THE GREAT DIVIDE Although index funds are mandated to give returns in line with their benchmark indices, give or take a couple of percentage points on account of tracking error and other expenses and sometimes they outperform or underperform their benchmark indices by a huge margin.
Returns in %
Nifty
Nifty
INDEX FUNDS (NIFTY)
Dec 09
75.57 75.49 75.32 74.74 73.83 73.80 72.33 71.64 70.43 65.86
ICICI Pru Index Birla Sun Life Index (G) Franklin India Index NSE Nifty (G) SBI Magnum Index (G) Tata Index Nifty A UTI Nifty (G) Principal Index (G) Canara Robeco Nifty Index (G) HDFC Index Nifty LICMF Index Nifty (G)
INDEX FUNDS (NIFTY)
Jun 09
8.84 6.57 5.65 5.49 5.28 5.23 4.81 4.62 3.05 2.19
ICICI Pru Index Birla Sun Life Index (G) Franklin India Index NSE Nifty (G) UTI Nifty (G) Canara Robeco Nifty Index (G) HDFC Index Nifty SBI Magnum Index (G) Tata Index Nifty A Principal Index (G) LICMF Index Nifty (G)
73.24
11.40 Sensex
Sensex
INDEX FUNDS (SENSEX) UTI Master Index (G) Franklin India Index BSE Sensex (G) Tata Index Sensex A HDFC Index Sensex LICMF Index Sensex (G)
Dec 09
80.00 79.83 78.83 75.06 74.96
INDEX FUNDS (SENSEX) Franklin India Index BSE Sensex (G) Tata Index Sensex A UTI Master Index (G) LICMF Index Sensex (G) HDFC Index Sensex
Jun 09
7.57 6.80 6.36 5.29 3.85
78.02
13.15
Returns are sorted in descending order; returns are for a period of one-year; Nifty and Sensex returns are of the total returns index
Tracking error (%)
Tracking error The actual returns of index funds don't always mirror their benchmark returns on account of their cash holdings, brokerages and expenses incurred. Tracking error accounts for these differences. The lower the tracking error, the better is an index fund. A tracking error of up to 2 is acceptable.
Data
Mar 09
Jun 09
Sep 09
Dec 09
SENSEX Franklin India Index Fund - Sensex 0.93
1.00 3.42 5.49 1.55 1.41
0.95 3.30 2.80 1.46 1.41
0.54 2.09 2.12 1.30 0.74
NIFTY
Birla Index Canara Robeco Index Franklin India Index Fund-Nifty HDFC Index Fnd-Nifty ICICI Prudential Index Fund LIC Index-Nifty Principal Index Fund SBI Magnum Index Tata Index Fund-Nifty UTI Nifty Index HDFC Index Fnd - Sensex LIC Index - Sensex Tata Index Fund - Sensex UTI Master Index
1.60 2.69 1.01 1.72 0.97 3.07 0.97 2.36 0.92 0.76 3.29 6.23 1.55 1.37
1.40 2.82 1.06 1.89 0.97 3.28 0.96 2.04 0.99 0.87
1.29 2.39 1.05 1.91 0.98 3.35 0.78 1.55 1.00 0.86
0.93 2.25 0.42 1.44 1.33 2.64 0.75 0.56 0.71 0.54
Source: Morningstar India; fund houses; Mint research