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A profitable week for MF investors
 
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February 07, 2005 17:53 IST

The good times for mutual fund investors continue. The stock markets took off from where they left last week. The BSE Sensex posted a healthy gain of 3.10% over last week to close at 6,618 points.

The S&P CNX Nifty too rose by 69 points over last week to close at 2077 points, a gain of 3.48%.

Leading Diversified Equity Funds
Diversified Equity FundsNAV (Rs)1-Wk1-Mth1-Yr3-YrIncep.SDSR
DISCOVERY STOCK 9.718.61%5.66%52.19%38.60%-0.09%8.52%0.46%
MAGNUM GLOBAL 16.568.24%7.46%82.21%54.19%11.35%7.08%0.72%
MAGNUM EMERGING BUS. 13.118.08%5.13%--28.28%6.73%0.80%
TAURUS STARSHARE 17.616.99%5.45%56.67%50.15%4.65%8.04%0.54%
ESCORTS GROWTH29.316.67%9.22%33.04%39.57%32.27%6.40%0.49%
(Source: Credence Analytics. NAV data as on Feb 05 2005. Growth over 1-Yr is compounded annualised)
(The Sharpe Ratio is a measure of the returns offered by the fund vis-�-vis those offered by a risk-free instrument) (Standard deviation highlights the element of risk associated with the fund.)

Mutual funds from the diversified equity funds segment mirrored the healthy gains posted last week. Discovery Stock (8.61%) from Taurus Mutual Fund emerged as the top performer for the week followed Magnum Global (8.24%).

Category leaders HSBC Equity (4.25%), HDFC [Get Quote] Top 200 (3.87%) and Franklin India Bluechip (3.57%) had a modest week.

Sector funds regularly manage to find a way in investor portfolios. While there is nothing wrong in investing in sector funds, it's imperative for the investor to have some degree of knowledge about the sector. This is so because investments in sector funds are always associated with higher volatility, as they are more concentrated in their investment approach vis-�-vis diversified equity funds.

Also sector fund performances peak in short bursts, but not without intense volatility. For investors who can't stomach the above-average risk associated with sector funds, there is an innovative mutual fund scheme -- Principal Focussed Advantage Fund in the IPO stage, that seeks to invest across 4-6 sectors.

Prudent investors should always study their fund manager's profile before deciding to take the plunge into a scheme managed by him.

While fund managers can deliver smart returns for their investors, investors still need to do their homework before choosing to go with a particular fund manager. Studying the fund manager's profile will help in understanding the inherent risk-return quotient associated with any scheme.

Leading Debt Funds
Debt Funds NAV (Rs)1-Wk1-Mth6-Mth1-YrIncep.SDSR
HDFC HIGH INTEREST22.930.24%0.40%2.09%-0.04%11.09%0.99%-0.10%
MAGNUM INCOME18.150.21%0.24%1.60%-0.72%9.97%0.92%-0.19%
SUNDARAM INC. PLUS 11.760.21%0.43%1.66%3.00%6.57%0.41%-0.28%
UTI BOND FUND18.890.21%0.13%2.87%1.43%9.93%0.77%-0.19%
HDFC INCOME FUND15.680.19%0.25%2.13%0.68%10.50%0.98%-0.08%
(Source: Credence Analytics. NAV data as Feb 05 2005. Growth over 1-Yr is compounded annualised)

The 10- Yr GOI yield closed at 6.72% (February 4, 2005), down by 2 basis points over previous week's close. Bond yields and prices share an inverse relation, with rising yields translating into lower bond prices.

Debt funds clocked positive returns for the third week in a row. HDFC High Interest (0.24%) emerged the leader for this week followed by Magnum Income (0.21%).

Leading Balanced Funds
Balanced FundsNAV (Rs)1-Wk1-Mth1-Yr3-YrIncep.SDSR
CANTRIPLE 36.864.95%4.69%24.49%25.43%8.92%5.32%0.41%
KOTAK BALANCE 17.314.63%4.06%41.66%32.03%16.61%4.89%0.55%
ESCORTS BAL26.904.57%5.75%21.29%34.26%29.52%5.70%0.46%
TATA BALANCED 28.654.23%4.33%27.79%34.14%16.56%5.11%0.57%
MAGNUM BALANCED 16.163.79%2.92%41.63%34.33%17.01%5.12%0.68%
(Source: Credence Analytics. NAV data as on Feb 05 2005. Growth over 1-Yr is compounded annualised)

Balanced funds too did well this week posting smart returns. Cantriple (4.95%) emerged the leader in the balanced fund segment followed by Kotak Balance (4.63%) and Escorts Balanced (4.67%). Category leader HDFC Prudence (3.76%) had a reasonable week.

Right now with mutual fund IPOs being launched at the drop of a hat, investors need to get more circumspect while reviewing their investment options.

For one, a Rs 10 NAV is not an good enough reason to invest in a mutual fund IPO.

Second, if you have mutual fund schemes in your portfolio that help you achieve your investment objective effectively enough, you don't need to consider an IPO that will perform the same role in your portfolio.

Click here to get a free copy the latest issue of Money Simplified - The Definitive Guide to Tax Panning.



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