After an insipid three years, several listed funds on the Bombay Stock Exchange are showing signs of revival. While 20 funds are trading close to their yearly highs, a few have managed to record new highs. Further, the gap between the price and net asset value of a majority of funds has narrowed substantially.

Ironically, none of the listed funds from UTI find a place in the list of top gainers. Although the eight listed funds from the UTI stable have inched up on the bourses, they are currently trading at hefty discounts to their respective NAVs. Mastergrowth, Master Plus 1991 and Mastershare, for instance, continue to trade at discounts as high as 40 per cent to their NAVs.

Says T P Raman, managing director, Sundaram Newton AMC, ``Shifting of portfolio by growth funds is beginning to pay dividends. If a fund had churned its portfolio at 3,200 levels, the current index at around 3,700 level would bring significant gains.'' Adds another fund analyst, ``The market conditions are much better than what they were six months ago. Funds can no longer afford to sit on dud stocks. Some of the listed funds have gained because they are constantly monitoring their portfolio and churning non-performing stocks.''

Some of the common scrips in the portfolio of these funds are MTNL, State Bank of India, Arvind Mills, Castrol, Hindustan Petroleum, ONGC and Bharat Petroleum Corporation. With the exception of Arvind and Castrol, all these scrips have registered gains.

Leading the pack of gainers is Magnum Triple Plus, which has increased 11 per cent since April 4. The fund currently trades at Rs 203.5, a premium of 18.03 per cent to its net asset value. The fund's NAV has also shot up from Rs 149.63 to Rs 172.42. Although the general improvement in market sentiment is one reason that has aided the fund's rise on the bourses, high interest rates prevailing in the beginning of the year is also another factor.

Says a fund analyst with SBI Mutual Fund, ``The scheme was able to lock-in a larger slice of the corpus to high-yielding debt instruments in the beginning of 1997 when interest rates were high. This strategy has paid off since interest rates have dropped sharply. Besides, the scheme has also restructured its portfolio.''

According to sources, Triple Plus is also attracting buying interest because it has assured a return of Rs 300 in the year 1999. If an investor purchases Triple Plus at Rs 200 and receives Rs 300 after two years, the returns work out to 25 per cent per annum, which is quite lucrative. ``This has led to a demand-supply mismatch,'' points a fund analyst.

Other gainers include listed funds from Bank of India. While BoI Double Square + A has shot up from Rs 199 to Rs 215, the discount to NAV has narrowed from -9.2 per cent to -1.77 per cent. In the case of BoI Double Square + B, the price has risen by 9.5 per cent and the discount to NAV has nose dived from -9.54 to -0.97 per cent.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.