Bank, energy shares hit Indian stock funds in May

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Tue, Jun 3 06:58 PM

MUMBAI (Reuters) - More than 90 percent of India's equity mutual funds suffered losses in May as large allocations to banking and energy sectors and mid-cap and small-cap stocks were hit harder in a broad stock market slide during the month.

Actively managed diversified equity funds, the biggest group of stock funds by assets and number, saw their net values drop an average 5.1 percent, data from global fund tracker Lipper showed.

Only six of 196 such funds showed a positive return. Nearly half of them fell more than the 5.04 percent decline in India's benchmark stock index.

"Equity funds turned in a disappointing performance in May with the markets correcting once again during the month," Dhruva Chatterji, senior research analyst at Lipper, said.

Indian shares posted their fourth monthly loss of 2008 in May and were down more than 19 percent in the first five months, denting returns of equity mutual funds.

"Banking funds were hit more, while technology, pharma and FMCG funds were relatively less hurt during the month," he added.

Diversified funds had invested more than a fourth of their assets in financial services and energy sectors and over 43 percent in the shares of small and medium sized firms at the end of April, data from fund tracker ICRA Online showed.

The BSE Bankex and BSE Oil & Gas indices lost 12.5 percent and 9.6 percent respectively in May, while the BSE Mid Cap and BSE Small Cap

indices fell 5.3 percent and 7.3 percent during the month.

Equity funds investing globally and those targeting technology and healthcare stocks showed positive return, while the gold exchange traded funds rose an average 6.5 percent in May after losing for two successive months.

Returns of fixed income funds softened in May as rising inflation triggered a sharp rise in bond yields, Chatterji said.

Indian federal bond yields traded at one-month highs on May 30, after data showing inflation at its highest in more than three-and-a-half years raised concerns about policy tightening.

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PERFORMANCE

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Fund Category Monthly returns in percent

May-08 Apr-08

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Bond INR General 0.63* 0.81*

Bond INR Government 0.18 0.27

Commodities 6.53 -6.29

Equity Emerging Mkts Global 7.56 8.28

Equity Global 5.34* 7.11

Equity India -5.14* 8.43*

Equity Sector Banks&Financial -13.61 13.41

Equity Sector Cyc Goods & Svs -7.32 4.71

Equity Sector General Industry -5.68 5.35

Equity Sector Gold&Prec Metals 12.00* -5.80

Equity Sector Information Tech 0.21 13.09

Equity Sector Natural Resource -0.09 5.64

Equity Sector Non Cyclical Con -1.33 11.42

Equity Sector Pharma&Health 1.35 12.59

Equity Sector Real Est Global 3.48* 6.74

Equity Sector Telecom Srvcs -1.36 10.15

Mixed Asset INR Balanced -1.57* 2.71*

Mixed Asset Other Aggressive -2.33 4.23

Mixed Asset Other Conservative -0.73* 1.73

Mixed Asset Other Flexible -1.53* 3.58*

Money Market INR 0.62* 0.63*

Protected -0.30* 1.73

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Returns have been calculated only for primary funds and based on Indian rupees.

* Since not all fund net asset values are reported at the same intervals, the last available price is used for performance calculation.

Source: Lipper

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