How mutual fund schemes performed in Q1

Diversified Equity Funds

For the three months ended June 30, 2004, the average category return from diversified equity funds was around a negative 8%. However, even at this level, the return was higher as compared with the performance of the diversified indices, which depreciated by 13-15%.

Defensive

For the one-year ranking horizon, HSBC Equity Fund and Templeton India Growth Fund maintained their previous quarter's ICRA MFR 1 ranks, while DSP ML Opportunities Fund slipped to ICRA MFR 2.

Deutsche Alpha Equity Fund and Reliance Growth Fund both moved one notch up to ICRA MFR 1, thus entering the top 10% bracket. Both these funds fared well on the return score parameter.

For the three-year ranking horizon, Reliance Growth Fund and Reliance Vision Fund managed to hold on to their ICRA MFR 1 ranks, while DSP ML Opportunities Fund moved up to ICRA MFR 1 on the strength of its superior performance on the return score parameter.

Aggressive

In this category, there was a major reshuffle in the one-year rankings. Franklin India Prima Fund and Tata Equity Opportunities Fund, which had been ranked ICRA MFR 1 in the previous quarter, slipped to the ICRA MFR 2 rank, while Alliance Basic Industries Fund fell to ICRA MFR 3 from ICRA MFR 1 in the previous quarter. Franklin India Opportunities Fund, SBI Magnum Sector Umbrella""Contra, and Tata Life Sciences & Technology Fund moved up to the ICRA MFR 1 position.

For the three-year horizon, Alliance Basic Industries Fund once ranked ICRA MFR 1 while HDFC Equity Fund, which had been ranked ICRA MFR 1 in the previous quarter, slipped to ICRA MFR2, giving way to Franklin India Prima Fund, which secured ICRA MFR 1.

DEBT"" long Term Funds

Deutsche Premiere Bond Fund retained its ICRA MFR 1 rank in the Debt""Long Term category for the one-year period ended June 30, 2004. However, the other two funds that had been ranked ICRA MFR 1 in the previous quarter""Kotak Bond Wholesale and Birla Income Plus""slipped because of their poor performance on the return score parameter.

These two funds were replaced by Grindlays Dynamic Bond Fund and Sahara Income Fund on account of their improved return score. Both these schemes had ranked ICRA MFR 2 in the previous quarter.

For three-year period ended June 30, 2004, while Birla Income Plus ranked ICRA MFR 1 for the second consecutive quarter, Templeton India Income Builder Account slipped to ICRA MFR 2 and was replaced by Kotak Bond Wholesale, which moved up one notch from its previous quarter's rank of ICRA MFR 2.

Debt""Short Term Funds

In the category of Debt""Short Term, Reliance Short Term Fund ranked ICRA MFR 1 for the third consecutive quarter. ING Vysya Income Fund""Short Term Plan is the other scheme that ranked ICRA MFR 1, moving up one notch from its ICRA MFR 2 rank in the previous quarter.

Deutsche Short Maturity Fund, on the other hand, slipped to ICRA MFR 2. The schemes in this category were ranked only for their one-year performance as there were not enough schemes with a three-year history.

Marginal Equity Schemes

This category of funds, which saw increasing inflows recently, fared poorly in the quarter ended June 2004.

With average annualised returns of close to a negative 4% over the past quarter, investors in marginal equity schemes""popularly known as Monthly Income Plans (MIP)""experienced a relatively high volatility. However, funds in this category are likely to continue attracting investors as long as the equity market outlook remains positive and the debt market volatile.

Most of the marginal equity schemes have maintained their portfolio average maturity at less than three years to reduce the risk associated with volatility of the debt component of the portfolio.

Although the equity exposure is maintained at 10-12%, most of the schemes have spread the investments across a large number of companies to minimise risk.

For the one-year horizon, the category of Marginal Equity schemes saw a noticeable change with Alliance MIP losing its ICRA MFR 1 position to FT India MIP.

FT India MIP outperformed Alliance MIP on the return score, average maturity and corpus size parameters. While Tata MIP has held on to its ICRA MFR 2 rank, DSP ML Savings Fund moved up one notch from ICRA MFR 3 to ICRA MFR 2.

However, for the three-year horizon, all the ICRA MFR 1 and ICRA MFR 2 funds managed to retain their respective ranks. While Alliance MIP ranked ICRA MFR 1 for the third consecutive quarter, Birla MIP and FT India MIP ranked ICRA MFR 2.

Liquid Funds

For the one-year horizon, LIC MF Liquid Fund and Canliquid continued their good performance, which helped them secure the ICRA MFR 1 rank for the third consecutive quarter.

Prudential ICICI Liquid Plan however slipped from its ICRA MFR 1 position in the previous quarter to MFR 2. It was replaced by Templeton India TMA, which moved up one notch from its previous quarter's ICRA MFR 2 rank.

For the three-year horizon, the ICRA MFR 1 ranked schemes of the previous quarter, namely Templeton India TMA and Reliance Liquid Fund""Treasury Plan""Retail, retained their top rankings for the quarter ended June 2004.

Gilt""Long Term Funds

For the one-year period, Chola Gilt Investment and FT India Gilt Investment Plan once again secured the top honours, indicating performance among the top 10% in the category.

Both schemes fared well on the return score and average maturity parameters. For the three-year horizon, Tata Gilt Securities Fund also held on to its ICRA MFR 1 rank, mainly because of its strong performance on the return score parameter.

Gilt""Short Term Funds

For the one-year horizon, Templeton Government Securities Fund""Treasury Plan moved up to ICRA MFR 1 rank from its ICRA MFR 2 position in the previous quarter, replacing Prudential ICICI Gilt Fund""Treasury Plan. For the three-year horizon, Birla Gilt Plus Liquid Plan retained its ICRA MFR 1 rank of the previous quarter. The fund was the best performer on the return score as well as on the corpus size parameter.

Equity Sector""Technology Funds

For the one-year horizon, SBI Magnum Sector Umbrella""Infotech moved to the ICRA MFR 1 position, faring well on the return score and liquidity parameters. Significantly, this fund had ranked ICRA MFR 3 in the previous quarter.

The ICRA MFR 1 ranked fund of the previous quarter, Franklin India Opportunities Fund, moved to the Diversified Equity""Aggressive category following its recent change in investment objective that allows it to invest across sectors. DSP ML Technology Fund and Prudential ICICI Technology Fund retained their ICRA MFR 2 positions in the category.

For the three-year period ended June 2004, there was no major change at the top of the table with Birla India Opportunities Fund retaining its ICRA MFR 1 position of the previous quarter. DSP ML Technology Fund and Franklin India Opportunities Fund also managed to hold on to their ICRA MFR 2 positions.

Equity Linked Savings Schemes (ELSS)

In the ELSS category, SBI Magnum Tax Gain Scheme 93 moved up to ICRA MFR 1 from its last quarter's position of ICRA MFR 2, while Birla Equity Plan slipped to ICRA MFR 2 in the one year rankings.

This time there were two schemes in the ICRA MFR 1 position because of an increase in the total number of eligible schemes. The other ICRA MFR 1 ranked scheme was Alliance Capital Tax Relief 96, which was at ICRA MFR 2 in the previous quarter.

For the three-year period, HDFC Tax Plan 2000 was able to retain its ICRA MFR 1 position mainly because of its superior performance on the return score and company concentration parameters.

Birla Equity Plan and Alliance Capital Tax Relief 96 also retained their ICRA MFR 2 positions, but HDFC Tax Saver Fund slipped to ICRA MFR 3 giving way to Prudential ICICI Tax Plan, which ranked ICRA MFR 2.

Balanced Funds

For balanced funds, it was a dual hit as returns from both the equity and bond markets fell in the last quarter. The funds that were performing well till recently on account of bullish sentiments in both the equity and debt markets, suffered in the last quarter. The category average return stood at a negative 5.48% for the three months ended June 30, 2004.

HDFC Prudence Fund, which was ranked ICRA MFR 1 in the previous two quarters for both one and three years, slipped to ICRA MFR 2 in the one-year ranking.

While SBI Magnum Balanced Fund with its superior performance on the return score parameter secured the ICRA MFR 1 rank, DSP ML Balanced Fund was able to retain its ICRA MFR 1 rank of the previous quarter.

Unlike in case of the one-year ranking, HDFC Prudence Fund remained in the ICRA MFR 1 position for the third consecutive quarter in the three-year rankings. The fund performed well on the return score and corpus size parameters.

DSP ML Balanced Fund, which replaced JM Balanced Fund, was the other ICRA MFR 1 ranked fund in the Balanced Funds category for the three-year period.

Index Funds

In the passively managed Index category of funds, SBI Magnum Index Fund secured the top position, replacing UTI Nifty fund which had been at the top of the table in the previous two quarters.

SBI Magnum Index Fund had been the best performer on the tracking error parameter in the previous quarter as well, but a relatively low score on corpus size parameter prevented it from attaining the ICRA MFR 1 rank.

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