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Sectoral funds – Weekly roundup. - Views on News from Equitymaster
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  • Dec 30, 2000

    Sectoral funds – Weekly roundup.

    Bourses saw some significant buying this week, mirroring the festivities round them. The BSE Sensex appreciated by 3.7% to close at 3,975 points, while the S&P CNX Nifty enhanced by 4.2% to close at 1,264 points.

    Open-ended, IT Funds NAV
    Since inception
    K P Internet Opport.(Gr) 6.1 -5.0% -10.3% 0.0% -36.1%
    IL&FS eCOM Fund (Gr) 4.7 -6.6% -14.9% 0.0% -65.7%
    K Tech 5.5 -6.6% -13.9% 0.0% -30.1%
    Alliance New Millenn (Gr) 6.8 -7.1% -15.2% 0.0% -55.6%
    K P Infotech (Gr) 21.2 -7.5% -17.3% -40.5% 88.7%
    Tata IT Sector Fund 8.0 -7.7% -18.2% -44.6% 11.4%
    Birla IT Fund (Gr) 12.6 -7.8% -16.8% -50.2% 5.2%
    DSP ML Tech.com (Gr) 6.2 -8.4% -15.6% 0.0% -27.6%
    UTI Sector- Software 13.2 -9.3% -15.6% -25.8% 16.0%
    Pru ICICI Tech. (Gr) 4.6 -11.3% -16.2% 0.0% -53.8%
    Magnum Sector Funds-IT 11.1 -11.5% -18.5% -48.7% 48.2%
    Chola Freedom Tech (Cum) 11.4 -11.6% -16.8% -28.3% 3.9%
    Sun F&C Emerg Tech (Gr) 5.4 -11.7% -13.8% 0.0% -37.4%

    *CAGR=Compounded Annual Growth Rate

    Information technology (IT) funds posted an indifferent performance this week. However IT funds did not witness a freefall in their net asset values (NAVs) as in the earlier week. The mood in IT stocks is negative with Infosys trading at a price to earnings (P/E) of 64 and the story with IT funds is not very different with NAVs (net asset values) taking on a battered look. For value investors, with some appetite for risk, this could be a good opportunity to enter IT funds, as the downside in IT stocks from here is very low. However, it would have to be a long term investment with a minimum investment horizon of 18-24 months.

    Open-ended, Pharma Funds NAV
    Since inception
    K P Pharma (Gr) 9.9 -0.9% 3.6% -31.0% 3.2%
    UTI Sector-Pharma 10.7 -2.1% -2.4% -18.7% -6.5%
    Magnum Sector Funds-Pharma 9.7 -2.3% -1.7% -32.6% -2.6%

    *CAGR=Compounded Annual Growth Rate

    The misery of pharma funds was evident from the southbound journey of NAVs. Even now the pharma sector lacks a trigger and there is no buying interest. Like IT funds, pharma funds may also seem attractive to investors who are looking for a value proposition. Given the knowledge-based nature of the industry, the country’s inherent strengths in research & development (R&D) could prove very useful.

    Open-ended, FMCG Funds NAV
    Since inception
    K P FMCG (Gr) 12.1 0.2% 5.1% -11.8% 13.5%
    Pru ICICI FMCG (Gr) 10.0 -2.3% 2.9% -17.0% -1.9%
    Magnum Sector Funds-FMCG 8.3 -2.5% 1.8% -34.9% -11.1%

    *CAGR=Compounded Annual Growth Rate

    FMCG (fast moving consumer goods) funds haven’t done much better than their sectoral peers. FMCG stocks continue to be snubbed by the markets. Investment in FMCG funds must be put on hold as FMCG funds are the least attractive of all sectoral funds.



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