Technology funds have delivered

Technology funds have performed the best among sectoral funds in the past one year. But FMCG funds were the only ones to have given a positive return in the past one month.

As far as one-year returns go, banking and FMCG sector funds also managed to be in the positive territory. Interestingly, most sectoral funds (except for IT) have managed to beat their respective index returns for both one-year and one-month periods.

Most technology funds have managed to outperform other sectoral funds, though most of them have stayed behind their benchmark BSE IT Index.

While the index managed a return of 33.41 per cent, only two IT funds, SBI magnum sector umbrella "� Infotech (37.54 per cent) and Alliance New Millennium fund (34.96 per cent) outperformed the index. 

The sectoral show
Scheme name	1 Month	1 Year
Banking
Reliance Banking Fund	-1.51	26.11
UTI Thematic Banking Sector Fund	-0.72	25.58
BSE Bankex index	-0.62	19.25
FMCG
Prudential ICICI FMCG	6.51	58.19
Alliance Buy India Fund	6.8	50.43
SBI Magnum Sector Umbrella - FMCG	3.21	39.02
Franklin FMCG Fund	2.22	34.23
UTI Growth Sector Fund - Brand Value	1.06	15.56
BSE FMCG index	3.95	16.17
Technology
SBI Magnum Sector Umbrella - Infotech	-2.64	37.54
Alliance New Millennium	-2.2	34.96
Franklin Infotech Fund	-6.63	33.24
Prudential ICICI Technology Fund	1.22	33.04
DSP ML Technology.com Fund	-3.03	28.86
Kotak Tech Fund	-6.45	26.51
Tata Life Sciences and Technology Fund	1.81	22.72
UTI Growth Sector Fund - Software	-2.5	16.94
BSE IT index	-6.58	33.41
Pharma
Franklin Pharma Fund	-1.87	5
JM Healthcare Sector Fund	-1.46	--
Reliance Pharma Fund	0.27	--
SBI Magnum Sector Umbrella - Pharma	1.54	10.29
UTI Growth Sector Fund - Pharma and Healthcare	-0.13	-3.67
BSE Health Care index	-5.51	-0.56
Source: www.mutualfundsindia.com

According to Anup Maheshwari, head of equities at DSP Merrill Lynch Mutual Fund, the outlook on the technology sector continues to be positive.

"But we maintain a cautious outlook for the short-term, due to the possible reduction n global technology spending in the near-term," he adds. In comparison, most FMCG sector funds did outperform the Bombay Stock Exchange FMCG index, which gave a 1-year return of 16.17 per cent.

In comparison, leading FMCG sectoral funds Prudential ICICI FMCG fund and Alliance Buy India were far ahead with returns of 58.19 per cent and 50.43 per cent, respectively.

These two funds were also the best performing of all sectoral funds in the past month, with returns of 6.51 per cent and 6.80 per cent, respectively.

"FMCG stocks are under-owned since the sector has faced pricing pressures and a slowdown in demand. However, this could be a turnaround sector," says Sandip Sabharwal, head of equities at SBI mutual fund.

As far as pharma funds are concerned, Franklin Pharma fund and SBI Magnum Sector Umbrella "� pharma fund were in the positive territory for the past year with returns of 5 per cent and 10.29 per cent, respectively.

However as with others, save FMCG funds, all of them ended up in the negative territory in the past month. According to Sabharwal, the last six months have been difficult for the pharma sector because of severe price pressures in the generic markets overseas and the MRP-related taxes in the domestic markets.

"However, all the negatives, including VAT, appear to be priced into the stocks and from here onwards, companies should do well," he adds.

Sabharwal's portfolio going forward would mainly comprise a mix of generic players and those doing contract manufacturing.

The two banking sector funds Reliance Banking fund (26.11 per cent) and UTI Thematic Banking Sector fund (25.58 per cent) were also outperformers against BSE Bankex, which gave a return of 19.25 per cent in the past year.