Diversified equity funds register strong performance in June

The capital goods and banking sectors reported strong performance

July 04, 2012 2:52 IST | India Infoline News Service
Diversified equity funds, which form the largest category of Indian mutual funds in terms of number and assets, recorded an average 6.01% in June, according to the data from fund tracker Lipper, a Thomson Reuters service. These funds had declined 5.65% in May.

Improving global sentiment and expectations that domestic reforms will be reviewed, led these funds report their strongest performance in five months in June compared to their negative returns in May. New measures to ease the eurozone crisis, expectations that the government may review economic reforms and efforts to provide clarity on a tax proposal helped the benchmark BSE Sensex gain 7.5% in June.

Pankaaj Maalde, head-financial planning, ApnaPaisa.com, said, “We have seen some positive change after the prime minister took the charge of finance ministry. He has given necessary instructions to restore the confidence. The government’s decision to postpone the GAAR (General Anti-Avoidance Rules) provisions from 1 April 2013, fall in crude oil price internationally and some relief from eurozone has lead to this rally. To continue this rally, we need more steps to ease inflation in coming days.”

The capital goods and banking sectors reported strong performance. Gains in the capital goods sector—which stood around 10% of mutual funds’ assets by May—supported net asset values as expectations for new spending on infrastructure helped the sectoral index zoomed 13.7%, the Morningstar India data said.

The banking sector, which is fund managers’ top sectoral bet in India with an allocation of almost 22%, contributed largely to the diversified equity funds performance. While the BSE banking index rose 9.4%.

The top performing funds in June were UTI Banking Sector Fund and Goldman Sachs Infrastructure Exchange Traded Scheme, both returning more than 10%. While, fixed income funds that invest in government securities registered a 0.69% return on an average, and gold ETFs ended almost flat, the data said.

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