Investors can consider buying into units of Magnum Contra. The fund’s consistency in containing losses in tougher periods and ability to beat the benchmark by a good margin over a longer time frame buttress the case for investment.

Over a five-year period, the fund has generated a compounded annualised return of 27.4 per cent and outpaced benchmark BSE 100 by 15 percentage points. This performance places the fund in the top of diversified equity funds over the same period.

Over a three-year period the fund generated a compounded annualised return of minus 1.5 per cent but declined 1.1 percentage points lower than its benchmark. During the above time period, on a monthly return basis, too, the fund contained losses better than the benchmark in nine out of a total of 12 months in which the benchmark posted negative returns.

Performance: Over a one-year period the fund’s NAV declined 30 per cent but the fund contained downside better than the benchmark. It achieved this by moving one-fourth of the assets into cash and debt over the past few months. However, the fund trailed its peers such as UTI Contra and Kotak Contra by a good margin in the above period, perhaps due to the high cash holding.

That the fund prefers to adopt a buy and hold strategy is reflected in its portfolio turnover and SIP returns over the past seven years. SIP returns were always half of lumpsum investments and this implies that the stocks in the portfolio have undergone lesser volatility.

Portfolio Overview: The portfolio as well as the fund’s performance the last year suggests that it behaves like any other diversified equity scheme, perhaps with a less contrarian approach.

Contrarian funds invests in undervalued stocks that are out of flavour but have the ability to achieve good returns once they are sighted favourably by the market. Its only contrarian strategy currently is an average holding of 8 per cent in the auto sector for over a year.

The fund sports a well diversified portfolio. As per the March fact sheet it had 73 stocks in its portfolio. A good number of these stocks in the portfolio participated in the recent rally. The top ten preferred stocks accounted for 34 per cent of the assets and mid and small cap cornered 20 per cent of the portfolio

While equity markets gained 32.39 per cent between March 9 and April 9, average return of diversified equity fund in the same period has been 24.3 per cent.

The worst performing fund in the diversified equity fund category has managed to give a paltry of 2.28 per cent return during the period under review. Significantly, of the 221 schemes under the category, 208 failed to outperform the BSE Sensex.

The benchmark index had closed on 10,803.86 points on April 9, registering a rise of 2,643.46 point since March 9, 2009, when it had sunken to its threeyear low of 8,160.40.

However, there are some funds that have managed to outperform the Sensex during the 30-day period under consideration. The best scheme in the diversified equity fund category, Taurus Infrastructure, has managed to given a return of 41.85 per cent in the same period. Other schemes, such as JM Basic, Magnum Emerging Businesses, DBS Chola Opportunities managed to outperform the market barometer.

The story is similar in sector-specific funds. While the Bankex has gone up by 38.86 per cent between March 9 and April 9, none of the schemes catering to the banking sector has been able match the performance of the Bankex. The best return of 32.56 per cent has been given by Sundaram BNP Paribas Financial Services Opportunities. The worst fund in the category, JM Financial Services, has managed only 16.88 per cent. Of the two funds meant for the auto sector, JM Auto Sector outstripped BSE Auto index, providing gains of 29.12 per cent. BSE Auto index rose 26.74 per cent during the period. UTI Transportation and Logistics, the other scheme dedicated to Auto sector, has given a return of 17.71 per cent.

In the past one year, most fund schemes have underperformed the Sensex, marginally though. While, the Sensex gave a return of -31.58 per cent, diversified fund gave a return -34.24 per cent. Similarly, the Bankex fell 32.91 per cent against 34.24 per cent drop of bank funds. Auto specific funds have given an average negative return of 25.16 per cent against Auto index

Contrary to the market perception that equity-linked savings schemes (ELSS) failed to draw investors in the past weeks of FY09, estimates show that the category posted sales of Rs 611 crore in March 2009, the highest by this mutual fund category in the previous fiscal. Considering the redemptions for the month at Rs 64 crore, the net ELSS inflows for March 2009 totalled Rs 547 crore, far exceeding industry expectations. “Given the current market sentiment, these collections have exceeded our anticipations,” says Birla Sun Life Asset Management Company CIO A Balasubramanian.

However, despite being the highest in FY09, ELSS collections were the lowest in March compared with the previous three fiscal years. March being the last month of the financial year usually witnesses very heavy collections under the ELSS category compared with any other month of the financial year. The March collections, at times, have been twice or thrice that of any other month.

In hindsight, March 2008 was probably one of the best months ever for the ELSS category, in terms of net sales. The category had then accounted for net inflows of over Rs 2,000 crore. While a repetition of this feat in March 2009 was nothing more than a faint dream for fund managers, the fact that the actual collections have not been as bad as anticipated has brought in relief to many.

The only other category of funds that has clocked positive inflows for the month, after ELSS, is gilt funds, which invest in government paper. The category has recorded net inflows of Rs 482 crore. These funds have been witnessing healthy inflows since October 2008 and have accounted for total net inflows of Rs 3,606 for FY09 against Rs 434 crore in FY08.

This is an interesting trend since yields on government securities have been on the rise for some time. However, Mr Balasubramanian said, “Banks are flush with liquidity of nearly Rs 1-lakh crore that is anticipated to flow into g-secs in the near term. This will eventually bring down the yields.”