There is good news for investors in mutual funds, especially for those who have given up hope on the industry as a potent investment vehicle since their investments had depreciated to below par value.

The current market rally has lifted the net asset value (NAV) of 24 equity schemes above par value.

According to a BS Research Bureau study, the NAV of 31 equity-oriented schemes had fallen below the par value of Rs 10 as on April 25, 2003, when the Bombay Stock Exchange (BSE) Sensex slipped to a six-month low.

The current 1400-point rally in the benchmark Sensex has resulted in the NAV of 24 schemes jumping back to above par value, while seven schemes still rule below par value.

However, among the 24 schemes, only Tata Equity Opportunity Fund has outperformed market indices by posting a NAV return of 74.45 per cent. The fund's NAV rose from Rs 7.67 on April 25 to Rs 13.38 on September 1.

The broader stock market, represented by the BSE-500 index, appreciated by 63.6 per cent, while the BSE Sensex has gained 47.88 per cent.

Of the 24 schemes, only 11 have outperformed the Sensex by posting NAV returns of over 47.88 per cent. The NAVs of the remaining 13 schemes have appreciated between 23.12 per cent and 46.22 per cent.

The UTI Mutual Fund has been the biggest gainer with the NAV of as many as seven of its schemes bouncing back to above par value.

UTI Mastergain, which was floated during the 1992 stock market boom, has been the largest gainer among the UTI schemes.

The NAV of Mastergain has appreciated 58.69 per cent from Rs 8.98 on April 25 to Rs 14.25 on September 1. The UTIMF's Pharma Fund ranks fourth in the list with a 54.52 per cent gain in its NAV.

The NAVs of Master Equity Plan and Grandmaster soared by over 50 per cent in the current rally between April 25 and September 1.

The NAV of DSP Top 100 Equity Scheme, the third largest gainer in the list, appreciated 55.09 per cent. The scheme's NAV increased from Rs 9.82 to Rs 15.23.

JM Equity, ranked fifth, gained 52.39 per cent. Three schemes managed by the LIC Mutual Fund made into the list with the Sensex Advantage Scheme's NAV up 43.06 per cent, Index Fund Nifty up 41.67 per cent and Index Fund Sensex up 41.05 per cent.

One facet of the turnaround in these 24 schemes' performance is that their fund managers have followed a diversified portfolio strategy. This helped them to reap the maximum from the broad market rally.

As many as 19 schemes have diversified portfolios. Of the 19 schemes, 10 have outperformed the Sensex, while five schemes have appreciated between 41 per cent and 48 per cent.

Among index schemes, Birla Index Fund has outperformed the Sensex by posting relatively higher returns of 50.42 per cent, while the NAV of UTI Master Index rose 48.67 per cent.