Financial Daily from THE HINDU group of publications
Monday, Jul 08, 2002
Columns - Mutual Confidence
It's tough times for IT funds
TWO years make a long time in the realm of mutual funds. The last couple of years were trying times indeed for technology funds, marked as they were by a rather indifferent performance. Even as their fund managers continue to draw flak from investors, the recent period of crisis seems to have taught a lot of them some important lessons. For one thing, they have managed to develop distinct investment styles.
A look at the latest performance figures underlines the variety that exists in the tech fund segment. Over the past one-year (ending June 30), the relatively better performers included funds that have stuck to their guns in good times and bad. Each has its own story to tell; each follows a specific strategy when it comes to stock-picking.
The ones that have come out tops in the last one-year include tech funds from Birla IT Fund, DSP Merrill Lynch Technology.com Fund and IL&FS eCom Fund all of which are aggressive investors in their own separate ways. Value Research, in its latest release, has worked out the percentage changes: Birla (47.45 per cent), DSP ML (27.47) and IL&FS (9.74). The difference between the top performer and the occupant of the third slot is worth noting.
At the other end of the spectrum are players such as Pioneer ITI Internet Opportunities Fund (a negative 6.25 per cent), Pioneer ITI Infotech Fund (down 5.53 per cent) and Kotak Mahindra's K Tech Fund (down 5.47 per cent).
Remove K Tech from the laggards' list and replace it with UTI Software Fund, and the negative tally has not changed much over the last three months. The best gainers during this three-year period are Alliance New Millennium and the two funds run by DSP ML and Birla.
It may be mentioned here that Pioneer ITI Infotech is the only fund of its kind that has a clear three-year track record. Its score, Value Research has stated, is 9.9 per cent over this period, and a good 28.08 per cent since its launch in August 1998.
In the last two years or so, the sector average borders on a negative 33.29 per cent. The BSE IT Index, on the other hand, delivered a negative score of 38.06 per cent during this time.
If you go by NAV alone, a section of the techs are still trailing far behind their IPO rates. Those that have been around Rs 5 or less include names such as Alliance New Millennium (the largest in terms of asset size), IL&FS eCom, Prudential ICICI Technology and SUN F&C Emerging Technologies.
As for new offer documents, HSBC has lined up equity, income and liquid schemes, which are expected to be launched in the very near future. HDFC Index Fund (with Sensex, Nifty and Sensex Plus options) is currently in the market for initial subscription.
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