Equity funds ride market boom

Equity funds' performance last week was in total contrast to that of the previous week, when only technology funds ended with positive returns. Thing were looking rosier last week as all equity categories ended the week with gains, save auto sector funds.

With the benchmark indices moving up to all-time high levels last week, it comes as no surprise that index funds topped the table last week. Index funds returned 3.16 per cent last week, followed by pharma (2.14 per cent) and FMCG funds (2.05 per cent).

Technology funds, the toppers of the week earlier, came in fourth at 1.78 per cent. While diversified funds managed a return of 1.52 per cent for the week, only auto sector funds (-0.19 per cent) ended up in the red last week.

Among the index funds, Reliance Index Fund - Sensex plan (4.15 per cent), Tata Index Fund - Nifty plan (3.88 per cent) and UTI Index Advantage Fund - Nifty plan (3.57 per cent) were the best performers.

However, out of the 27 index-based schemes, only four Sensex-benchmarked funds managed to equal or beat the Sensex, which gave a return of 3.51 per cent.

Similarly, only four funds managed to equal or outperform the Nifty (3.34 per cent), among Nifty-based funds.

The big gains in equities last week - the Sensex gained 242 points during the week, propelling it above the 7,000 mark - which saw almost all sectoral indices moving up, also got reflected in the performance of equity funds.

However, market watchers are wary about the immediate future, though remain bullish about the long-term market prospects.

"Considering that markets are at an all-time high, our view is quite cautious," says Jayesh Shroff, fund manager of BoB Mutual Fund.

"Though equities can still make you money over the longer-term, considering the sharp upturn in the index in the recent past, a correction is pretty likely soon," he adds.

As far as performance in the past 12 months is concerned, it is the tax planning funds, which have come out on top, returning 77.23 per cent for the period, followed by FMCG (74.25 per cent) and diversified funds (64.99 per cent). The weekly toppers, index funds came (50.87 per cent) seventh out of the nine categories for the one-year period.

Debt fund performances continued to be low key, with the income fund category average for the week standing at 0.24 per cent, while liquid fund returns even lower at 0.12 per cent.