Debt funds keep the tempo

Debt funds fetched better average returns compared with equity schemes in the week to Friday.

The continued fall in share indices led all equity fund categories to register negative average returns, with automobile funds being the worst hit. Irrespective of fall in bond prices, all debt fund categories ended the week in the positive zone.

Debt funds: At the end of the week, the yield on the 10-year benchmark government bond, 7.59 per cent hardened to 7.6136 per cent compared with 7.5955 per cent previous Friday.

Bond prices fell due to concerns over rise in inflation and interest rates in case of hike in fuel prices. There were also fears in the market that the Reserve Bank of India would hike rates at its monetary policy review in June to curtail inflation pressure.

Short-term income and short-term floating rate funds gave similar average returns of 0.12 per cent. In short-term income schemes, the highest return of 0.12 per cent was recorded by HDFC Short Term Plan and DWS Short Maturity Fund. Among short-term floaters, the top performer was Escorts Floating Rate with 0.14 per cent return.

Liquid and long-term floaters gave identical average returns of 0.11 per cent.

Templeton India Money Management Account gave the best return of 0.14 per cent in liquid fund category while Principal Floating Rate-Flexible Maturity, with 0.13 per cent, return topped long-term floaters.

Medium-term income, short-term gilt, and long-term gilt funds registered 0.09 per cent, 0.07 per cent, and 0.06 per cent average returns.

DWS Premier Bond regular (0.22 per cent return), Birla Gilt Plus Liquid (0.11 per cent), and Magnum Gilt Fund (0.1 per cent) were the top performers in medium-term income, short-term gilt, and long-term gilt funds respectively.

Sector funds: Banking funds with 0.31 per cent negative average return were able to beat the CNX Bankex Index that fell by 0.15 per cent.

Other sector funds like fast-moving consumer good and technology funds ended the week with 0.58 per cent and 0.77 per cent negative average returns.

FMCG funds underperofrmed the BSE FMCG Index that rose 0.75 per cent last week. On the other hand, technology fund category fared better compared with the BSE IT Index and the CNX IT Index that rose 1.02 per cent and 1.24 per cent respectively.

Pharmaceutical and automobile funds with negative average returns of 1.28 per cent and 2.52 per cent fared well in comparison to the BSE Healthcare Index and BSE Auto Index that fell 0.22 per cent and 2.67 per cent respectively.

Diversified equity, Tax-saving, index funds
In line with the broad trend in indices, index funds posted 0.97 per cent negative average returns. In comparison, Sensex and Nifty shed 1.18 per cent and 1.15 per cent respectively.

Banking BeES with 0.15 per cent negative return was able to sustain well in comparison to falling indices. Principal Index Fund (1.64 per cent negative return) gave the least return among index funds.

Diversified equity and equity-linked savings schemes gave 1.49 per cent and 2.02 per cent negative average returns.

The top three performers in diversified equity fund category were: Tata Contra Fund (1.22 per cent return), Templeton India Equity Income Fund (0.92 per cent), and Quantum Long Term Equity Fund (0.49 per cent). The worst performer was JM Basic with 4.59 per cent negative return.

Within ELSS, Birla Sun Life Tax Relief '96 (0.65 per cent) and Birla Equity Plan (0.16) were top performers. ABN AMRO Tax Advantage gave the least return (negative 4.65 per cent).