Tech funds top returns chart in '06

Technology mutual funds yielded an average return of 46 per cent in 2006, matching the Sensex growth and outperforming most sectoral indices. The funds mainly invest in stocks of large and mid-size IT or software companies.

All other sector-specific funds, including banking and auto funds, failed to keep pace with the bull run of their respective sectoral indices during the year.

Of course, since the time the stock market staged a rebound from the May-June meltdown, all mutual funds "� barring the banking funds "� came out with improved results to outperform the buoyant market.

"The corporate performance has been the dominating factor in the country's bull run. Technology funds did well as infotech companies managed to sustain the wage increase and rupee appreciation pressure and turn in a stable performance throughout the year," Sanjay Sinha, head of equity at SBI Mutual Fund, said. 
 

MONEY SPINNERS Top Equity Returns in 2006
In %
Technology	46.83
Index	40.77
Diversified	36.29
Other Speciality	33.45
Tax Planning	31.37
Banking	27.02
Auto	17.81
FMCG	16.64
Source: Value Research

According to Value Research data, tech funds emerged the topper in 2006 with the average return at 46.83 per cent, while that of the index funds was 40.77 per cent.

Diversified funds, with a multi-sectoral portfolio, gave a return of 36.29 per cent against tax saver funds' 31.37 per cent returns and other speciality funds' 33.45 per cent returns.

Among all fund categories, diversified and tax saver funds maintained a steady growth throughout the year with returns of 30-35 per cent.

Of the total 2,000-odd mutual schemes in the country, nearly 43 equity schemes outperformed the Sensex, which gained 46.70 per cent. The BSE IT index posted growth of 40.87 per cent during the same period.

However, the list of top performing MF schemes was dominated by infrastructure, mid-cap and other speciality funds as their returns surpassed those of technology funds, whose top performing schemes generated an average return of 52 per cent.

Banking stocks, one of the most active stock groups during the year, grew 39.44 per cent, while banking mutual funds underperformed with returns of 27.02 per cent, as per the Value Research data.

Other sectoral funds too failed to beat the performances of their sectoral indices, as the returns of mutual funds investing into auto stocks were 17.81 per cent against BSE Auto index's growth of 38.85 per cent.

Similarly, the NAV (net asset value) of FMCG mutual funds gained 16.64 per cent, underperforming the 17.40 per cent returns given by the BSE FMCG index.

Incidentally, the equity market, which witnessed a long correction in May-June, appreciated 29 per cent in the second half of calendar 2006, as it ended the year at 13,786.91 points from the 10,609 level in June. Thus, growth in the second half outperformed the first half performance, where the Sensex gained 12 per cent.

All sector-specific mutual funds, except banking funds, outperformed the Sensex as well as their respective sectoral indices as their returns were higher than the Sensex's gain of 29 per cent in the last six months.

Banking funds generated the highest return of 55 per cent during the six-month period but failed to match the impressive run by the BSE Bankex, which gained 62 per cent in the period.

Technology funds' returns were 53 per cent and auto fund's 28 per cent, compared with BSE IT's40 per cent growth and BSE Auto's 16 per cent gain.

Tax saver funds yielded an average return of 53 per cent, while diversified equity funds maintained their growth at 33 per cent. The returns given by other speciality and index funds were also around 33 per cent.