Diversified MFs outperform mkts

Though the equity markets have remained flat in the first six months of 2010, more than 90% of equity-diversified funds have outperformed the benchmark index. This is in keeping with a trend seen over the past 10 years, which suggests that, typically, fund managers have managed to score over the index whenever the market has been either flat or in the midst of a bull-run. In 2009, for instance, when Sensex gained 81%, more than 97% of equity-diversified schemes outperformed the benchmark.

However during bear phase, fund managers tend to lag behind. For instance, whether it was during 2000, 2001 or 2008, equity-diversified funds lagged behind the benchmark indices . In 2008, when Sensex reported a negative return of 52%, only 3.5% of equity-diversified schemes were outperformers.

From January 2010 till date, Sensex has given a return of only 2.1%. However, Birla Sun Life MNC Fund has given its investors a return of 22.5%, which is the highest in the equity-diversified category. The HDFC Mid Cap Opportunities Fund has delivered 18.4% while Canara Robeco's FORCE fund has given 19% returns. However, given that over 250 schemes qualify for the category, the average return has been just over 5%, with six schemes showing a negative return. These include JM Basic which gave a negative return of over 6% while Bharti AXA Equity fund also giving negative return of approximately 3%. Tata AMC MD Ved Prakash Chaturvedi, whose Tata Dividend Yield Fund has given 17% returns, said, “We invested in companies that were likely to announce big dividends and that has paid off. We were looking at stocks where we could unlock value.”

Canara Robeco Mutual Fund head-equities Anand Shah said, “Two things matters the most if any fund wants to beat the benchmark, one is stock picking and other is the selection of a sector. In our case, in the first six months this year we had a good exposure to the banking sector which has helped us.” Fortis Mutual Fund senior portfolio manager Amit Nigam said, “During the bullrun and when markets are flat, mid-caps usually outperform large-caps and fund managers have some exposure to the mid-caps which helps them beat the index.”

Source: http://www.financialexpress.com/news/diversified-mfs-outperform-mkts/649950/

Sebi for recorders to check front running in MFs

In a move to enforce discipline and check front running in mutual funds, Sebi has asked mutual fund houses to install recording facilities in dealing rooms and disallow traders from using their personal mobile phones. Sebi, in a letter to mutual fund players, has directed that all dealing records be preserved for eight years. Further, Sebi has asked asset management companies to ensure that the terms of reference of the review of internal auditors are submitted to the board of trustees. Moreover, Sebi wants that AMCs ensure that the recordings are checked periodically by designated executives.

IDBI Mutual Fund MD&CEO Krishnamurthy Vijayan said, “Most of the funds have already been following these practices. Perhaps the regular may have found a couple of instances where this was not happening which is probably why the directive has been issued. “ These directives from Sebi come in the wake of the regulator unearthing a massive front running trade involving an employee of HDFC AMC and three other clients during April to July 2007.

Source: http://www.financialexpress.com/news/sebi-for-recorders-to-check-front-running-in-mfs/649951/