Mutual Funds showed positive performance in July 2012

The domestic mutual funds after being cautious net buyers for last couple of months (to the tune of Rs 834 crore), turned to be net sellers in the Indian equity markets to the tune of Rs 1,710 crore. Fund managers seemed to be cautious about the Euro zone debt crisis and its rippling and crippling effect on the Indian economy. Moreover, the domestic data too wasn't very encouraging for them to buy in the Indian equity markets and redemption pressures too were imminent as investors remained cautious.

 
 
 
 
 
 
 
(1-Mth average returns of funds in various categories as on July 31, 2012)
(Source: ACE MF, Personal FN Research)
As far as the performance of various categories of mutual funds is concerned, despite the lull in the market, gains were seen in some of the diversified equity funds category, especially those following multi-cap and flexi-cap trait in their portfolio holdings.
Among the sector funds, pharma funds took the lead followed by those following the media and entertainment and consumption theme. However, most mutual fund schemes with a mandate of investing in infrastructure and technology sector / theme took a hit, due to detrimental undercurrents for these sectors.
In the Fund of Fund (FoF) schemes, the offshore ones delivered luring returns despite uncertainty in the global economic environment.
Speaking about the hybrid funds; in balanced funds category only a few of them managed to deliver gains in the month gone by as they remained vulnerable to the underlying currents of the equity markets. However in the Monthly Income Plans (MIPs) category, gains were seen across funds aided by drop in yields of shorter maturity papers just before the last week on the month (where the bonds markets expected that RBI may not reduce policy rates in its 1st quarter review of monetary policy 2012-13, as inflationary pressures persisted).
Thus Debt mutual funds, across categories and tenure also showed a decent performance in the month gone by, as yields for short-term debt papers had started mellowing down (as cited above), while long-term debt papers witnessed a very narrow range bound yield movement. 
It is noteworthy that FIIs too continued to exude confidence in the Indian debt markets as seen in the month of June 2012 (where they net bought to the tune of Rs 1,682 crore) as they bought net to the tune of Rs 3,266 crore. Domestic mutual funds on the other hand, bought in the Indian debt market net to the tune of Rs 8,543 crore, thereby lowering aggression as seen in June 2012 (where they net bought Rs 74,371 crore).
Performance across various categories of mutual funds
 
 
 
 
(1-Mth average returns of funds in various categories as on July 31, 2012)
(Source: ACE MF, Personal FN Research)

The graph above depicts how various categories of mutual funds performed in the previous month. Amongst the sector and thematic funds, tech funds were the one which took the maximum hit followed by those mandated to invest in the infrastructure theme. Among the diversified equity funds, mid cap funds and the one having positioned their portfolio the flexi-cap style managed to report petite gains. However the rest of the funds in terms of market cap bias and styles, ended the month with losses.
Tracing with upward movement of prices of precious yellow metal - gold, Gold ETFs too exhibited positive returns for investors (gaining by an average of +2.0%). Likewise debt mutual funds across categories gained from the yield movements of short-term and long-term debt papers (as explained earlier).  PersonalFN is a Mumbai based Financial Planning and Mutual Fund Research Firm