GEM GAZE
Index Funds
Lauded in times of lull…
Investors, who embraced index funds in 2008, when the financial crisis had reached a crescendo, are now pointing their index finger towards index funds blaming them for their mediocrity. Little do they realise that it is this factor that mellowed down the ill effects of the crisis while equity funds faced a steep slide.
Only two index funds have exhibited performance worthy of a gem in the past 12 months. The others have fallen short of expectations.
Benchmark Banking BeES
Fall from grace…
From enjoying the status of a fund with the highest AUM last year (Rs. 4253.4 crores), Banking BeES has undergone a steep downward spiral to Rs. 2744 crores in September 2008, Rs. 559 crores in January 2009 and a paltry AUM of Rs. 107.4 crores in April 2009. The financial crisis has had a telling effect on the fund’s performance but the recent rally bodes well for the fund. The one-year return was a negative 27.83% in 2008 but the latest one month performance of 20.63% as against the category average of a mere 10.58% has more than made up for it. But the question of sustainability remains…
ICICI Prudential Index Fund
Active passivity…
ICICI Prudential Index Fund has graduated to a new level by allowing for an exposure (nearly 16 per cent) to derivatives. By using index and even stock futures, the fund has given some sort of respite to its investors. But by doing this the passively managed approach of index funds have been rendered meaningless. The one-year return has been a negative 27.22 %. But the one-month return during the recent rally has been 8.15% as against the category average of 10.58%. The tracking error is 3.19% for 3 months and 2.91% for six months. The AUM has shown a marginal increase over the previous year to Rs. 43.37 crores in April 2009. The expense ratio is 1.25% while the portfolio turnover ratio is 379%, the highest among all index funds.
Birla Index Fund
Crushed under cash…
With an AUM of a meagre Rs. 30.43 crores, the performance of the fund over the one-year and one-month periods at -29.30% and 8.19% have been worse than the category average of -29.19 and 10.58 percent respectively. Birla Index Fund has 25 per cent of its net assets in cash. Holding cash in an index fund is a double edged sword. If the benchmark scrips go up, the fund will lose out on returns. But if the scrips go down, the fund will fall less as compared to the benchmark. The expense ratio is 1.5% and the portfolio turnover ratio is 150%.
Can Robeco Nifty Index Fund
The underdog…
The AUM of the fund in April 2009 stands at Rs. 4.98 crores. While the one-year return is slightly better at -29.03 % compared to the category average of -29.19 %, the one-month return is worse at 8.15 % compared to the category average of 10.58 %. The scheme underperformed the Sensex over most of the time periods. The expense ratio is 1.01% and the portfolio turnover ratio is 4%.
Franklin India Index Fund Gem
Golden glitter…
This ICRA 5-star gold award winner 2009 in the one-year and three-year categories, has an AUM of Rs. 80.57 crores. The one-year and one-month returns are -28.98% and 8.21% respectively. The expense ratio is 1% and the portfolio turnover ratio is 24.93%.
Principal Index Fund
Pathetic performance…
The fund’s AUM stands at Rs. 21.88 crores. The fund’s performance has fallen short of its category average. Its one-year and one-month returns are -30.32% as against the category average of -29.19% and 7.93% as against the category average of 10.58%. The expense ratio is 1.49% and the portfolio turnover ratio is 37%.
Index Funds
Lauded in times of lull…
Investors, who embraced index funds in 2008, when the financial crisis had reached a crescendo, are now pointing their index finger towards index funds blaming them for their mediocrity. Little do they realise that it is this factor that mellowed down the ill effects of the crisis while equity funds faced a steep slide.
Only two index funds have exhibited performance worthy of a gem in the past 12 months. The others have fallen short of expectations.
Benchmark Banking BeES
Fall from grace…
From enjoying the status of a fund with the highest AUM last year (Rs. 4253.4 crores), Banking BeES has undergone a steep downward spiral to Rs. 2744 crores in September 2008, Rs. 559 crores in January 2009 and a paltry AUM of Rs. 107.4 crores in April 2009. The financial crisis has had a telling effect on the fund’s performance but the recent rally bodes well for the fund. The one-year return was a negative 27.83% in 2008 but the latest one month performance of 20.63% as against the category average of a mere 10.58% has more than made up for it. But the question of sustainability remains…
ICICI Prudential Index Fund
Active passivity…
ICICI Prudential Index Fund has graduated to a new level by allowing for an exposure (nearly 16 per cent) to derivatives. By using index and even stock futures, the fund has given some sort of respite to its investors. But by doing this the passively managed approach of index funds have been rendered meaningless. The one-year return has been a negative 27.22 %. But the one-month return during the recent rally has been 8.15% as against the category average of 10.58%. The tracking error is 3.19% for 3 months and 2.91% for six months. The AUM has shown a marginal increase over the previous year to Rs. 43.37 crores in April 2009. The expense ratio is 1.25% while the portfolio turnover ratio is 379%, the highest among all index funds.
Birla Index Fund
Crushed under cash…
With an AUM of a meagre Rs. 30.43 crores, the performance of the fund over the one-year and one-month periods at -29.30% and 8.19% have been worse than the category average of -29.19 and 10.58 percent respectively. Birla Index Fund has 25 per cent of its net assets in cash. Holding cash in an index fund is a double edged sword. If the benchmark scrips go up, the fund will lose out on returns. But if the scrips go down, the fund will fall less as compared to the benchmark. The expense ratio is 1.5% and the portfolio turnover ratio is 150%.
Can Robeco Nifty Index Fund
The underdog…
The AUM of the fund in April 2009 stands at Rs. 4.98 crores. While the one-year return is slightly better at -29.03 % compared to the category average of -29.19 %, the one-month return is worse at 8.15 % compared to the category average of 10.58 %. The scheme underperformed the Sensex over most of the time periods. The expense ratio is 1.01% and the portfolio turnover ratio is 4%.
Franklin India Index Fund Gem
Golden glitter…
This ICRA 5-star gold award winner 2009 in the one-year and three-year categories, has an AUM of Rs. 80.57 crores. The one-year and one-month returns are -28.98% and 8.21% respectively. The expense ratio is 1% and the portfolio turnover ratio is 24.93%.
Principal Index Fund
Pathetic performance…
The fund’s AUM stands at Rs. 21.88 crores. The fund’s performance has fallen short of its category average. Its one-year and one-month returns are -30.32% as against the category average of -29.19% and 7.93% as against the category average of 10.58%. The expense ratio is 1.49% and the portfolio turnover ratio is 37%.
UTI Nifty Index Fund Gem
On an award winning spree…
It has been ranked a Seven Star Fund by ICRA and has been awarded the Gold Award for best one-year and three-year performance in the category of Index Equity funds for the year ended 31 December, 2008. The AUM was Rs. 200.98 crores in April 2009. One-year and one-month returns are -28.98% and 8.01% respectively. The expense ratio is 1.34% while the portfolio turnover ratio is 9.13%.
Tata Index Fund
Run-on-the-mill…
The AUM of the fund in April 2009 was a mere Rs. 6.77 crores. The one-year and one-month returns have not been impressive at -29.39% and 8.12% respectively. The expense ratio is 1.5% and portfolio turnover ratio is 19%.
LIC Index Fund
Lacklustre performance…
The one-year and one-month performance of LIC Index Fund has been lacklustre. The returns were -30.66% and 7.69% respectively. The fund has the dubious distinction of having the highest tracking error. The tracking error for the fund is as high as 9.38 per cent for the three-month category and 10.54 per cent for the six-month category. For the one-year and two-year category the error is somewhat less, but still glaring, at 7.53 per cent and 5.74 per cent, respectively. The AUM of the fund is Rs.84.28 crores. The expense ratio is 1.5% and the portfolio turnover ratio is 10%.
ING Vysya Nifty Plus Fund
Worsening by the day…
The one-year and one-month returns are -28.40% vis-à-vis the category average of -32.71% and 7.88% vis-à-vis the category average of 10.11% respectively. The AUM of the fund is Rs. 8.4 crores. The expense ratio is very high at 2.5% and the portfolio turnover ratio is 12.64%.
Magnum Index Fund
Hyperactivity takes its toll…
The one-year and one-month returns are -30.27 and 8.37% respectively. The AUM of the fund is Rs. 16.48 crores. The expense ratio is 1.5% and the portfolio turnover ratio is 174%.
Index funds, in general, do not enjoy as much recognition as their equity counterparts in India. The financial crisis temporarily altered this scenario. The steep fall in the AUM of index funds (thanks to the recent rally!) compared to the previous year bears testimony to the fact that index funds still meet step motherly treatment from Indian investors.
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