Skip to main content

Commodity-focused funds put up a poor performance

Schemes gave maximum returns of 20% and minimum of -4%

WITH inflation rising all round the globe and commodities on fire, advisers have been cajoling investors to buy into mutual funds that invest in shares of commodity companies. But you should look deeper, before you step in.

With surging inflation estimated to have cost Indian households an additional Rs 5,80,000 crore during 200809 to 2010-11, investors are inclined to put money to ride on inflation themes. Right from agriculture raw materials, fuel, food and metals, most commodities — as reflected by major indices — have gone up by 20-40 per cent in the last one year.

But how have the niche group of eight commodity focused funds done in the last 12 months? If we take Sensex 4.8 per cent return in last 12 months as benchmark, then there is a wide variance in the performance of schemes with the maximum being 20 per cent and the minimum being -4 per cent. This means the performance of commodity-focused funds has been patchy.

Out of eight commodity focused funds, four have clocked more than 12 per cent gain while the balance four have not managed to even beat food inflation's nearly 9 per cent rise in May 2011. On the other hand, normal stock MFs have not done bad either too.

Nearly 50 per cent of the 230 plain vanilla diversified stock funds has beaten Sensex in the last one year. Fund managers point out that while some commodity MFs may do well during commodity price boom affecting a set of commodities, they should be treated on par with thematic funds, that means a small allocation could be for them.

Thematic funds surely deserve a space in one's portfolio. But, the exposure should not be more than 1015 per cent. Funds that invest in companies that are a commodity play are also a theme.

Birla Sun Life Commodity Equities (Global Agri) scheme heads the 12-month performance list with 20.02 per cent gains, followed by ING OptiMix Global Commodities with 18.14 per cent, Mirae Asset Global Commodity Stocks (15.84 per cent), Birla Sun Life Commodity Equities (Global Multi Comm.) with 13.66 per cent.

On the other hand, Reliance Natural Resources with 8.32 per cent, DSP BlackRock Natural Resources & New Energy's 6.76 per cent and SBI Mag num COMMA's (-0.13) re turns are not impressive.

Radhika Gupta, director, Forefront Capital Manage ment feels that the best way to take exposure is to directly invest in commodities.

When you are looking for more than just basic passive exposure, commodity MFs are not available in India.

What you have are funds that invest in stocks of com modity companies. All stocks have specific issues, which may not help to log returns.

Advisors say that though funds investing in commodity companies are a good idea, there are some caveats.

The mutual funds that in vest directly into the equity of related companies will Pinaki Paul have to pay greater attention to each company's strategy instead of the price movements of the underlying commodity.

Also, commodities may not enjoy the bull-run for an extended period of time.

CLSA strategist Russell Napier in a recent report says that the structural distortion in the US treasury market is about to unwind and will result in increase in emerging market interest rate and exchange rates. If the scenario, as envisaged by Russell, unfolds in the near term then commodity prices will likely correct sharply.

 

-----------------------------------------------------------------

 

Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in L&T Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Popular posts from this blog

Real Returns in Investing

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Real Returns in Investing     A Anil Singh (name changed), 44, works with a private company and believes in investing his entire savings in fixed deposits. His financials from the year 2000 till date is given in the table. Anil's savings in FDs gave him an average return of around 8%. The total amount saved over the 174 months (From January 2000 to June 2014) is Rs 49.80 lakh. The value of his investment today is around Rs 66.71 lakh. Naveen Singh (name changed), 44, works in a similar profile like Anil. However his expenses were on the higher side. His financials are as in the table. Naveen invested only in equities. The total amount saved over the 174 months (From January 2000 to June 2014) is Rs 38.40 lakh. The v...

Budget 2014 Highlights for Saving

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   The new finance minister Arun Jaitley has just presented his first budget. What measures does the budget contain that will specifically impact savers and investors? Here they are: 1. Housing loans exemption for self-occupied properties increased to Rs2 lakh: Earlier this amount was Rs1.5 lakhs. This move barely keeps pace with the inflation in asset values.   2. Investment limit under 80 (C) increased to Rs1.5 lakh: This is a good move again and offers some relief to taxpayers.   3. IT exemption increased to Rs2.5 lakh, Rs3 lakh for senior citizens. This comes as a minor relief for taxpayers.   4. Annual PPF ceiling to be enhanced to Rs1.5 lakh, from Rs1 lakh: This is in tune with the change in 80C.   5. Long term capital gains tax for debt funds has been rai...

ICICI Prudential MIP 25 - Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   ICICI Prudential MIP 25     (CRISIL Rank 2)   This scheme was launched March 2004. Please see the chart below for the one, two, three and five years annualized returns from this scheme. The minimum investment in the scheme is Rs 5,000. The asset allocation of the portfolio is 24% equity, 72% debt and 4% cash equivalent and others. Please see the chart below for the monthly dividends declared by the scheme, on a per unit basis, over the last 5 years.   For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mai...

Franklin India Smaller Companies Fund - Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Franklin India Smaller Companies Fund   While the universe of small-cap stocks in India is vast, there are very few equity funds which take on the task of sifting through this space for good long-term bets. Franklin India Smaller Companies Fund has managed this with aplomb. What we like about this fund is its significant out-performance of its category and benchmark over the last four years, and its ability to moderate portfolio risk despite investing in the riskiest segment of the equity market. This fund's stock selection strategy, like that of Franklin India Prima Fund is focused on finding companies that generate positive cash flows across business cycles. High return on investment and manageable leverage are also filtering criteria. Says R. Janakiraman, fund ma...

How to open a Capital Gains Account?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to open a Capital Gains Account? You can open a capital gains account in an authorized bank. The Government has notified 28 banks which can open the Capital Gains Account on behalf of the Government. You have to apply for opening the account by filling out the required application form (Form A) and submit proof of address, PAN card and photograph. You cannot withdraw funds from a capital gains account using a cheque book or ATM, like you do in your normal savings bank account. There are procedures to be followed to withdraw funds from the capital gains account. Investment in Specified Bonds Section 54EC of Income Act provide that if the seller invests whole or part of capital gains arising from the sale of asset in specified Capital Gains, within a period of six months of the ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now