IT & auto funds most hit, gold funds shine through

Written by Markets Bureau | Mumbai, Sep 29 | Updated: Sep 30 2008, 05:59am hrs
The US sub-prime woes leading to the financial tsunami have impacted the return of all the equity linked mutual funds over one year period ended on September 26. Worst hit amongst the equity linked funds are the IT funds, which have seen an average decline of around 33%. Meanwhile, gold exchange traded funds have seen stellar performance while scoring a 37% return.

The going for the mutual fund industry is going to be tough, says Dhirendra Kumar, CEO of Value Research, a company that tracks mutual funds. Inflows, in the market were positive for the first couple of months in the year and now they have started to trickle down. We might actually see some outflows, albeit small ones, in the days to come, says Kumar.

Apart from the IT funds, other specialty funds have taken a hit. The funds were the second most hit funds. The return on the auto funds has dipped by 28% over one year period. The rising interest rate is one of the main reasons for the dip of the return on the auto funds.

A senior fund manager from a global fund house said that the return on the majority of the funds has been in the negative zone because of FIIs selling pressures in the backdrop of the US financial crisis. The return on the banking funds has also dipped by 20% over the one year period.

Hybrid funds, especially arbitrage funds, which work on rule based investing and looks at market anomalies have also been performing well in volatile markets.