Bank funds only equity schemes to beat indices

While equity diversified funds have given an average return of 76 per cent in the three-month period since March 9 — the day when the present market rally started — banking sector funds were the only ones that managed to outperform the broader market indices during theperiod.While banking sector funds have, on an average, managed to give a healthy 92.78 per cent return since March 9, the Sensex and Nifty posted 84.24 per cent and 78.01 per cent gains, respectively, during the same period.Among the banking sector funds, Sundaram BNP Paribus Financial Services Fund has managed to give the highest return at 103.35 per cent. The lowest return in this category came from JM Financial Services Sector Fund, which clocked 73.03 per cent. Among equity funds, all other categories — including equity diversified, tax planning, technology, pharma and FMCG funds —under-performed the Sensex.Equity diversified funds gave a return of 76.75 per cent while tax planning, technology, pharmaceuticals and FMCG funds posted 73.57 per cent, 65.37 per cent, 51.58 per cent and 28.45 per cent gains, respectively, in the past 3 months.Among the sector-specific funds, however, technology and FMCG schemes have outperformed the respective sectoral indices on BSE. For instance, while the average return on the technology funds in the three months since March 9 stood at 65.37 per cent, BSE IT rose just 54.50 per cent during the period.Similarly, FMCG funds outperformed the BSE FMCG Index. While, FMCG funds gave a return of 28.45 per cent, the BSE FMCG Index rose only 19.98 per cent.In sharp contrast, the best performing banking funds failed to match the gain posted by the BSE Bankex, which saw a whopping 114 per cent rise since March 9.“The weightage of some banking stocks in the banking index is far more than some of their peers. Since none of the banking dedicated funds could afford to hold stocks of more than one or two banks, historically banking funds have under-performed the BSE Bankex,” says Dhirendra Kumar, chief executive officer of mutual fund research firm Value Research.RK Gupta, MD of Taurus Mutual Fund, echoed Dhirendra Kumar’s views. “Many small and mid-cap banking stocks are not part of BSE Bankex and most banking sector-dedicated funds also invest in these stocks. This caused such huge difference in return given by the Bankex and the banking sector funds,” he pointed out.

Source: http://www.mydigitalfc.com/mutual-funds/bank-funds-only-equity-schemes-beat-indices-164