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/