Meltdown hits equity diversified funds hard

The meltdown in the markets over the past year has wiped out all the gains that the equity diversified funds had made in the previous two years. The UTI AMC has cornered two slots among the best performers. As a category, tax plans have lost slightly more than the diversified funds. But over the past year, the top five tax plans, on an average, lost 48%, against the 40% losses of the top five diversified funds.

A lower exposure to stocks has helped the balanced funds contain their losses in the past year. The rising bond prices have helped the balanced debt funds regain lost ground over the past six months. The relatively small and new funds have fared better than the older lot. DWS Money Plus Advantage plan, with a fraction of Franklin Templeton FTF fund's assets, has delivered the highest returns in the category.

The Takeaways:

1. A substantial write-back of mark-to-market losses is expected to help PSU banks like SBI report robust third quarter results. The ICICI Bank is expected to benefit from a steep fall in borrowing costs.
2. Funds increased their exposure to relatively defensive sectors like pharmaceuticals and consumer non-durables (FMCG).