Fund managers fail to keep pace with exchanges

The mammoth rally of over 960 points witnessed in the 30-share Sensex of the Bombay Stock Exchange (BSE) last week resulted in a weekly return of over 6%. The gains posted by the BSE benchmark index has beaten the performance of all the fund managers of the mutual fund (MF) industry as not a single equity-based scheme could come closer to the return given by the Sensex, as the best return posted by equity schemes was not more than 4% in last one week. This means all the fund managers have underperformed the Sensex during last one week.

Take for example MF Index schemes, which predominantly invest in the BSE Sensex or the broader S&P CNX Nifty of the National Stock Exchange (NSE). Data collated by Value Research Online shows that equity Index schemes in the last one week has given 4.69% return as on September 20.

Similarly, the BSE Bankex in the last one-week has risen by 603.73 points or 7.42% but MF banking schemes, which invest in the stocks of the banking index, has given 4.31% return till Thursday. The BSE FMCG index has gone up by 80.18 points or 3.87% but MF schemes, which invest in the shares of companies in the FMCG sector, has given 2.49% return during the same period.

A fund manger said, “In the market rally last week, its only the large cap companies who have gained. And most of these MF schemes have considerable exposure in the mid cap and small cap companies as well and the mid and small cap companies during this period have not risen with that intensity. As a result of which their returns are a bit mediocre.”

Even the BSE Auto index in the last one week has gone up by 6.31% or by 308.03 points, but the returns from MF auto schemes, which invest in companies of the automobile sector has given 2.24% returns during the same period.

The BSE Sensex has also out-performed in terms of its returns from the safe heaven of gold investments. The returns from Gold exchange traded funds (GETFs) have been a merge 1.39%.

One exception between all this has been the returns from the Banking BeEs. The MF schemes, which invest in the Bank Nifty of the National Stock Exchange (NSE), have given 7% return in the last one-week.