Mutual Funds: The leaders & laggards of year 2006

As another fabulous year for the Indian Stock markets comes to an end, its time to check how the equity mutual funds have rewarded investors. At first glance, the numbers show a mixed trend.

Despite the ups and downs, the Sensex and Nifty delivered handsome returns of 47.6  per cent and 40.1 per cent respectively from the beginning of the year till December 27.

However, the BSE Midcap surged only 28.1%, while the BSE Small cap gained 13.5%, making it evident that the market took a preference to large-cap stocks, and the mid-cap and small-cap stocks didn't do as well in the year 2006.

This impact could be seen in the performance of equity funds too as out of the 159 diversified equity funds (includes diversified equity, midcap, and equity tax saving schemes), only 20 funds (13 per cent) out-performed the Sensex, and 50 funds (37 per cent) out-performed the Nifty. The best returns generated were up to 58.3 per cent, and the worst being a negative 10.6 per cent. 

Equity Diversified Funds

Equity Diversified funds churned out an average 33.2% return, which was that of the 72nd fund in this category comprising 135 funds. Infrastructure funds stole the limelight this year with the top three performers being Tata Infrastructure Fund (58.3 per cent), UTI Infrastructure Fund (57.5 per cent), and Pru ICICI Infrastructure Fund (57.4 per cent).

The other funds that out-performed the Sensex churning out returns in the range of 47-58 per cent included Sundaram Select Midcap, Pru ICICI Dynamic Plan, Franklin India Opportunities Fund, Sundaram Capex Opportunities Fund, Reliance Regular Savings Fund - Equity, SBI Magnum Global Fund, DSP-ML India T.I.G.E.R. Fund, DWS Alpha Equity Fund, Reliance Equity Opportunities Fund, Sundaram BNP Paribas Select Focus, HSBC India Opportunities Fund, Reliance NRI Equity Fund, SBI Magnum Contra Fund, Principal Large Cap Fund, UTI Master Plus 91, Franklin India Prima Plus Fund, an Franklin India Growth Fund.

Twenty-seven funds out-performed the Nifty, though they failed to out-perform the Sensex, churning out returns in the range if 40-47 per cent.

These were Birla Sun Life Frontline Equity Fund, SBI Magnum Multiplier Plus, Taurus Star Share, DSP-ML Top 100 Equity Fund, Pru ICICI Power, DWS Investment Opportunity Fund, Tata Select Equity Fund, DSP-ML Equity Fund, Pru ICICI Services Industries Fund, Reliance Vision Fund, Franklin India Bluechip Fund, SBI Magnum Midcap Fund, SBI Magnum Comma Fund, DSP-ML Opportunities Fund, Fidelity Equity Fund, Birla Sun Life Equity Fund, Kotak 30, HDFC Growth Fund, JM Equity Fund, Pru ICICI Growth Plan, Tata Pure Equity Fund, Sundaram BNP Paribas Growth Fund, SBI Magnum Multicap Fund, UTI Index Select Equity Fund, Sahara Growth Fund, Franklin India Flexi Cap Fund, and ING Vysya Domestic Opportunities Fund.

The worst performers in the category were ABN AMRO Dividend Yield Fund (-3.8 per cent), and JM Emerging Leaders Fund (-0.5 per cent), while Principal Dividend Yield Fund, ING Vysya Dividend Yield Fund, Taurus Discovery Fund, Franklin India Smaller Companies Fund, UTI Mid Cap Fund, Birla Dividend Yield Plus, and UTI Master Value Fund churned out measly returns in the range of 2-9 per cent.

Equity Tax Saving Funds

Equity Tax Saving Funds churned out an average 28.2 per cent return, which was that of the 15th fund in this category comprising 24 funds. While none of the ELSS could out-perform the Sensex, Birla Sun Life Tax Relief 96 (43.7 per cent), SBI Magnum Tax Gain Scheme (42.7 per cent), and Principal Tax Savings Fund (41.2 per cent)  managed to out-perform the Nifty.

The worst performer in this category was Taurus Libra Tax Shield (-10.6%).

Sector Funds

During the year, FMCG, pharma, auto, metal, oil and gas and banks under-performed the broader indices, while technology and capital goods yielded superior returns.

Among funds, IT, power, and select FMCG funds put up a good show by out-performing their respective benchmark indices, but pharma, auto and banking funds grossly under-performed their benchmarks.

Reliance Diversified Power Sector Fund up 55.5 per cent yielded the maximum returns among sector funds.

Among the IT sector funds, SBI Magnum IT Fund (50.4 per cent), Pru ICICI Technology Fund (50.1 per cent), UTI Software Fund (48.6 per cent), DSP-ML Technology.Com (45.9 per cent), Birla Sun Life New Millennium (45.6 per cent), and Franklin Infotech Fund (42.7 per cent) yielded superior returns than the 42.2 per cent gained by BSE IT index, while Kotak Tech (37.2 per cent) was the sole under-performer in this category.

In the FMCG pack, Pru ICICI FMCG up 22.8 per cent out-performed BSE FMCG index up 18.7 per cent, while Franklin FMCG (14.3 per cent), and SBI Magnum FMCG (8.4 per cent) were the under-performers.