The meltdown in the equity market, due to the subprime mortgage crisis globally, has affected the average return of all equity related mutual funds (MFs). Losses suffered in terms of returns of funds have been significantly higher than the absolute setback witnessed in the value of benchmark market indices. However, the dip in the return of pharma, auto and technology funds, have been more than that of index funds, over a one month period, which ended on August 16.
Returns of pharma funds have been eroded the most. The return has been negative at (-) 10.60%. Compared to this, the dip in BSE HC was lower by 7.5% or 288 points at 3,526 points during the said period.
A senior fund manager said the overall erosion in the market has also affected the average return of sectoral funds. The dip in the average return has been more or less in line with the market dip. He said the subprime crisis has witnessed meltdown in the US and other parts of the globe and domestic markets also could not escape the global subprime fury.
The return of auto funds took the second highest hit in the market. The average return on auto funds has been negative at 8.15%. On the other hand, the BSE Auto index has seen a higher fall compared with auto funds. The BSE Auto index has dipped by 8.8% or 451 points at 4,629 points in a one month period. Value Research says, the meltdown in IT stocks has led to erosion of the value in the technology funds. The average return in technology funds has been negative at 7.89%. Compared to this, the BSE IT index has taken a lesser hit, which is down 4.3% or 211 points to end at 4,637 points.