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Mutual funds are on a roll!
September 11, 2004 14:24 IST
The good times continued for mutual fund investors with another bumper week at the bourses. The BSE Sensex rose significantly by 2.91% to close at 5,370 points, while the S&P CNX Nifty rose by 2.14% to end at 1,669 points. Leading Diversified Equity Funds| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-year | 3-year | Incep. | SD | SR | | GIC FORTUNE 94 | 14.19 | 3.20% | 5.35% | 31.39% | 46.42% | 4.35% | 7.79% | 0.41% | | KOTAK GLOBAL IND. SCH. G | 11.07 | 3.12% | 8.17% | NA | NA | 12.41% | 5.38% | 0.20% | | TAURUS STARSHARE | 13.08 | 2.91% | 9.46% | 45.82% | 39.58% | 1.91% | 7.54% | 0.43% | | ALLIANCE EQUITY G | 60.91 | 2.77% | 7.29% | 53.39% | 39.68% | 34.20% | 6.51% | 0.56% | | UTI GRANDMASTER 1993 | 17.39 | 2.66% | 8.21% | 45.91% | 34.53% | 6.49% | 6.79% | 0.43% |
(Source: Credence Analytics. NAV data as on Sept 10, 2004. Growth over 1-year is compounded annualised)
(The Sharpe Ratio is a measure of the returns offered by the fund vis-à-vis those offered by a risk-free instrument)
(Standard deviation highlights the element of risk associated with the fund.)This week saw some relatively new names in the equity fund rankings. GIC Fortune (up 3.20%) was the leader, with Kotak Global India (3.12%) coming in next. Category leaders – Franklin Bluechip (1.77%), HDFC Top 200 (1.40%) and HSBC Equity (1.41%) had a relatively average week. What is the latest 'trend' on the retail investor's mind - the mid cap rally. Everyone wants to know how he can participate in the rally and share the spoils. Our view on mid cap funds is that high-risk investors must consider investing in them but only after building a mutual fund portfolio with a fair share of large cap funds. One grouse that investors have are loosely defined investment objectives of mutual funds. Vague objectives like 'Long-term capital appreciation' or 'will invest across all market capitalisations including large caps, mid caps and small caps' give absolutely no inkling of how the fund manager plans to invest your money. Investing in mutual funds without a well-defined investment objective is like shooting in the dark. For instance, you may well find all your funds invested in the same universe of stocks depending on the latest rally in the stock markets. So instead of diversifying, you are invested in the same bunch of stocks! Leading Income Funds| Income Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | Incep. | SD | SR | | DEUTSCHE DYN. BOND G | 9.94 | 0.35% | 1.54% | -0.63% | NA | -0.48% | 1.13% | -0.54% | | MAGNUM INCOME G | 18.13 | 0.29% | 1.94% | -1.34% | 0.95% | 10.68% | 1.27% | -0.01% | | DEUTSCHE PREM. BOND G | 11.06 | 0.27% | 2.04% | 0.27% | 3.51% | 1.52% | 1.32% | 0.10% | | TATA DYNAMIC BOND FUND | 10.52 | 0.24% | 0.50% | 1.81% | 5.39% | 5.18% | 1.07% | -0.12% | | PRU ICICI FLEXIBLE INC. PLAN | 11.94 | 0.23% | 1.50% | 0.46% | 2.79% | 9.35% | 2.11% | 0.09% |
(Source: Credence Analytics. NAV data as on Sept 10, 2004. Growth over 1-year is compounded annualised)
The benchmark 7.37% 2014 GOI yield closed at 5.95% (September 10, 2004), 9 basis points above the previous weekly close. Actively managed income funds (the 'dynamic funds' of the world) dominated the rankings. Deutsche Dynamic Bond (0.35%) was the leader followed by Magnum Income (0.29%). With interest rates and inflation being of primary concern, Personalfn decided to bring in the experts to do the talking on 'where interest rates are headed?', Mahesh Vyas (CEO and MD of Center for Monitoring Indian Economy) opined, 'Given that inflation is not really high there should be no pressure on interest rates. There is enough and more liquidity yet in the system. So, I do not see any pressure on interest rates in the months to come. So, I do not see any pressure on interest rates in the months to come.' Leading Balanced Funds| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-year | 3-year | Incep. | SD | SR | | ALLIANCE 1995 G | 85.31 | 2.36% | 5.36% | 30.58% | 28.27% | 26.15% | 4.90% | 0.47% | | BOB BALANCED G | 12.20 | 1.84% | 4.54% | 23.02% | NA | 22.74% | 5.15% | 0.26% | | UNIT SCHEME 95 G | 31.78 | 1.57% | 6.47% | 30.78% | 24.98% | 18.88% | 4.28% | 0.46% | | TATA BALANCED APP | 23.22 | 1.51% | 5.62% | 30.54% | 28.00% | 14.59% | 4.97% | 0.49% | | ESCORTS BAL G | 22.16 | 1.43% | 4.76% | 32.14% | 29.03% | 26.17% | 5.47% | 0.39% |
(Source: Credence Analytics. NAV data as on Sept 10, 2004. Growth over 1-year is compounded annualised)
The weekly balanced fund rankings had Alliance 1995 in the lead (up 2.36%) with BoB Balanced (1.84%) at second place. HDFC Prudence, the category leader, had an indifferent week (up 0.90%). It's that time of the year when the tax-paying investor starts worrying about how he can cut down on his tax outgo. Equity-linked investments perform better over the long-term vis-à-vis peers like bonds, gold, real estate. Equities are also best positioned to counter inflation and give a healthy return net of inflation over the long-term. For the mutual fund investor with a moderate to high-risk profile, the equity-linked saving scheme is an option worth considering.
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