.2%), and Reliance Equity Fund (down 8.6%), which too have a mandate to invest in the derivatives segment, failed to take much advantage of the hedging opportunities.
All the IT funds managed to outperform the BSE TecK and BSE IT indices, which were down 14.2%, and 14.1%, respectively. IT funds churned out a negative 12.6% returns during this period.
Pharma funds failed to outperform the Healthcare index (down 9.5%) as they churned out an average negative 11.1% return. Franklin Pharma Fund (down 9.4%) was the only exception.
Among FMCG funds, SBI Magnum FMCG Fund (down 7.7%) under-performed the BSE FMCG index (down 6.8%), while Franklin FMCG Fund (down 4.6%), and ICICI Pru FMCG Fund (down 4.0%) yielded better returns than the benchmark index.
Auto and banking sector funds outperformed the BSE Auto (down 12.2%), and BANKEX (down 10.5%) as they yielded an average (-11.2%) and (-7.8%) returns respectively.
Balanced funds yielded returns in the range of (-2.7%) to (-9.3%) while index fund returns were almost at par with the indices in the range of (-10.7%) to (-12%).
Table I - Equity Funds that under-performed the Sensex
| Equity Funds that under-performed the Sensex | 26-Jul-07 | 21-Aug-07 | Returns |
| ABN Amro Equity Fund (G) | 33.18 | 28.16 | -15.1% |
| ABN Amro Future Leaders Fund (G) | 12.058 | 10.317 | -14.4% |
| ABN AMRO Opportunities Fund (G) | 26.507 | 22.697 | -14.4% |
| Franklin India Opportunities Fund (G) | 30.192 | 26.287 | -12.9% |
| Templeton India Growth Fund (G) | 79.4 | 69.177 | -12.9% |
| ABN AMRO Dividend Yield Fund (G) | 12.029 | 10.495 | -12.8% |
| Templeton India Equity Income Fund (G) | 14.619 | 12.791 | -12.5% |
| Sundaram BNP Paribas Equity Multiplier Fund (G) | 11.547 | 10.122 | -12.3% |
| Sahara Tax Gain (G) | 24.273 | 21.28 | -12.3% |
| DBS Chola Hedged Equity Fund (G) | 11.69 | 10.26 | -12.2% |
| Sundaram BNP Paribas Select Focus (G) | 69.554 | 61.156 | -12.1% |
| ABN AMRO Sustainable Development Fund (G) | 11.756 | 10.365 | -11.8% |
| Reliance Regular Savings Fund - Equity Option | 18.369 | 16.209 | -11.8% |
| UTI Index Select Equity Fund (G) | 39.11 | 34.54 | -11.7% |
| Taurus INFRA-TIPS (G) | 12.05 | 10.65 | -11.6% |
| Tata Equity Opportunities Fund - Plan B (G) | 69.728 | 61.623 | -11.6% |
| Baroda Global Fund (G) | 12.77 | 11.29 | -11.6% |
| Tata Service Industries Fund (G) | 22.58 | 19.972 | -11.6% |
| BOB Growth Fund (G) | 35.99 | 31.86 | -11.5% |
| Sundaram BNP Paribas India Leadership Fund (G) | 32.961 | 29.19 | -11.4% |
| Reliance Vision Fund - Retail Plan (G) | 220.86 | 195.71 | -11.4% |
Table II - Equity Funds that lost less than 6%
| Equity Funds that lost less than 6% | 26-Jul-07 | 21-Aug-07 | Returns |
| HDFC Mid-Cap Opportunities Fund (G) | 10.142 | 9.667 | -4.7% |
| SBI Infrastructure Fund - Series I (G) | 10.23 | 9.75 | -4.7% |
| JM Small & Mid-Cap Fund - Regular Plan (G) | 11.261 | 10.726 | -4.8% |
| Escorts High Yield Equity Plan (G) | 11.148 | 10.598 | -4.9% |
| Escorts Tax Plan (G) | 51.028 | 48.179 | -5.6% |
| JM Equity Tax Saver Fund - Series I (G) | 11.802 | 11.104 | -5.9% |
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