Sunday, October 13, 2013


October 2013

The prolonged volatility in the Indian stock market has taken its toll on the mutual fund performance, with sector mutual funds in dire straits. This lacklustre performance is reflected in three out of five funds in the October 2012 GEMGAZE making an unceremonious exit from the October 2013 GEMGAZE.


Canara Robeco Infrastructure Fund Gem

Performance pays

Canara Robeco Infrastructure is an open-ended equity mutual fund co-launched by Canara Bank and Robeco Groep N.V. on December 2, 2005 and is domiciled in India. The fund invests its AUM of 71.5 crores in growth stocks of companies operating in the infrastructure sectors, with nearly 62% of the assets in large caps. The fund’s one-year return is -16.44% as against the category average return of -17.46%. The fund’s return of 5% annually in the last three years is nothing to write home about. But so was its benchmark index BSE 100’s performance of 4.5% annually over this period. The fund’s performance is also not poor if one considers the downturn faced by infrastructure and capital goods stocks in the last three to five years. The BSE Capital Goods lost a fifth of its value in the last three years. The fund has demonstrated good performance in rallies. From the March 2009 lows, for instance, it has delivered an absolute return of 130%, next only to Taurus Infrastructure. HDFC Infrastructure managed 112% over this period, while ICICI Prudential Infrastructure climbed 66%. Canara Robeco Infrastructure also did quite well in the 2011 volatility, losing 20%, as against the 25% fall in its benchmark BSE 100 as well as the Sensex. With a well-diversified portfolio of stocks in the energy, engineering, and construction space, Canara Robeco Infrastructure has been among the better performers in its category.

SBI Magnum FMCG Fund Gem

More than just defensive

In the past one year, the Rs 222 crore Magnum FMCG Fund is perched at the top and its AUM has almost doubled from Rs 108 crore the previous year. 70% of the assets are in large caps. Owing to its small size, the fund could stay with a compact portfolio, an advantage given the limited universe of FMCG stocks. The one-year return of the fund is 19.12% as against the category average of 16.23%. Over the three and five year periods, the fund posted 20.8% and 33.2% of CAGR, respectively. Most FMCG stocks have proved to be more than just defensive bets over the last two years. They remained steady through the worst phase of inflation, when cost pressures increased, margins plunged, and demand shrunk. The FMCG industry trends continue to be positive and earnings growth is likely to be strong in the near term as well.

ICICI Prudential Banking & Financial Services Gem

Leader of the pack

ICICI Prudential Banking & Financial Services Fund invests predominantly in large and midcap financial companies. 46% of the portfolio consists of large caps. The Fund has not only outperformed its benchmark, the S&P BSE Bankex but has also outperformed other banking sector funds. The current AUM of the fund is Rs 247 crores and the one-year return is –5.30% as against the category average return of –16.7%.

SBI Pharma Fund Gem

Consistent outperformer

SBI Pharma Fund, launched in 1999, sports an AUM of Rs. 114 crores. The asset allocation reveals that the scheme currently has an allocation of 90.55% towards equities with around 8.39% in debt and a minor 1.06% in cash and cash equivalent. The number of stocks held by the fund in the last few months has hovered around 15. Back in 2007 and early 2008, the number of stocks were just restricted to 8-10. By the second half of 2009, the number gradually increased to 14. The fund currently has 17 stocks in its portfolio. The top 10 stocks account for over 85% of the total assets. With an average market capitalisation of about Rs 30,000 crore, the fund has a higher skew towards large-cap stocks of nearly 60%. The concentration analysis reveals that the fund has around 64.32% assets allocated towards the top 5 stocks while the top 10 stocks make up around 83.11%. The one-year return of the fund is 28.29% as against the category average of 23.03%. There has been a divergence in performance by the pharmaceutical funds. On a one-year and 2-year basis only SBI Pharma could match up to its benchmark, while the other two funds lagged behind. Even on a three-year basis only SBI Pharma could come near the benchmark i.e. S&P BSE Healthcare. Over the five-year period, Reliance Pharma and UTI Pharma & Healthcare funds outperformed. Overall, SBI Pharma seems to be the most consistent performer of the pack.  The fund has delivered good returns in the short as well as long run. It has beaten the broader markets at different time horizons. Pharma fund can be considered by investors who would like to pick a sector specific fund and bet on the prospects of the healthcare sector keeping in mind the risks associated with a sector fund. 

ICICI Prudential Technology Fund Gem

Roller coaster ride

ICICI Prudential Technology Fund is a Rs 111 crore technology fund, which invests in large technology oriented companies. It invests in companies listed in the BSE Teck. Its portfolio has 56% exposure to large cap companies. It heavily invests in Infosys ltd. The fund seeks to invest in knowledge sectors like IT and IT Enabled Services, Media, Telecommunications and others. The one-year return of the fund is 32.6% as against the category average of 30.66%, thanks to the drastic rupee depreciation in the past few months.

No comments: