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Jul 12, 2012, 08.23 AM IST
Domestic mutual funds bought cautiously to the tune of Rs 484 crore in the month of June 2012 as against a net buy of Rs 350 crore in May. The domestic mutual funds delivered a good performance led by the up-move witnessed by the Indian equity markets.
Domestic mutual funds being encouraged by the present valuations of the Indian equity markets net bought cautiously to the tune of Rs 484 crore in the month gone by i.e. June 2012, thereby following their May month's activity where they were net buyers to the tune of Rs 350 crore. However, fund managers were cautious in their buying activity, and weren't ruling out detrimental impact of Euro zone debt crisis.
As far as the performance of various categories of mutual funds is concerned, in the diversified equity fund category, across market capitalisation and style of fund management, gains were reflected due to the up-move witnessed by the Indian equity markets.
Among the sector funds, banking & financial services took the lead followed by power and infrastructure theme. Even defensive sectors such as pharma and FMCG, generated luring returns and so did tech funds.
In the Fund of Fund (FoF) schemes, the offshore ones and domestic equity ones both delivered luring returns, in reflection to the intermediate positive newsflashes in the global markets.
Speaking about the hybrid funds, balanced funds too felt the positive impact of the ascending move of the Indian equity markets, and thus all of them reported gains in the month gone by. Likewise Monthly Income Plans (MIPs) too generated gains with drop in yields of longer maturity papers and support from the equity market movement (for the equity composition of their portfolio).
(Source: ACE MF, Personal FN Research)
Debt mutual funds, across categories and tenure also showed a decent performance in the month gone by, as yields for short-term papers remained stiff and longer maturity papers fell. In the maturity profile of upto 2 years, short-term income funds delivered appealing returns. With interest rates at the peak, and likely to mellow down gradually over the next six months also led to long-term gilt funds perform well.
It is noteworthy that FIIs too continued to exude confidence in the Indian debt markets as seen in the month of May (where they net bought to the tune of Rs 1,893 crore) as they bought net to the tune of Rs 1,682 crore. Domestic mutual funds on the other hand, aggressively bought in the Indian debt market - net to the tune of Rs 74,371 crore, as against Rs 19,109 crore in the month of May.
Thus well supported by inflows into debt mutual funds, the industry's Assets Under Management (AUM) also reported a rise of 4%. The industry added Rs 27,913 crore in the quarter April 2012 to June 2012, thereby placing the total AUM at Rs 6,92,705 crore as on June 30, 2012 (according the data released by the Association of Mutual Funds in India).
(1-Mth average returns of funds in various categories as on June 30, 2012)
The graph above depicts how various categories of mutual funds performed in the previous month. Amongst the sector and thematic funds, all of them delivered positive returns, but banking and infra funds were the ones who took the lead. In the diversified equity funds category too, across market capitalisation and styles wealth creation was seen.
Tracing with upward movement of prices of precious yellow metal - gold, Gold ETFs too exhibited positive returns for investors (gaining by an average of +1.8%). Likewise debt mutual funds across categories gained from the yield movements of short-term and long-term debt papers.
PersonalFN is a Mumbai based Financial Planning and Mutual Fund Research Firm
Tags: Mutual funds performance, short-term income funds , Gold ETFs , PersonalFN , diversified equity fund category, banking & financial services
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