A call to honour

Equity Index32.98 Equity Technology32.97 Equity Diversified27.58 Equity FMCG26.83 Hybrid-Equity Oriented23.95 Equity Tax Planning21.30 Equity Auto 11.12 Equity Pharma8.22 Equity Banking-8.03  Index trailers  For the past one year ended August 2, 2006, the category that produced the best returns among mutual funds was index funds. While equity diversified funds delivered returns of 27.58 per cent, index funds delivered 32.98 per cent. A close second were technology funds that delivered 32.97 per cent. 
 

TOP FIVE Diversified equity fund return (%) as on August 2, 2006
	1 Year
Sundaram BNP Paribas Select Midcap	56.34
Sundaram BNP Paribas Select Focus	47.03
DSPML T.I.G.E.R.	45.87
Tata Infrastructure	45.58
Magnum Multiplier Plus	44.69

 But more disturbing is the fact that the performance of actively managed funds have been slipping. Over the past one year ended June 2006, only 42 out of the 111 equity diversified funds beat the Sensex, which delivered 47.5 per cent returns.  Similarly, only 61 funds beat the 50-share Nifty, which gave 40.9 per cent. This does not compare well with past performance. For instance, in the previous year, 62 per cent of funds managed to beat the Sensex and 71 per cent managed to beat the Nifty.  One of the reasons for funds lagging behind the Sensex is the high level of concentration in the index. For instance, Reliance Industries which has a 10.84 per cent weightage in the Sensex, has been a stunning performer delivering a return of 76.5 per cent. 
 

B0TTOM FIVE Diversified equity fund return (%) as on August 2, 2006
	1 Year
Taurus Discovery Stock	-18.14
JM Emerging Leaders	1.60
Tata Midcap	6.60
Tata Growth	6.90
UTI India Advantage Equity	8.30

 But fund managers were underweight on the stock. But then, the writing is still clear, as demonstrated in the performance comparison against Nifty that fund managers