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04 Aug 2012 11:17 AM
Gilt funds best performers across categories: CRISIL  
Team Cafemutual
 

Despite better performance, uncertainty over the pace of rate cuts has led to a drop in assets in gilt funds.

Gilt funds which invest in government securities have posted over 3.1% over the quarter ending June 2012, outperforming 22 other categories of funds, shows CRISIL latest report. This was mainly due to softening of yields on the back of the Reserve Bank of India (RBI) repo rate cut by 50 basis points to 8 % in its Annual Monetary Policy for 2012-13 in April 2012.

However, gilt fund assets under management dropped 5% from Rs 3442 crore in April to Rs 3266 crore in June 2012 mainly due to uncertainty about the pace of rate cuts by RBI.  Investor interest was muted due to a pause in rate cut by RBI in June even though gilt funds outperformed other categories.

Bond yields and prices move inversely, i.e., when yields fall, prices/ NAVs (of bond funds) rise and vice versa. On the other hand, equity funds returned 1.39% during the quarter vis-à-vis 1.93% by the S&P CNX Nifty and 1.12% by the S&P CNX 500 Equity Index.

Investors took a shine to income funds (especially dynamic bond funds) which was reflected by a 33% growth in AUM for the June quarter to Rs 10446 crore from Rs 7812 crore. This category returned 2.66% during the period under review.

HDFC Mutual Fund continued to lead the tally of top ranked funds for the quarter ended June 2012 with 12 funds under CRISIL Fund Rank 1 (same as in the previous quarter). This was followed by UTI Mutual Fund with 9 top ranked funds (5 in the previous quarter), ICICI Prudential Mutual Fund with 7 funds (3 in the previous quarter) and SBI Mutual Fund with 6 funds (7 in the previous quarter).

 
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