Mutual fund (MFs) investors have reaped better returns than those investors who have been investing in the benchmark indices during the past year. The MF schemes dedicated to the banking sector and “Other Speciality Schemes” (OSS) have outperformed the 30-share Sensex of the Bombay Stock Exchange (BSE), which has clocked a return of about 46%.
In fact, banking schemes offered by MFs have emerged as the smartest, giving average returns of around 64.34% during the last one year, according to data collated by Value Research Online. The other attractive returns were from OSS, which basically invest in a basket of listed stocks, and gave around 62.24% returns during the same period. The rest of the MF schemes gave returns in line with, or less than, the gains posted by the BSE Sensex.
Among the banking schemes, the UTI banking sector scheme gave around 65.38% return and its net asset value (NAV) was at Rs 31.39 as on November 8. In fact, its NAV in August 2007 was at Rs 23.10, while it was Rs 14.39 in April registered an increase of around Rs 17 in the last 6 months.
This scheme, which has around Rs 105 crore of assets under management (AUM), has invested 89% of its corpus in the stocks of the financial sector. It has the highest exposure of 25.30% in the stocks of ICICI Bank and 19.04% holdings in the public sector giant, the State Bank of India (SBI).
During the same period, the BSE Sensex has given around 45.79% returns or has surged by 5,986.42 points, while the BSE Bankex has risen by 3,865.15 points or around 59%.
Dhirendra Kumar, CEO, Value Research said, “As a result of Basel II coming into force from 2009, public sector banks (PSBs) will have to restructure their operations by that time. Hence, these banks stocks are on fire right now and hence can give better returns in the coming days. However, a word of caution on this sector is that investors should not only study the growth and profits of these banks. They should also take into account the non-performing assets (NPAs) of these banks. Who can predict a situation like a credit crunch?”
Other banking scheme is Reliance MF?s Banking scheme, gave 63.30% return during last year, with its NAV at Rs 58.51.
