NEW DELHI Diversified stock funds lagged the benchmark Sensex in February, as exposure to mid- and small-cap shares and sectors like capital goods hurt net asset values.
Diversified funds fell 4.66 percent on an average during the month, compared with a 2.75 percent fall in the Sensex, data from global fund tracker Lipper, a Thomson Reuters company, showed.
"There is no predictability at all, there are no sectoral moves... sometimes it (market) is getting impacted by global cues," said T P Raman, Managing Director at Sundaram Mutual Fund.
Equity diversified funds with significant exposure to mid- and small-cap firms bore the brunt as the BSE Mid-cap index declined 7.2 percent and the small-cap index dropped 7.8 percent in February.
Though money managers have reduced exposure to such stocks in recent months, these companies still accounted for more than 30 percent of assets as of January-end, Morningstar India data showed.
Exposure to capital goods -- a favourite with fund managers -- which accounted for nearly a quarter of assets, also affected net asset values as the sectoral index fell 8.3 percent during February.
"Funds with higher exposure to realty, healthcare, capital goods and auto sectors took a harder knock on their chin during the month," said Dhruva Raj Chatterji, senior research analyst at Morningstar India.
Among sectoral funds, schemes which bet on pharma stocks lost 6.9 percent in February, as the healthcare index posted a drop of 8.32 percent.
Diversified equity funds had 6.6 percent of their assets allocated to cash at end-January, their highest level since February 2010, data showed.
Fund managers have increased their allocation to cash, as a spate of corruption scandals, high inflation and rising crude oil prices dented sentiment and led to a fall in key indices.
"It appears that some of the funds which took larger cash calls during the correction may also have buffered themselves a bit amidst the turmoil," Chatterji said.
BOND, GOLD FUNDS
Indian fixed income funds investing in government debt saw net values rise 0.67 percent in February, as the yield on the actively traded benchmark bond fell eight basis points in the month.
India's gold exchange-traded funds (ETFs) gained 3.8 percent in February as the price of the yellow metal jumped on the back of political turmoil in Libya.
On the continuous charts in India, gold futures ended February at 20,923 rupees per 10 grams, up 5 percent for the month.
(Additional reporting by Neha D' Silva, Editing by Sunil Nair)
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