Diversified growth funds are finally showing some semblance of consistency as returns have been climbing for some time now.

The surge witnessed in equity markets since mid-August has pushed up the net asset values (NAVs) of growth funds and this is reflected in the returns. The rise in equities is (once again) led by software stocks, with FMCG and pharma stocks showing no growth worth writing home about.

Open-ended, Growth Funds	NAV (Rs)	Last week	Last month	Last year	Since inception
Magnum Equity Fund	16.2	8.3%	16.4%	31.4%	17.1%
Magnum Multiplier Plus 1993	21.8	6.8%	12.3%	18.7%	12.7%
Magnum Global Fund	12.5	6.2%	11.0%	3.9%	6.2%
IDBI Equity Fund (Gr)	11.9	4.8%	14.3%	-0.3%	4.5%
Sun F&C Emerg Tech (Gr)	7.0	3.4%	9.5%	0.0%	-18.0%
Primary Equity Fund	15.9	3.1%	3.6%	-0.5%	9.1%
Sundaram Growth	14.5	2.9%	8.7%	13.3%	24.6%
Mastergain 1992	11.7	2.9%	4.7%	-15.0%	3.5%
ING Growth (Gr)	19.7	2.6%	18.5%	64.5%	70.3%
Birla Advantage Fund	42.2	2.4%	11.1%	54.0%	36.3%
Sun F & C Value (Gr)	22.6	2.4%	8.9%	6.9%	33.8%
Canglobal	44.6	2.3%	5.8%	-24.1%	6.5%
DSP ML Opportunities (Gr)	9.6	2.2%	10.8%	0.0%	8.8%

(The above table shows only diversified growth funds with over 2% returns in the last week.)

However, the trend over the past few months seems to suggest that a surge in equities reaches a threshold level after which there is some profit-booking by funds and foreign institutional investors (FIIs). This results in a slide in equity markets, and consequently in growth fund NAVs. Then stocks (read software) find support at a level, which then results in heavy buying by funds and FIIs.

As far as the mutual fund investor is concerned, there is not much he can see in this rise. His joy could be short-lived if there is offloading by funds and FIIs tomorrow, which will see a plunge in fund NAVs. Meanwhile inflationary concerns are very much there and unless these concerns are addressed, any rally in equity markets is unlikely to be sustainable over a reasonable period of time.

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