Investors who invested in defensive sector funds would have a mental solace. In the last one year, these funds, which include FMCG and pharma, have performed better than other sector including auto, banking and technology.
In the last one year, FMCG and pharma funds have fallen by 23% and 23.26% respectively. Auto, banking and technology have fallen to the extent of 25%, 35%, and 42% respectively. This performance makes sense when one looks at the fall in S&P Nifty, which shed 29% in the last one year.
The strategy that worked:
a) Pharma funds
Funds which were over-weight on healthcare sector benefited largely and it helped these funds to mitigate maximum damage, while those which were not overweight suffered bigger losses. There are in all five solely dedicated pharma funds. Of these, Reliance Pharma, UTI Pharma and Healthcare, and Franklin Pharma were the better performers. These funds unanimously adhered to the strategy of going overweight on healthcare to an extent of 90% and above while those which didn’t observe this strategy suffered greater damages. These funds are Magnum Pharma and JM Healthcare.
In the last one year, Reliance Pharma, UTI Pharma and Healthcare, and Franklin Pharma fell to the extent of 14.94%, 15.29% and 15.33% respectively, while Magnum Pharma and JM Healthcare fell to the extent of 38.24% and 32.49% respectively.
b) FMCG funds
Franklin Templeton, ICICI Prudential and SBI Mutual have almost a decade long history. SBI Magnum FMCG Fund has recorded minimum loss of 13.26% in this category over last one year. Franklin FMCG Fund followed with a loss of 16.85% for the same period of time, whereas ICICI Prudential FMCG fund lost 32.61%--the maximum in this category.
SBI Magnum Fund ran a concentrated portfolio of both the Indian and Multinational counters. The fund manager has invested 27.35% of the scheme corpus in Nestle as its top holding. “Focused investments in the category leaders with growth orientation at reasonable price have saved the fund in the bad times,” said a fund analyst with a domestic brokerage. The fund has put 70% of the money in top 5 stocks. Point to note here is the fund is the smallest in this category with only Rs 5.42 crore.
Its nearest competitor on the returns front, Franklin FMCG Fund, has chosen to be a well diversified equity fund in the FMCG sector with a portfolio of 18 stocks. The well diversified investment style has helped the fund in the difficult times. Nestle is the top holding with 15% allocation followed by HUL. However the investors in ICICI Prudential were not as fortunate.
The fund manages a concentrated portfolio with a focus on Indian companies than the multinationals. This is the only scheme in this segment that has employed derivatives. A short position of Hindustan Unilever is initiated in February. The fund has ITC as its top investments with 40% weight. Marico is the second biggest holding in the portfolio. Barring Gillette the fund has no long positions in any of the multinationals. Though the fund has delivered the worst performance in the category, it still enjoys the title of largest fund with Rs 42 crore under management as on February 2009.
In the last one year, FMCG and pharma funds have fallen by 23% and 23.26% respectively. Auto, banking and technology have fallen to the extent of 25%, 35%, and 42% respectively. This performance makes sense when one looks at the fall in S&P Nifty, which shed 29% in the last one year.
The strategy that worked:
a) Pharma funds
Funds which were over-weight on healthcare sector benefited largely and it helped these funds to mitigate maximum damage, while those which were not overweight suffered bigger losses. There are in all five solely dedicated pharma funds. Of these, Reliance Pharma, UTI Pharma and Healthcare, and Franklin Pharma were the better performers. These funds unanimously adhered to the strategy of going overweight on healthcare to an extent of 90% and above while those which didn’t observe this strategy suffered greater damages. These funds are Magnum Pharma and JM Healthcare.
In the last one year, Reliance Pharma, UTI Pharma and Healthcare, and Franklin Pharma fell to the extent of 14.94%, 15.29% and 15.33% respectively, while Magnum Pharma and JM Healthcare fell to the extent of 38.24% and 32.49% respectively.
b) FMCG funds
Franklin Templeton, ICICI Prudential and SBI Mutual have almost a decade long history. SBI Magnum FMCG Fund has recorded minimum loss of 13.26% in this category over last one year. Franklin FMCG Fund followed with a loss of 16.85% for the same period of time, whereas ICICI Prudential FMCG fund lost 32.61%--the maximum in this category.
SBI Magnum Fund ran a concentrated portfolio of both the Indian and Multinational counters. The fund manager has invested 27.35% of the scheme corpus in Nestle as its top holding. “Focused investments in the category leaders with growth orientation at reasonable price have saved the fund in the bad times,” said a fund analyst with a domestic brokerage. The fund has put 70% of the money in top 5 stocks. Point to note here is the fund is the smallest in this category with only Rs 5.42 crore.
Its nearest competitor on the returns front, Franklin FMCG Fund, has chosen to be a well diversified equity fund in the FMCG sector with a portfolio of 18 stocks. The well diversified investment style has helped the fund in the difficult times. Nestle is the top holding with 15% allocation followed by HUL. However the investors in ICICI Prudential were not as fortunate.
The fund manages a concentrated portfolio with a focus on Indian companies than the multinationals. This is the only scheme in this segment that has employed derivatives. A short position of Hindustan Unilever is initiated in February. The fund has ITC as its top investments with 40% weight. Marico is the second biggest holding in the portfolio. Barring Gillette the fund has no long positions in any of the multinationals. Though the fund has delivered the worst performance in the category, it still enjoys the title of largest fund with Rs 42 crore under management as on February 2009.
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