Betting on the banking, gold and FMCG sectors has paid off well for mutual fund managers, with each of these categories giving returns of more than 25 per cent in the last one-year period.

The banking sector funds have given average returns of 27 per cent in the last one year period, while the BSE Bankex returned about 23 per cent for the same period.

“To put things into perspective, had fund managers constructed a portfolio that mirrored the Sensex or the Nifty in pursuit of diversification, they would have shown returns of 10.9 per cent for Sensex and 12.36 per cent for Nifty,” said the CEO of a mutual fund house.

The banking sector is like an all-weather bet for fund managers, who park between 15 and 20 per cent of their portfolio in this sector. “The banking sector is the only performing sector, even brighter than the indices. They have been volatile of late and are entering their third decline. But despite that this is a good category to invest in,” said Mr Dhirendra Kumar, CEO, Value Research.

The top three banking sector funds in terms of performance are Reliance Banking Retail (37.63 per cent returns), Kotak PSU Bank ETF (35.45 per cent returns), PSU Bank BeES (35.24 per cent returns).

Gold funds have given returns of 25.77 per cent for 2010-2011. With the uncertainty in the markets, these schemes saw an increase in investor interest leading to an increase in their AUM.

As on February, the average assets under management (AUM) for the category were Rs 3,744 crore. This is an increase of over 135 per cent from March 2010 (AUM - Rs 1,590 crore) so far.

The FMCG funds have also seen high returns of around 25.76 per cent, though this is lower than the BSE FMCG index returns of 27.02 per cent for the one year period ending March 31, 2011. Analysts said that a difference of about 2 percentage points is not very significant.

FMCG has always been known as a defensive sector. Whenever there is uncertainty in the market, these funds tend to do well, say analysts.

However, this sector has only three funds – Magnum FMCG (29.78 per cent returns), Franklin FMCG (23.79 per cent) and ICICI Prudential FMCG (23.70 per cent).

The other sectors that have given high returns include technology (17.91 per cent returns), international funds (17.08 per cent) and pharmaceuticals (13.48 per cent).

The large cap funds gave returns in line with Sensex at 10.8 per cent.

The sectors that did not perform and delivered poor returns include infrastructure, which gave -3.88 per cent. “Infrastructure has been testing the patience of fund managers. It has been a laggard and when the stocks do well, investors sell heavily,” said Mr Kumar.

The same is the case with the mid-cap and small-cap funds which gave returns of 4.48 per cent. “These stocks rise after momentous gains in the market and fall freely and fall most when the markets fall,” he added.

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