Mutual Funds left to rue Friday ambush

Last Friday’s free-fall in global markets has left not only equity traders but also mutual fund investors gasping for breath. A single day’s trade has caused NAV of equity schemes to erode by an average of about 2%.

Nearly 20% of the total equity schemes were quoting their 52-week low NAV at the end of trade on Friday. Sector-specific schemes, particularly those dedicated to infrastructure and technology space, have been hammered the most, followed by index funds. In the infrastructure category, schemes from Baroda Pioneer, ICICI Prudential, IDFC, L&T, Reliance, Tata and UTI saw their NAVs plunge to 52-week lows. In case of dedicated IT funds, those who have been beaten the most and quoted their yearly low NAVs include Birla SL New Millennium, DSP Blackrock Technolgy.com and Franklin Infotech.

It is not just the sector funds that have taken a sharp hit. Within the diversified equity space, schemes with a high exposure to energy, engineering and technology sectors have also succumbed to market wrath. Aheavy fall of about 3% in BSE Power and nearly 4% in BSE IT indices was clearly reflected in the performance of schemes with high exposure to these sectors. Some such schemes include ICICI Prudential Top 100, IDFC Equity, Kotak Contra, Reliance Equity and UTI Contra.

Friday’s massacre has once again established that an exposure to defensive space can save the face on a rainy day. Healthcare and FMCG continued to be better placed than most other sectors and the same was reflected in performance of equity schemes with reasonably good exposure in these two industries. Mirae Emerging Bluechip, for instance, having a combined exposure of 18% in these two sectors, and quite low investment in energy and technology is the only equity scheme to quote an increase of about 6% in NAV after Friday’s trade.

Other schemes, which had a decent allocation to defensive counters and have managed to cushion their fall, include HDFC Mid-cap Opportunities, HDFC Taxsaver, BNP Dividend Yield and Canara Robeco Force, among others.