CRISIL's monthly risk-adjusted return rankings (CRISIL-RRR) of mutual fund schemes for January 2005 show the stability of debt schemes and the impact of equity market correction on diversified equity schemes.

Says Krishnan Sitaraman,head of CRISIL's financial sector ratings, "After a bull run till December 2004, the equity market witnessed correction across the board in January 2005. Most of the benchmark indices came off the highs they had achieved last month."

However, good results by most corporates and healthy fundamentals induced investors into making value picks at lower levels. Profit booking at higher levels led to volatility, and the markets ended the month in negative territory; the Nifty generated negative returns of 1.10 per cent. The CNX Midcap 200 index, however, showed an annualised return of 6.08 per cent, indicating continued momentum in the mid-cap segment. The debt market continued to maintain stability and ended in positive territory for the second month in a row.

CRISIL-RRR has ranked 184 schemes for January 2005. It measures performance of the schemes based on their returns over the period of analysis, as well as the risks taken to achieve those returns. It covers most mutual fund investment options available to investors, covering 70 per cent of the industry assets under management (AUM) in January 2005.

Equity funds: Volatility affects returns
The 'general equity' category ended the month in negative territory on account of the correction and volatility in the equity market. The CRISIL Fund~eX generated a negative monthly return of 1.67 per cent. The ongoing mid-cap rally, however, continued to spur the returns of schemes with a relatively higher proportion invested in mid-cap stocks. Reliance Growth Fund occupies the top slot at CRISIL~RRR 1 for January 2005. Sundaram Select Midcap and Franklin India Prima Fund are at CRISIL~RRR 2 and CRISIL~RRR 3 respectively.

In the 'software' sector, Birla India Opportunities Fund - Plan B continues to reign at CRISIL~RRR 1. DSP Merrill Lynch Technology Fund and Alliance New Millennium Fund have interchanged their ranks relative to December 2004, and are currently at CRISIL~RRR 2 and CRISIL~RRR 3 respectively.

Debt funds maintain stability
The 'income' category was volatile but attained stability during the latter half of the month and ended in positive territory. The CRISIL Fund~dX generated annualised monthly returns of 4.42 per cent in January 2005. The top performer in the category was CanCigo at CRISIL~RRR 1, having moved up one notch over its previous ranking. CanIncome was at CRISIL~RRR 2 and HSBC Income Fund-Investment Plan moved up four places to CRISIL~RRR 3.

In the 'debt-short term' category, UTI Liquid Short Term Plan topped the charts at CRISIL~RRR 1, having moved up two notches. It was followed by Principal Income Fund-Short Term Plan and Kotak Bond Short Term Plan at CRISIL~RRR 2 and CRISIL~RRR 3 respectively. The CRISIL STBEX, the benchmark for short-term income funds, generated annualised monthly returns of 4.83 per cent.

In the 'gilt-long term' category, Reliance Gilt Securities Fund-Long Term Plan entered the ranking this month at CRISIL~RRR 1. UTI Gilt Advantage Fund-Long Term Plan and Sahara Gilt Fund followed at CRISIL~RRR 2 and CRISIL~RRR 3 respectively. The CRISIL MF~Gilt Index generated an annualised monthly return of 1.81 per cent for January 2005.

The liquid fund continued to maintain momentum, as reflected by the CRISIL~LX, which generated annualised monthly returns of 4.95 per cent in January 2005 as against 4.87 per cent in December 2004. The top performers were UTI Liquid Advantage Fund at CRISIL~RRR 1, Sundaram Money Fund at CRISIL~RRR 2, and Tata Liquid Fund-RIP at CRISIL~RRR 3.

The correction in the equity market resulted in lower returns for schemes in the balanced fund category during the month. The CRISIL Fund~bX generated a negative return of 1.714 per cent for January 2005. SBI Magnum Balanced Fund moved up two places to CRISIL~RRR 1. It was followed by Sundaram Balanced Fund and DSP Merrill Lynch Balanced Fund, at CRISIL~RRR 2 and CRISIL~RRR 3 respectively.

The CRISIL MIPEX, the benchmark for monthly income plan (MIP) schemes, generated annualised monthly returns of 1.89 per cent buoyed by the stability in the debt markets. The top performers were FT India Monthly Income Plan at CRISIL~RRR 1, DSP Merrill Lynch Savings Plus Fund-Moderate at CRISIL~RRR 2, and Prudential ICICI MIP Plan-Cumulative at CRISIL~RRR 3.

In the 'floating rate fund' category, for the second month in a row, there was no change in the ranking for the top three schemes; HDFC Floating Rate Income Fund-Short Term Plan stayed at the CRISIL~RRR 1 rank, followed by Grindlays Floating Rate Fund at CRISIL~RRR 2, and Prudential ICICI Floating Rate Plan-Option B at CRISIL~RRR 3.