The Hindu Business Line : One-year returns: HSBC Equity and Prima retain top slots

Aggressive Equity Funds: For the one-year period, 31 schemes were analysed in this quarter. The period witnessed 12 schemes changing their category from Defensive to Aggressive equity. The change in portfolio management style displays select fund manager's preference to take higher risks and concentrate on few sectors to capitalise on the rising equity markets.

Franklin India Prima, UTI Dynamic Equity Fund and Deutsche Alpha Equity Fund were ranked ICRA MFR1 for the one-year horizon, while Alliance Basic Industries fund was ranked ICRA MFR1 for the three-year horizon. Franklin India Prima improved its performance and regained the top position that it had lost in the previous quarter.

The allocation of its portfolio remained more or less same as in the previous quarter, the exception being the auto/auto ancillaries where it pruned exposure by a little over 4 per cent. The scheme did well on the risk front by maintaining relatively low volatility andposted an absolute return of 20 per cent in the quarter.

UTI Dynamic Equity fund, the second among the top performers, is a relatively new fund that was launched in September 2003 and just managed to be included in the ranking. The scheme was taken over by UTI Mutual Fund from the erstwhile IL&FS Mutual Fund. The fund manager has pruned its exposure to IT and increased allocation to petroleum and steel sector stocks in the quarter. The scheme has done well to post an over 27 per cent absolute return during the quarter.

Defensive Equity Funds: HSBC Equity Fund, SBI Magnum Sector Umbrella-Contra, HDFC Capital Builder Fund and Reliance Growth have been awarded ICRA MFR1 for the one-year horizon whereas Reliance Vision Fund, Reliance Growth, Franklin India Prima Fund and HDFC Equity Fund have been ranked ICRA MFR1 for the three-year horizon. HSBC Equity Fund, which was the winner of the Best Fund of the Year Award for 2003, has maintained its performance in both the quarters of the current year. Because of its continued good performance, investors have increased their allocation to the fund. The scheme has reduced exposure to auto and auto ancillary and increased exposure to steel and banking sectors.

Reliance Growth Fund is the other consistent performer, and has maintained its ICRA MFR1 rank for the one-year as well as three-year horizons. The scheme manages assets worth Rs 6,153 crore and has posted an absolute return of 27.21 per cent in the quarter. Reliance Vision Fund has been ranked ICRA MFR1 for the three-year horizon. For the one-year horizon the scheme lagged and slipped to ICRA MFR3.

Balanced Funds: For the one-year period, 21 schemes where ranked as against 17 in the previous quarter. Four new schemes qualified for the ranking after they completed the mandatory period of one year. For the three-year period, 15 schemes were considered as against 16 in the previous quarter (Franklin Templeton merged Franklin India Balanced Fund with its own FT India Balanced Fund).

DSP ML Balanced Fund retained the ICRA MFR1 position for both the one-year and three-year horizons. It posted a return of 10.83 per cent in the quarter. The fund size has increased by almost 4 per cent to Rs 1,429 crore during the last three months. The portfolio is invested in sectors such as software, banks and electricals. The fund has increased its exposure to software while reducing its exposure to the auto and auto ancillary sectors.

HDFC Prudence Fund retained the ICRA MFR1 position for the three-year period, but slipped in the one-year category to ICRA MFR2. The fund maintains a well-diversified portfolio with a maximum equity exposure of 8.84 per cent to the banking sector. IT stocks constitute 6.7 per cent of the portfolio.

Index Funds: Index schemes were ranked for the one-year period only because of the insufficient number of schemes in operation for the three-year period. SBI Magnum Index Fund once again remained on top in this quarter by maintaining a low tracking error. For index category schemes, IER was replaced by tracking error to calculate the deviation from its objective of replicating the index. All the schemes except the UTI Index Advantage Fund and Birla Index Fund have maintained their ICRA MFR Rankings. While UTI Index Advantage Fund has moved up from ICRA MFR3 to ICRA MFR2, Birla Index Scheme has moved down from ICRA MFR2 to ICRA MFR3.

Technology Funds: In the case of technology sector schemes, the number of funds remained at seven. In the one-year category, SBI Magnum Sector Umbrella-Infotech maintained its ICRA MFR1 position, posting an absolute return of 19.28 per cent. DSP ML Technology.com Fund also maintained its ICRA MFR2 spot, scoring reasonably well against the IER and liquidity parameters. It posted a quarterly return of 20.97 per cent.

The change in this category was that Franklin Infotech Fund and PRU ICICI Technology Fund swapped positions, with Franklin Infotech Fund moving up to ICRA MFR2 and PRU ICICI Technology Fund going down to ICRA MFR3. For the three-year horizon, among the 10 schemes, there has been no reshuffling at the top with Birla India Opportunities fund maintaining its MFR1 position mainly on the strength of its superior IER. It posted an absolute return of 21.68 per cent in this quarter. PRU ICICI improved its position to ICRA MFR2 against the risk-adjusted return ranking parameter while its rank on the other parameters was the same as in the previous quarter.

Tax-Saving Funds: There is no change as far as the number of schemes qualifying for the one-year and three-year rankings in this category is concerned. SBI Magnum Tax Gain Scheme 93 remained at the top posting a healthy 30.8 per cent absolute return.

The scheme has a 13 per cent exposure to the engineering and industrial sector. HDFC Tax Plan 2000 was ranked ICRA MFR1 for both the one-year and three-year periods. While it moved up to ICRA MFR1 position from during the second quarter, it retained its ICRA MFR1 position in the three-year category.

It posted an absolute return of 27.9 per cent in this quarter. It has recorded a healthy growth of almost 47 per cent in its corpus. Alliance Capital Tax Relief 96 was pushed down to ICRA MFR3 for the one-year ranking period.

Long-term Debt Funds: For the one-year period, this category saw a major reshuffling in the 32 schemes considered. Grindlays Super Saver Income Fund and Tata Dynamic Bond Fund are the new entrants at ICRA MFR1 along with the past topper Deutsche Premier Bond Fund. The new ones have replaced Grindlays Dynamic Bond Fund, which has gone down to ICRA MFR2, and Sahara Income Fund, which has fallen sharply to MFR5.

(Source: ICRA Online)

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