Equity investors beat mutual fund returns in April

The investors who put their money directly in index-specific stocks scored over those who invested in mutual funds in April, as most fund houses gave returns of 5-6 per cent while the benchmark BSE Sensex rose by about 12 per cent in the month.

But, compared to the previous month, the mutual fund schemes showed a recovery in April. Among the sectoral funds, pharma funds gave good returns of nearly 5.8 per cent. In March, several equity schemes witnessed a fall of nearly 10-20 per cent.

The key stock index, the BSE Sensex, rose from 12,455.37 to 13,908, a gain of 1,453 points in April.

During the last year, the pharma, telecom and automobile sector funds had given lower returns compared with banking and technology funds.

"The funds were sitting on huge cash levels during the last two months and did not use the opportunity to pick stocks having attractive valuations. Even now, there is not enough market participation by the funds as there is a perception that markets might weaken again in the coming days. So, funds are remaining cautious," said a fund manager.

The Reliance Pharma fund gave the highest returns of 9.58 per cent, followed by 5.82 per cent from UTI Pharma & Healthcare fund and JM Healthcare sector fund gave 5.12 per cent.

Magnum Pharma (4.89 per cent) and Franklin Pharma (3.93 per cent) were the others. Interestingly, during the last one year except for Reliance, all the others lost their net asset value (NAV) and gave negative returns, according to Value Research, a mutual funds' tracking firm.

Among the diversified equity funds, Kotak MNC fund, an open-ended fund gave the biggest returns of 11.05 per cent during the month. Magnum COMMA was the second, with returns of 10.03 per cent and Canfortune 94 (9.89 per cent) was the third.

Most of the diversified funds launched some years back had hit their all-time highs in May last year, but have failed to reach that level during the year.

However, funds such as Canfortune 94 and JM Basic are close to their highs.