Tech-tilted equity funds top the rally heap

Hot run in Technology counters helps schemes post an average 40.28% gains

Equity funds with a focus on the technology sector were the major beneficiaries of the current market rally.

These funds have given returns of 40.28 per cent in the last one year, followed by pharmaceutical sector funds with returns of 40.16 per cent, according to data from Value Research.

Technology stocks have outperformed the benchmark indices in the current market rally. A host of mutual funds had repositioned their tech plans following the meltdown in 2000. But many of them have been quick to seize the latest opportunity by investing in tech stocks. 
 

Average return as on November 11, '04, in per cent
Fund category	1 year	6 mths
Equity
Technology	40.28	32.56
Pharma	40.16	17.13
Tax planning	34.21	17.04
Diversified	31.12	14.15
FMCG	29.29	20.42
Petroleum	22.76	10.14
Index	16.25	10.27
Hybrid
Asset allocation	25.13	13.80
Equity-oriented	20.56	8.99
Debt-oriented	9.19	3.67
Monthly income	4.69	1.45
Debt
Ultra short-term inst	4.62	2.30
Floating rate	4.61	2.26
Ultra short-term	4.31	2.14
Short-term inst	4.07	1.56
Short-term	3.81	1.48
Medium-term	-0.29	-1.69
Medium-term inst	-0.51	-2.12
Speciality	-0.72	-2.58
Gilt
Short-term	2.16	0.49
Medium & long-term	-2.60	-3.96

The public offerings from TCS and Patni Computers have further increased valuations of technology stocks. The six-month returns figure from Value Research shows that equity technology schemes were on top with returns of 32.50 per cent, followed by FMCG schemes at 20.40 per cent and pharmaceutical schemes at over 17 per cent.

Tax-planning plans have given returns in excess of 32 per cent over a one-year period, while on a six-month time frame their returns have been over 17 per cent.

However, during this period returns from debt funds have languished. Medium and long-term debt schemes have given negative returns over the last six months and over a one-year period. Short-term funds have fared better with positive returns, though much lower than the current inflation rate.

The increasing interest rate regime has overturned the dynamics of the funds sector which was skewed towards debt schemes with interest rates consistently falling for the past three years.