Equity Funds Are The Flavour Of The Season

Most equity funds posted double-digit returns in the quarter ended June 2003, lending weight to the old adage in the investment industry that equities outperform all other asset classes in the long run.

This time round, the market rally was broad-based, with most of the sectors showing good gains. Mid-cap stocks had a good run-the National Stock Exchange (NSE) CNX MIDCAP 200 returned about 46 per cent in the April-June 2003 quarter, against the 16 per cent returns in the 50-scrip S&P CNX fifty.

The breadth of the rally can also be gauged from the performance of the BSE 500 and the BSE 200, which posted returns of 28 per cent and 26 per cent, respectively. It is not surprising, therefore, to have equity funds posting double-digit returns.

After a volatile January-March 2003 quarter, the debt markets settled for an uneventful June quarter. But what is most important, investors got better returns with lesser volatility in the quarter ended June 2003 as against the previous quarter.

The 13th Crisil composite performance rating (CPR) includes 120 funds from 22 fund houses across six categories. The top honours have been shared by six fund houses.

In the Equity (diversified) category, Franklin India Prima Fund, HDFC Equity Fund (formerly Zurich India Equity Fund), HDFC Top 200 Fund (formerly Zurich India Top 200 Fund) and Reliance Vision Fund have been ranked Crisil CPR-1, indicating "very good performance" in the category.

In the income funds category, Birla Income Plus Plan B and Templeton India Income Builder Account were rated CPR-1. In the balanced funds category, Franklin India Balanced Fund and HDFC Prudence Fund continue to share the top honours.

In the Gilt (long-term) category, Templeton India G-Sec Fund does not show any sign of vertigo, and retains the Crisil CPR-1 rating for the eight consecutive quarter.

In the liquid category, JM High Liquidity Fund and CanLiquid have been ranked Crisil CPR-1. In the Income (short-term) category, JM Short Term Fund has entered the rankings at the top spot.