Opportunities funds outperform Sensex, Nifty yields in last 4 years

Mumbai, May 24 | Updated: May 25 2007, 07:05am hrs
By grabbing the right opportunity at the right time and staying invested for longer term, opportunities funds offered by mutual funds (MFs) during the last four years have outperformed the benchmark indices. The 30-share Sensex of the Bombay Stock Exchange (BSE) gave around 47.09% return and the broader S&P CNX Nifty of the National Stock Exchange (NSE) gave around 44.60% return during the last four years. Interestingly, during the same period some of the opportunities funds have out performed the indices giving compounded returns as high as 66%.

Compounded annualised returns during the last four years show that Tata Equity opportunities fund has topped the chart giving the maximum return of about 66.11%. Second in line was the fund from the stable of DSP Merrill Lynch, which gave around 60.59% return. The other opportunities fund, which outperformed the indices were Franklin India opportunities fund and Birla India opportunities fund giving 57.32% and 45.20% returns, respectively.

Explains a fund manager, In the bull run during the last 3-4 years, active fund management has done a good job to beat the benchmark indices. Opportunities fund, as a category needs to be well poised in every scenario to beat the benchmark.

He further explained that opportunities fund pose themselves as the one that aims to provide long term capital appreciation by capitalising on investment opportunities created by the dramatic growth of the various sectors and companies, which have a profound impact on individuals and business.

Ved Prakash Chaturvedi, managing director, Tata MF, said, "Tata equity opportunities fund has proactively picked market trends and opportunities early. In several sectors including infrastructure, contract research & manufacturing and IT, the fund has been ahead in stock picking. This leadership in picking quality stocks has helped in outperforming the benchmark indices in last 4 years."

The opportunities funds offer two options --growth and dividend plans. The net asset values (NAVs) of the growth options seem to be better than the dividend options. The NAV of the Tata opportunities fund as on May 23 was Rs 21.90 in the dividend option and Rs 62.65 in the growth option. Similarly, DSP ML growth option's NAV was at Rs 58.22 and dividend option's NAV was at Rs 26.36, Franklin Templeton's dividend option NAV is Rs 16.12 and growth plan's NAV Rs 26.93.