The Hindu Business Line : ICRA Online Rankings

THE first quarter of FY2005-06 will go down in history as a record-breaking quarter, given that the market kept surpassing previous highs almost every other day, while the Sensex, for the first time in history, crossed the 7000 mark. FIIs have been pouring money into the market like never before.

Mutual funds, though unable to beat the market, posted much higher returns overall than they had done in the previous quarter, when they had turned in dismal returns.

To place figures before readers, this time the broad-based indices Nifty and Sensex posted 11.38 per cent and 12.73 per cent returns respectively, for the quarter under study, while the equity diversified funds recorded just 9.1 per cent on an average for the quarter. In the previous quarter, Nifty was down by 2.16 per cent and the Sensex by 1.67 per cent. The diversified equity funds, on an average, managed just 0.85 per cent returns in the previous quarter.

For the ranking, ICRA Online analysed funds over one-year and three-year time horizons, on the basis of various parameters after the funds had been suitably categorised taking into account their investment styles and stated objectives.

Performance and suitability for investment were analysed on the basis of such attributes as fund size, average maturity, liquidity, portfolio turnover, and portfolio diversification across companies and sectors, apart from risk and return parameters.

Aggressive Equity Funds: In the one-year time frame, 44 funds were analysed in this category, and four achieved top ranking. As on the previous two occasions, SBI Magnum Global Fund 94 remained unaltered at the top. Among the four, Alliance Buy India Fund moved up a category. The other two at the top were SBI Magnum Sector Umbrella - Contra and Sundaram Select Midcap.

SBI Magnum Global Fund 94 did not deviate much from its winning strategy of last time, and kept its exposure highest in the electrical and electronic equipment sector. Havells India in the electronics sector took up 4 per cent of its net assets.

The computers and software sector followed the electronics sector. United Phosphorus was its top holding over the quarter and it generated a return of 12.51 per cent. Its corpus doubled over the quarter and at June-end stood at Rs. 265.73 crore. But very surprisingly, the fund manager had been reducing the equity exposure over the quarter.

Another fund from the SBI stable, SBI Magnum Sector Umbrella-Contra again changed its sectoral allocation, this time from housing to the auto and ancillary sector. It had almost 15 per cent exposure to this sector. Electrical and electronics followed this sector. Its NAV appreciated 13.13 per cent over the quarter and the fund size grew from Rs 205.8 crore to Rs 349.04 crore.

Over the quarter, its highest exposure was in Zee Telefilms.

Sundaram Select Midcap, as in the previous quarter, retained its highest exposure in the engineering and industrial machinery sector, followed by the auto and ancillary sector. Over the quarter, its highest exposure was in Lakshmi Machine Works. This fund reported a growth of 26 per cent in its corpus and its NAV appreciated by 10 per cent over the quarter.

Lastly, the new entrant, Alliance Buy India Fund. This fund is basically a sectoral fund focused on the FMCG sector. For this reason, it provided its investors with a high return of 25 per cent. It had the highest exposure to Pantaloon India Retail, and to the textile sector. This fund, however, reported a minor increase in fund size.

In the three-year time-frame, 22 funds were analysed, of which two made it to the top. Both were new in some way.

While Franklin India Prima Fund, which was at the top last time too, had a change in category from defensive to aggressive, SBI Magnum Sector Umbrella - Contra has also moved into the top category. These two replaced Alliance Basic Industries and HDFC Capital Builder.

Defensive Equity Funds: In the one-year time frame, 34 funds came under scrutiny and all the three that were in the top spot last time retained their positions this quarter too: Reliance Growth, Alliance Equity and Pru ICICI Dynamic Plan. Reliance Growth Fund has showed remarkable consistency, being in the ICRA top category for a long period now. It did well not only on risk-adjusted return but also on the parameters of company concentration and corpus size. Engineering and industrial machinery had the highest exposure, followed by the auto and ancillary sector. Among companies, Bharat Earth Movers and SBI had the highest exposures.

Alliance Equity fund had the highest exposure in Siemens, and among sectors, the banking sector took most of its assets.

Lastly, Pru ICICI Dynamic had the highest exposure in I Flex Solutions, among companies. Among sectors, it had the highest exposure in computers and software education, followed by banking. In the three-year time frame, 28 funds were analysed and three emerged at the top, including the old timer Reliance Growth. While DSP ML Opportunities moved up a notch to replace Reliance Vision at the top spot, Alliance Equity also figures in the top category.

Balanced Funds: In the one-year time-frame, 18 funds were analysed and there was a minor change at the top. While SBI Magnum Balanced Fund retained its position, Tata Balanced Fund came up to the top spot this time, swapping positions with HDFC Prudence Fund. SBI Magnum Balanced Fund had a 67.5 per cent exposure in equity and 24 per cent in debt.

Adlabs Films was its top holding. As for sector exposure, there was a shift from the banking sector to oil, gas and petroleum this time.

In the three-year bracket, among the 14 funds analysed, HDFC Prudence maintained its top spot. It had a 63.55 per cent exposure in equities and 28.05 per cent in debt. It posted a return of 10.75 per cent and saw a 23 per cent increase in its corpus. Satyam Computers was its top holding over the quarter. This time, the fund made a shift in its sectoral exposure from banking to auto and ancillary.

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