'Fund managers struggle to beat benchmark index'

Last Updated: Sat, Sep 01, 2012 18:41 hrs

The past one year (August 2011-August 2012) has been a difficult time for the markets. With fiscal and current account deficits reaching record highs amidst slowing growth in gross domestic product (GDP) and political logjam in implementing economic reforms, there was little for the markets to cheer about. Reflecting the macro weakness, rupee depreciated to a record low of 57.33 against the dollar.

As a result, Standard & Poor’s cautioned that India might become the first BRIC (Brazil, Russia, India and China) country to lose its investment-grade rating, unless growth issues were addressed immediately.

In this period of uncertainty, the four managers of Smart Portfolio Season 4, tried to make the best of the portfolio of Rs 10 lakh each with the S&P CNX 500 as the benchmark index. During the last one year the S&P CNX 500 gained 2.27 per cent.

Only Ashish Mittal from Centrum Wealth managed to outperform the S&P CNX 500 and ended the Smart Portfolio Season 4 with a 4.58 per cent gain.

Fund Manager, Emkay
Shah’s portfolio ended with a 7.88 per cent loss at Rs 9.21 lakh. Select stocks like Den Networks Ltd, Orbit Corporation Ltd and Jindal South West Holdings Ltd saw him notching up 20 per cent-plus returns.

The portfolio, however, took a severe beating on investments in mid- and small-cap stocks like Adani Enterprises Ltd, Allahabad Bank, Central Bank of India, Jaiprakash Associates Ltd, TV18 Broadcast Ltd, Hindustan Construction Company Ltd and Lovable Lingerie Ltd.

VP (equity strategies), Motilal Oswal Securities
Parikh closed the season with a marginal loss of 1.42 per cent at Rs 9.86 lakh. His most profitable buys during the season included Tata Motors Ltd, HCL Technologies Ltd and Infosys Ltd.

Meanwhile, investments in Hindalco Industries Ltd, Power Finance Corporation Ltd and Jaiprakash Associates Ltd proved costly, losing 15 per cent each.

Fund Manager (PMS), Centrum Wealth

Mittal was very selective and the least in churning his portfolio through the year. However, his investments in scrips like Unichem Laboratories Ltd, ITC Ltd, BASF India Ltd, MRF Ltd, Yes Bank Ltd and Bajaj Auto Ltd made sure that he remained steady in the green zone in an otherwise volatile market. He thus rounded off with a 4.58 per cent gain at Rs 10.46 lakh, outperforming the benchmark S&P CNX 500 index.

The select stocks that made him see red during the period under review were J B Chemicals & Pharamaceuticals Ltd, EID Parry (India) Ltd and United Phosphorus Ltd.

Head (technical and derivatives research), Geojit BNP Paribas Financial Services

Alex Mathews, Head (Technical and Derivatives Research), Geojit BNP Paribas Financial Services

Mathews was the most active through the season. He started off on a positive note but slipped later as investments in Timken India Ltd, 3i Infotech Ltd, Hindalco Industries Ltd and Ranbaxy Laboratories Ltd witnessed huge value erosion. Meanwhile, the gains in Reliance Industrial Infrastructure Ltd, Gravita India Ltd and TTK Prestige Ltd helped provide some damage control.

He held nearly 50 per cent of the money allocated in cash during the last leg of the season. His portfolio lost 7.25 per cent to close at Rs 9.28 lakh.

Note: We are pleased to announce the launch of Smart Portfolios Season 5. The new season will feature new fund managers, new rules and a common goal: To beat the benchmark. For Smart Portfolios, visit www.smartinvestor.in/sp  

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