MIPs top performer in debt fund category last week

Among equity funds, pharma funds were chartbusters

Monthly income plans (MIPs) were the top performing category among debt funds last week. MIP returns for the week amounted to 0.38 per cent, obviously helped along by their exposure to equities.

The next best performing category in debt funds was liquid funds and floating rate funds with weekly returns of 0.10 per cent each. Income funds just about managed to stay in the positive territory with returns of 0.05 per cent. Long term gilt funds were at the bottom of the pile at 0.04 per cent.

MIPs continued to lead the category as far as performance over the past year is concerned, with returns of 10.21 per cent. Liquid funds were the second best at 5.44 per cent.

Despite the lackluster returns in most debt categories, debt fund managers believe that they still are an attractive option for investments in the debt category compared with bank fixed deposits and post office schemes.

"Though, the performance of debt funds have not been satisfactory in the recent past, on a post-tax basis they offer attractive returns compared with other debt investments," say Naval Bir Kumar, managing director of Standard Chartered Mutual Fund.

Coming to equities, pharma funds were the big winners last week, with returns of 3.31 per cent. Auto and tax planning funds came in next at 3.01 per cent and 2.66 per cent, respectively.

A downturn in the leading technology counters, after what was perceived to be disappointing results from Infosys and TCS, proved a drag on the performance of technology sector funds. In fact, this category was the only one to post negative returns last week.

Over the past 12-month period, equity categories continued to perform admirably well. All funds in this category gave returns of above 30 per cent, save petroleum sector funds.

FMCG sectoral funds topped the annual return stakes at 79.30 per cent, followed by tax planning funds at 74.06 per cent and banking sector funds at 68.70 per cent. Diversified fund returns amounted to 61.51 per cent for the past one year and 2.44 per cent for the week.

Interestingly, there were several tax planning funds in the top 5 among all equity funds. SBI Magnum Tax Gain topped the 12-month return table with 148.56 per cent, while other tax planning funds in the top 5 included Taurus Libra Taxshield (133.43 per cent), Prudential ICICI taxplan (112.91 per cent) and HDFC Tax saver (112.83 per cent).

Reliance Diversified Power fund (6.39 per cent) and SBI Magnum Sector Umbrella - Pharma (5.83 per cent) were the best performing equity funds on a weekly basis.

Though the markets have witnessed a correction last week, fund managers believe that long term fundamentals are in place, which should ensure good returns for equity fund investors over the long term.

"I expect equity funds to give annualised returns of around 15 per cent over a three to five year period," says Naval Bir Kumar.