Bond funds return 15% in ‘02

It's party time for bond fund investors in the new year. Bond funds have generated an average return of close to 15 per cent for calender 20...

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It’s party time for bond fund investors in the new year. Bond funds have generated an average return of close to 15 per cent for calender 2002 when the yield on the 10-year benchmark is abysmally low at around 6 per cent.

Even as fund experts during the early part of 2002 predicted a sharp fall in return to around 8-10 per cent, as many as 14 such mutual fund schemes have raked in between 16-19 per cent.

PNB Debt, the flagship scheme of PNB Mutual Fund, tops the chart with a return of almost 19 per cent. The income scheme has seen its net asset value (NAV) rise from Rs 15.08 to Rs 17.93 during the calender 2002.

Templeton India Income Builder closely follows with a return of 18 per cent (NAV rose from Rs 18.15 to Rs 21.43). Others like Sundaram Bond Saver (return 17.26 per cent), LIC Bond (17.14 per cent), Birla Income Plus (17.08 per cent), JM Income Fund-G (17.04 per cent), IL&FS Bond (16.83 per cent), Zurich India High Interest (16.82 per cent), K Bond Wholesale (16.72 per cent), JM Income Fund-D (16.66 per cent), IDBI Principal Income (16.52 per cent), HDFC Income Fund (16.48 per cent), Alliance Income Fund (16.23 per cent) and K Bond Deposit (16.18 per cent) have cheered investors with impressive gains. The sterling performance from the mutual funds on the bond street is backed by sharp bull-run during 2002. The rate cut expectations had fired up the bond markets in October. When RBI cajoled the bond markets by slashing bank rate, repo rate and cash reserve ratio (CRR) by 25 basis points each in the busy-season credit policy announced at the end of October, the activity in the bond markets peaked in November pushing up bond prices further. While the market is brimming with liquidity, the bull run continued in December, too. The yield on the 10-year benchmark government paper — 7.4% GOI 2012 — hit around 6 per cent (slipping below the bank rate) during the last leg of December from 7.36 per cent at the beginning of 2002.