Diversified equity funds, represented by CRISIL Fund~eX, returned 30.29 per cent for the year ended August 31, 2006, compared to 43.16 per cent by the S&P CNX Nifty during the same period. However, over the month ended August 31, 2006, CRISIL Fund~eX performed better than the S&P CNX Nifty, returning 9.29 per cent compared to 8.61 per cent by the NSE benchmark index.
These findings are part of the CRISIL FundServices monthly Risk Adjusted Return Ranking (CRISIL~RRR) of mutual fund schemes. The rankings covered 12 asset classes and 250 schemes representing almost 57 per cent of the assets managed by domestic mutual funds for the period ended August 2006. The CRISIL~RRR measures the return performance of the schemes over the period of analysis, adjusted for the risks they took to get those returns.
The gains made by Indian equities during August 2006 were primarily due to robust FII investments aggregating over USD1 billion. Other positives included the US Federal Reserve deciding against raising interest rates.
A ceasefire in West Asia, which cooled oil prices to some extent, also buoyed sentiment. Mutual funds were net buyers in equities to the extent of Rs4.26 billion during the month compared to a net seller position in July.
The Assets under Management of mutual funds increased by almost Rs200 billion (close to 7 per cent) from July to reach a record Rs3.07 trillion in August. Fixed Maturity Plans (FMPs) and liquid schemes continued to dominate mutual fund inflows.
The benchmark for the diversified equity funds category, CRISIL Fund~eX, generated a return of 30.29 per cent for the year ended August 2006.
The income funds returns as measured by CRISIL Fund~dX, were a modest 3.62 per cent for the year ended August 31, 2006.
The CRISIL STBEX, the benchmark for short-term income funds, generated returns of 4.73 per cent for the year ended August 2006.
The benchmark for balanced fund category, the CRISIL Fund~bX, generated returns of 27.51 per cent for the year ended August 31, 2006.
SEBI notified the Capital Protection-Oriented Schemes guidelines in August 2006, and ratings are mandatory for these schemes, which as per the guidelines will be close ended.
SEBI also directed AMCs to mention in the offer document that the Capital Protection-Oriented Schemes would only protect capital and not guarantee returns. SEBI has also specified that domestic funds can invest in overseas Exchange Traded Funds with a minimum of 10-years' existence.
Other overseas investments include ADR / GDRs of Indian companies, equity of overseas companies listed on recognised stock exchanges overseas, and foreign debt securities with fully-convertible currencies.