Debt Fund Returns Slip Into Red

The monthly returns on debt funds have fallen into negative territory.

Data sourced from Value Research India shows that on an average, almost all debt schemes, except the short-term ones, have posted negative returns (loss in value) during January 2003.

The largest decline in net asset value (NAV) was reported in the medium and long-term gilt schemes, which posted an average negative return of 0.92 per cent. The least depletion in value was recorded in specialty debts schemes, at 0.52 per cent.

The medium-term debts plans have posted negative returns of 0.70 per cent, while hybrid debt schemes reported negative returns of 0.87 per cent. Only short term debt schemes posted positive returns of 0.70 per cent in January 2003. Data available with the Business Standard Research Bureau shows that of the 170 debt schemes, as many as 72 debt schemes have reported negative returns in January 2003. This means that the NAV of four debt schemes in every ten has declined in January 2003.

The US-Iraq war fears have taken a toll on gilts with the market value of government securities declining during the month.

The market price of 9.85 per cent 2015 paper declined by 2.38 per cent. Its price moved down from Rs 132.35 as on December 31, 2002 to Rs 129.20 on January 31, 2003. Similarly, the price of the 8.35 per cent 2022 paper dropped 2.37 per cent, the 7.46 per cent 2017 paper suffered a 2.05 per cent) drop in price, 8.07 per cent 2017 paper (1.63 per cent), and 7.40 per cent 2012 paper (1.47 per cent).

Interestingly, of the 34 gilt schemes studied here as many as 26 schemes have reported negative return ranging between 0.09 per cent and 1.75 per cent. The biggest loser in the gilt scheme category is the FT India Gilt Investment Plan whose NAV declined 1.75 per cent from a NAV of Rs 12.56 on December 31, 2002 to Rs 12.34 on January 31, 2003. Tata Gilt Securities stood second among losers with a 1.68 per cent fall in its NAV.

Of the 48 medium term debt schemes, the NAV of as many as 34 schemes declined while 14 others showed NAV appreciation between 0.09 per cent and 0.66 per cent. The biggest loser in medium term debt schemes has been Libra Bond fund. The net asset value of this medium term debt scheme declined 2.62 per cent to Rs 11.53.