gundeep
01-11-2007, 07:48 PM
India's actively-managed diversified equity funds gave best monthly returns in nearly four years, but about two-thirds of them underperformed the benchmark BSE index which touched several record highs in October.
Such funds posted an average return of 13.3 per cent, lower than their monthly return of 17.1 per cent in December 2003, but nearly 63 per cent of them failed to match the 14.7 per cent rise in the benchmark index, data from global fund tracker Lipper showed.
The returns came in a month that saw the benchmark index hitting lower circuit breakers, forcing the markets to shut down for an hour, in response to an attempt by the market regulator to curb foreign funds making their way into booming local stocks.
"Markets quickly managed to recover and touch new highs," Dhruva Raj Chatterji, research analyst with Lipper, said.
The benchmark index, which hit a record closing high a day before India showed intent to curb foreign flows, raced to another record high on October 26 after the regulator said the step was only aimed at improving transparency.
While funds with higher exposure to capital goods, power, metals and realty stocks took advantage of the rallying stocks, the majority still lagged behind.
"Equity funds as a category underperformed the Sensex in October, with mid- and small-cap stocks lagging behind their large-cap counterparts," Chatterji said.
The BSE Mid Cap and BSE Small Cap indices rose 9.6 per cent and 7.7 per cent respectively, slowing down equity funds' return, which had invested 41 per cent of equity assets in such stocks at Sept-end, data from ICRA showed.
Among other fund categories, gold funds continued to do well and rose 4.6 per cent on an average in October, with the yellow metal touching fresh highs on global demand.
Such funds posted an average return of 13.3 per cent, lower than their monthly return of 17.1 per cent in December 2003, but nearly 63 per cent of them failed to match the 14.7 per cent rise in the benchmark index, data from global fund tracker Lipper showed.
The returns came in a month that saw the benchmark index hitting lower circuit breakers, forcing the markets to shut down for an hour, in response to an attempt by the market regulator to curb foreign funds making their way into booming local stocks.
"Markets quickly managed to recover and touch new highs," Dhruva Raj Chatterji, research analyst with Lipper, said.
The benchmark index, which hit a record closing high a day before India showed intent to curb foreign flows, raced to another record high on October 26 after the regulator said the step was only aimed at improving transparency.
While funds with higher exposure to capital goods, power, metals and realty stocks took advantage of the rallying stocks, the majority still lagged behind.
"Equity funds as a category underperformed the Sensex in October, with mid- and small-cap stocks lagging behind their large-cap counterparts," Chatterji said.
The BSE Mid Cap and BSE Small Cap indices rose 9.6 per cent and 7.7 per cent respectively, slowing down equity funds' return, which had invested 41 per cent of equity assets in such stocks at Sept-end, data from ICRA showed.
Among other fund categories, gold funds continued to do well and rose 4.6 per cent on an average in October, with the yellow metal touching fresh highs on global demand.