Generally Index funds find few takers as the philosophy of passive investing offers mediocre returns in a bullish market. This is mainly why Index funds have under-performed growth funds over the past few months. However, given the depressed state of software stocks, the fall in Index fund net asset values (NAVs) has been less pronounced vis-à-vis growth/software funds.

There was a time not so long ago, when the aggressive mutual fund investor did not look beyond growth/software funds, which rode the exceptional performance of software stocks. Index funds were meant for weaklings who did not have the heart (and money) to bet on growth funds. So growth/software funds made a lot of hay, while the (software) sun was shining, so to speak. But when the sun stopped shining, growth/software fund NAVs plunged dramatically.

Open-ended - Index Schemes	Benchmark Index	NAV (Rs)	Last week	Last month	Last year	Since inception
Index I-NIT 1999	Nifty	11.0	2.5%	1.8%	0.0%	7.0%
UTI Nifty Index Fund	Nifty	8.3	-3.4%	-12.2%	0.0%	-12.2%
UTI - Master Index Fund	Sensex	13.8	-5.1%	-13.4%	36.6%	30.4%

Over-enthusiastic (and ambitious?) fund managers of growth funds had large exposures to software stocks, far in excess of the BSE Sensex, which has a 30% exposure to the software sector (NSE-50 “ 20% exposure). Consequently Index funds (benchmarked against the Sensex and the Nifty) posted lower fall in NAVs than the growth funds.

Open-ended - Growth Schemes	NAV (Rs)	Last week	Last month	Last year	Since inception
Primary Equity Fund	17.5	-5.4%	-16.9%	58.8%	11.3%
ING Growth Portfolio (Gr.)	22.0	-5.4%	-31.8%	0.0%	124.3%
GIC Fortune 1994	6.5	-5.7%	-14.1%	22.8%	-7.0%
Pru ICICI Tech. Fund (Gr)	6.7	-6.0%	-33.9%	0.0%	-31.7%
Kothari Pioneer Prima Fund (Gr)	24.5	-7.2%	-20.6%	80.1%	15.0%
UTI Sector Fund - Brand Value	10.7	-8.3%	-19.4%	0.0%	-0.3%
Birla MNC Fund (Growth)	29.8	-9.7%	-18.4%	139.9%	21.9%
Birla IT Fund (Growth)	21.8	-9.7%	-34.7%	141.0%	17.9%
GIC Growth Plus II	18.1	-10.3%	-18.1%	142.7%	11.8%
Birla Advantage Fund	43.2	-12.0%	-29.9%	131.5%	39.9%
Grandmaster 1993	10.6	-14.0%	-38.8%	8.4%	-2.0%
Libra Leap	20.1	-15.3%	-41.4%	137.1%	37.3%
UTI Sector Fund - Software	23.9	-15.7%	-42.3%	0.0%	83.5%
Magnum Global Fund	12.8	-16.3%	-37.3%	54.4%	7.1%
IL&FS Growth & Value Fund (Gr)	14.7	-16.3%	-39.0%	0.0%	21.6%
Magnum Sector Funds - IT	17.4	-16.4%	-41.3%	0.0%	144.0%
IL&FS eCOM Fund (Gr)	7.0	-17.9%	-43.7%	0.0%	-48.9%
Magnum Multiplier Plus 1993	22.1	-19.6%	-40.9%	81.5%	13.7%
Magnum Equity Fund	16.4	-22.5%	-46.8%	99.8%	17.9%

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