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January 15, 2005 14:56 IST
Stock markets aren't what they used to be, at least not in 2005. For the second week in a row, equity markets slumped, something we haven't seen in some time. The BSE Sensex posted a loss of 3.83 per cent to close at 6,174 points, while the S&P CNX Nifty ended the week at 1,931 points (down 4.21 per cent). Leading Diversified Equity Funds| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | Incep. | SD | SR | | CHOLA MID CAP | 13.60 | -1.45% | 3.90% | - | - | 31.10% | 3.29% | 1.79% | | BOB GROWTH | 15.04 | -1.76% | 2.04% | 28.44% | 10.67% | 37.12% | 8.46% | 0.29% | | TATA DIVIDEND YIELD | 10.51 | -2.21% | -1.63% | - | - | 1.92% | NA | NA | | SUNDARAM SEL. MIDCAP | 34.92 | -2.24% | 3.73% | 47.34% | 31.85% | 66.93% | 8.32% | 0.59% | | BIRLA MIDCAP | 29.58 | -2.34% | -0.27% | 34.21% | 25.55% | 61.88% | 7.72% | 0.54% |
(Source: Credence Analytics. NAV data as on Jan 14, 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.)Investors witnessed something this week that they haven't seen in quite some time -- a 138-point drop on the BSE Sensex in a single day. A slump in equity markets is either greeted with panic or enthusiasm depending on the kind of investor you are. Investors with a short-term horizon would obviously be concerned with the slide in equity markets, simply because they have a limited time frame and can't afford to have their investments fall so sharply. Investors with a long-term horizon, see opportunity in adversity and actually add to their investments when markets correct. Large cap stocks were the hardest hit by the recent bout of volatility. Compared to them, mid cap stocks fared relatively better. That explains how three mid cap funds made it to the top five in our weekly rankings. Chola Mid Cap (-1.45 per cent) fell the least and by virtue of that was the leading diversified equity fund over the week. BoB Growth (-1.76 per cent) made it to the top five funds for the second week in a row. Leading Debt Funds| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | Incep. | SD | SR | | TATA INCOME | 21.66 | 0.18% | 0.48% | 0.60% | 0.32% | 10.26% | 1.14% | -0.21% | | ING VYSYA SEL. DEBT | 10.16 | 0.11% | 0.68% | - | - | 1.38% | 0.35% | -0.59% | | ESCORTS INC. PLAN | 20.57 | 0.10% | 0.36% | 2.13% | 4.55% | 11.40% | 0.49% | 0.14% | | CHOLA TRIPLE ACE | 22.67 | 0.08% | 0.47% | 0.79% | 0.00% | 10.89% | 1.38% | -0.19% | | CANINCOME | 11.43 | 0.08% | 0.39% | 1.40% | 2.21% | 5.84% | 1.22% | -0.18% |
(Source: Credence Analytics. NAV data as on Jan 14, 2005. Growth over 1-Yr is compounded annualised)Debt markets were also greeted with mild pessimism as the 10-Yr GOI Bond yield rose marginally to 6.60 per cent (up 6 basis points over previous week). Bond yields are inversely related to bond prices; a fall in the bond yield implies that bond prices have appreciated. On a positive note, inflation reached a seven-month low to settle down at 5.78 per cent, allaying inflationary concerns to an extent. Tata Income (0.18 per cent) was the leader followed by ING Vysya Select Debt (0.11 per cent). Leading Balanced Funds| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR | | TATA BALANCED | 26.80 | -1.70% | 0.34% | 12.66% | 31.43% | 15.82% | 6.01% | 0.46% | | UTI BALANCE | 34.71 | -2.06% | -0.63% | 10.05% | 26.05% | 19.23% | 7.77% | 0.45% | | HDFC [Get Quote] BALANCE | 19.18 | -2.08% | -0.71% | 9.17% | 24.68% | 16.43% | 5.31% | 0.40% | | ESCORTS BAL | 24.74 | -2.11% | -1.30% | 6.00% | 30.74% | 27.17% | 6.50% | 0.37% | | SUNDARAM BAL | 19.50 | -2.11% | -1.98% | 8.20% | 27.21% | 15.37% | 5.14% | 0.43% |
(Source: Credence Analytics. NAV data as on Jan 14, 2005. Growth over 1-Yr is compounded annualised) As markets corrected, balanced funds were the obvious victims given that they have more than 50 per cent of assets in equities. Tata Balanced (-1.70 per cent) registered the lowest fall, with UTI Balanced (-2.06 per cent) trailing it. As activity in the mutual fund initial public offerings segment picks up, there is greater demand on the investor to make the right investment decision. Admittedly that is not an easy task given the number of IPOs that we have seen of late. One IPO that we have reviewed last week is the Sundaram S.M.I.L.E Fund. We also plan to review the other 'popular' IPO doing the rounds -- Franklin India Flexi Cap Fund. Our advice to investors at this stage is -- don't get perturbed by the stock market fluctuations. If you have been heeding our advice over the months and have a systematic investment plan in progress, you are lowering your average cost of purchase. If you are the kind of investor who prefers to make lumpsum investments, you can consider investing a portion of your assets in well-managed equity-oriented funds. Of course, this is assuming that you have a long-term investment horizon (of at least 3 years) and equity/balanced funds make a good fit in your risk profile.
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