'India funds top performers in Gulf'
It is not resident Indians alone who have gained from the country's capital market rally last year, the Gulf investors also earned big with India-focused equity and debt funds emerging among the best performers in the region.
According to data compiled by international fund tracking firm Lipper, funds registered for sale in the GCC (Gulf Cooperation Council) region recorded an average gain of 19.26 per cent in 2007, with Equity India emerging as the second best performing category after Equity China.
The Indian rupee-dominated bond funds were the best performers in the bond category with about 20 per cent return.
The India-focused equity funds gave an average return of 71.08 per cent, against the overall average of 26.40 for all the equity funds.
Returns from the rupee-denominated general bond funds and government bond funds stood at 21.56 per cent and 19.79 per cent respectively. This, compared with an overall average return of 9.94 per cent for the bond funds.
Among the sector funds, those focused on technology, media and telecom (TMT) were the top performer with 106.12 per cent average return. Gulf investors took congizance of the undervaluation of TMT sector, but they "were more attracted to funds investing in the technological sector in Asia, most particularly in India," Lipper said.
While noting that utilities was the second best performing category, Lipper said Reliance Diversified Power Sector Fund-Growth was the top performer in this segment with 152.01 per cent return.
Run by Anil Ambani group Reliance Mutual Fund, India's largest fund house, invests mainly in the country and has Reliance Energy and Tata Power as its top holdings.
China's JF China Pioneer A-Share topped the overall equity category with a whopping 157 per cent return. However, Indian funds grabbed as many as 19 positions among the 20 top performers, Lipper said in its annual review report for GCC- registered funds.
These included six funds from Reliance Mutual Fund stable, four schemes each of UTI MF and Birla Sun Life, three DSP-Merrill Lynch schemes and two HDFC MF schemes.
Among the bond funds, the rupee-denominated schemes gained from the appreciation in the Indian currency. "The Indian rupee appreciated 10.65 per cent against the US dollar over the year, inflating the performance of underlying Indian assets," Lipper said.
Bond INR General category was the top performer with 21.56 per cent return, followed by Bond INR Government at 19.79 per cent.
Investors from the Gulf region are aggressively betting on Asia, particularly on India, the study stated, adding that "the recognised expertise and growing market of the outsourcing and offshoring business in India attracted significant foreign fund flows to the country, boosting the stock market in India."
GCC countries have been aggressive during the past few years in investing abroad through sovereign funds and is estimated to have invested over the past six years around $700 billion.
"Equity China, Equity India, and Equity Turkey were also among the best performing classifications. The worst performing funds in 2007 were real estate Europe funds, real estate global funds and Japan small- and mid-cap funds," said Lipper.