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Market slump deals blow to growth funds

Dec 28, 2000

The seasonal week (Christmas and Eid) saw both the major market indices on a downswing, showing no mirth that is indicative of these two major festivals. The BSE Sensex slumped by 8.5% and the S&P CNX Nifty plunged by 8.1% dealing the net asset values (NAVs) of diversified growth funds a major blow.

Open-ended, Growth FundsNAV
(Rs)
Last
week
Last
month
Last
year
*CAGR
Since inception
BSE Sensex--8.52%-3.70%-25.90%-
S&P CNX Nifty--8.13%-3.40%-18.10%-
CNX-500--9.88%-6.20%-33.20%-
ING Growth (Gr)12.7-15.5%-18.3%-34.1%17.0%
Primary Equity Fund13.6-12.9%-5.5%-30.4%5.5%
Magnum Multiplier Plus 199313.7-12.7%-13.5%-53.6%5.3%
Canexpo15.5-12.0%-10.6%-27.6%8.6%
Alliance Equity Fund (Gr)31.6-11.9%-12.9%-14.1%62.5%
Magnum Global Fund9.2-11.4%-12.1%-46.0%0.3%
DSP ML Opportunities (Gr)8.1-10.7%-7.0%0.0%-9.1%
JM Equity Fund (Gr)9.3-10.5%-7.3%-36.5%-0.8%
Tata Pure Equity 11.4-10.5%-9.9%-8.1%39.9%
Birla Advantage Fund29.9-10.5%-14.7%-42.3%26.2%
Magnum Equity Fund11.9-10.1%-9.4%-37.6%12.9%
Pru ICICI Growth (Gr)19.5-10.0%-10.2%-29.4%30.0%
*CAGR=Compounded Annual Growth Rate

(The above table only shows diversified growth funds that have fallen by over 10% over last week)

The above table reflects the agony of growth fund managers. Growth funds have found little solace as all sectors old economy as well TMT (technology, media, telecom) have witnessed sustained selling. Markets had perked up a couple of weeks back, but that turned out to be a flash in the pan rally. The current meltdown has a lot to do with nervousness on the NASDAQ over the past few days and this has resulted in a slump on local bourses.

As is evident from the table, 12-month returns have been dismal, with no fund posting growth and some funds falling by as much as 40%. Investors who had entered growth funds in the heydays of TMT, expecting their investments to double in a few months time, may want to reassess their investment decision.

With local stocks showing no signs of falling in line with the festivities around them, growth funds are likely to have a bleak time ahead of them.

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