Financial sector funds emerged winners in 2012, delivering an average return of 59% during the year, compared with about 57% returned by the BSE Bankex index, according to a report by Morningstar India. This is in contrast to their underperformance in 2011, a year when the BSE Bankex index slid nearly 32%.
?The hopes of further rate cuts by the RBI, along with good results by some private banks and NBFCs, helped fuel the rally in financial stocks during the year,? said Morningstar in its report titled ?2012:How Did Mutual Funds Fare??.
Fund managers increased allocation to banking and financial stocks considerably during 2012, in portfolios of diversified equity funds, according to the report.
Average exposure to the sector in portfolios of diversified equity funds increased from 20% at the end of 2011 to almost 26% in November 2012.
FMCG sector funds fared well in 2012, giving returns of 48% as the consumption theme continued to play out with investors. Technology sector funds were the bottom performers from the equity space, delivering an average return of 6.3% during the year compared to -1.2% returned by the BSE IT index. ?Weak corporate earnings beat down some of the IT majors like Infosys, which delivered a return of -15% during the year,? said Morningstar.
Small/mid-cap equity funds beat their large-cap peers, delivering an average return of 39% during the year, similar to the gains posted by the CNX Midcap and BSE Midcap indices.
Large-cap equity funds posted an average return of 27.7% in 2012 compared with 30% returned by the BSE 100 index and 25.7% by BSE Sensex.
Gold ETFs lost some of their shine, delivering average returns of almost 11% during the year compared with 31% returns registered in the previous year. Their performance especially dipped in the last quarter of 2012, as they registered a loss of 3% in those three months. Asset growth of gold ETFs tempered down in 2012 compared to the previous year.
Gold ETFs registered a 30% growth in assets in 2012 (up to November) compared with a 160% growth in 2011.
Inflows into gold ETFs also moderated in 2012, registering a net inflow of R1,352 crore during the year (up to November), compared with net inflows of R4,046 crore in 2011.
With some monetary easing by the RBI, and on hopes of further rate cuts, bond yields eased during the year, observed Morningstar. ?The benchmark 10-year bond yield fell by around 50 basis points during the year. As a result, gilt funds and longer duration bond funds outperformed in 2012,? said the report.
Long government bond funds were the top performing category from the fixed income segment, delivering a return of almost 11% in 2012. Dynamic bond funds and intermediate bond funds also fared well, delivering an average return of around 10% during the year.
