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Equity funds: Undeterred by the 9/11 effect

Mar 11, 2002

Its 6 months since the horrific attacks on the World Trade Center on September 11. Post 9/11, global markets tanked and equities were the last thing on any investor’s mind. The scenario was no different in India, as listless markets fell even further. However, within 6 months we have witnessed Indian markets do a Houdini. We have ranked equity funds in our database to find out the best performing funds over the last 6 months. Domestic equity funds are witnessing a revival of some sort with the rebound in equity markets. The performance of equity funds over the last 6 months in particular, reflects this rather dramatic turnaround (see table below). While the 9/11 attacks hurt most equity markets there are some noteworthy points with regards to Indian markets. Soon after the 9/11 attacks, we saw attacks on the Parliament House and the markets witnessed a selling frenzy all over again. Then we saw (and are still seeing) communal tension in Gujarat but the markets held up admirably nevertheless. Post 9/11, the Sensex has recovered from 2,600 to over 3,600, a growth of over 38% in just 6 months!

Adversity beckons prosperity
PIONEER I PRIMA FUND G 26.6 8-Mar 12.7% 61.5% 24.4% 12.6%
GIC FORTUNE 94 6.6 8-Mar 12.8% 45.0% 8.5% -5.0%
RELIANCE VISION 18.9 8-Mar 7.9% 41.2% 16.2% 10.1%
ZURICH I EQUITY G 22.3 8-Mar 9.1% 36.3% 20.6% 12.7%
ING GROWTH G 8.3 8-Mar 7.8% 33.8% -16.5% -5.7%
PIONEER I PRIMA PLUS G 24.7 8-Mar 11.4% 31.9% 14.1% 14.5%
DSP ML OPP G 8.4 8-Mar 6.9% 31.7% -0.4% -3.2%
BOINANZA EXCL G 9.2 8-Mar 5.1% 31.5% 23.1% 1.3%
PIONEER I BLUECHIP G 23.8 8-Mar 11.5% 31.0% 7.3% 24.4%
FRANKLIN GROWTH 5.8 8-Mar 6.0% 29.7% 4.1% -24.6%
(Returns over 1-Yr are annualised)

Investors who had jumped at the opportunity of entering the market at 2,600 levels are seeing the rewards of buying while everyone around them was selling. Investing has a lot to do with bravery and holding one’s nerves in adversity and this is good proof of that. This also serves to highlight a cardinal investment principle if you want to make money enter low and exit high and not the other way round.

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