The first quarter of 2005-06 ended in a blaze of glory at the stock market. The BSE Sensex closed June 30 at its (then) all-time high of 7,193.85 points. In line with this, mutual funds (MFs) registered improved returns compared to the previous quarter. The proof: no scheme registered negative returns. The caveat: profit booking by MFs meant they couldn't actually beat the markets. The Nifty and the Sensex returned 11.38 per cent and 12.73 per cent, respectively, while equity diversified schemes could manage only 9.1 per cent. Of the 97 schemes considered, 21 beat the Nifty and only 14 outperformed the Sensex. And the assets under management (AUM) of the mf industry increased 10 per cent to Rs 1,65,332.35 crore at the end of June.

Simple Returns

In the equity-diversified category, all rank holders (one to five) returned over 15 per cent. The SBI Magnum Sector Umbrella-Emerging Business Scheme retained its pole position with returns of 20.11 per cent. The corpus of the scheme grew from Rs 138.76 crore in March to Rs 208.12 crore in June. Among balanced funds, topper HDFC Prudence, with 28 per cent of its assets invested in debt and 63 per cent in equity, returned 10.76 per cent. In the MIP (monthly income plan) category, Reliance MIP emerged #1, with 16.84 per cent returns.

Among income funds, topper UTI Bond Fund's corpus fell from Rs 549.85 crore to Rs 526.59 crore. In the Gilt category, Principal g-Sec-Investment Plan, the #1, saw its fund size going up by over 50 per cent. With returns of 11.09 per cent, it was the only scheme in its category to give double digit returns.

Risk-adjusted Returns

The schemes were also analysed on the basis of the risk-adjusted returns. In the equity diversified category, Tata Equity Opportunity Fund, with 10.52 per cent returns, retained top billing this quarter. The balanced category also didn't see any change at the top, with HDFC Prudence retaining the #1 slot. However, last quarter's #4, Tata Balanced, and #5 Prudential ICICI Balanced, gave way to Alliance 95 and Kotak Balanced Fund, respectively. Continuing the trend seen in the earlier two categories, ft India MIP-Plan A stayed at the top of the MIP category. This scheme allocated 19 per cent of its corpus to equity and 65 per cent to debt.

In the income category, too, last quarter's topper, Escorts Income, retained its perch. The scheme had 94 per cent of its allocation in debt and 6 per cent in cash and liquids; its fund size increased from Rs 18.17 crore to Rs 25.83 crore. There was a change at the top in the Gilt funds category, though, with Templeton GSF Treasury Plan replacing UTI Gilt Advantage STP as the numero uno.

With the stock market in the midst of a bull run, investors in MFs should have a happy time ahead.