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Mutual fund investors clock modest gains - Views on News from Equitymaster
 
 
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  • Sep 25, 2004

    Mutual fund investors clock modest gains

    The markets finally lost some steam after surging for 4 weeks in a row. The BSE Sensex posted a weekly loss of 0.59% to close at 5,528 points while the S&P CNX Nifty was down by 0.63% to close at 1,723 points.

    Leading Diversified Equity Funds
    Diversified Equity Funds NAV (Rs) 1-Wk 1-Mth 1-Yr 3-Yr Incep. SD SR
    TAURUS STARSHARE 13.62 3.50% 10.37% 56.19% 46.50% 2.30% 9.25% 0.39%
    DISCOVERY STOCK 6.95 3.12% 10.67% 37.08% 28.08% -3.47% NA NA
    RELIANCE VISION 68.71 2.31% 11.72% 49.27% 78.80% 23.98% 7.39% 0.57%
    BOINANZA EXCL 14.70 2.30% 13.08% 22.34% 43.63% 9.64% NA NA
    UTI THEMATIC MID CAP 11.81 2.16% 11.00% NA NA 16.24% 7.49% 0.36%
    (Source: Credence Analytics. NAV data as on Sept 24, 2004. 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.)

    Top performers in the equity funds segment managed to deliver positive returns despite falling markets. Taurus Starshare (3.50%) topped the list followed by Discovery Stock (3.12%). Funds like Reliance Vision (2.31%) and UTI Thematic Midcap (2.16%) which predominantly invest in the midcap segment also featured in the list.

    It was a mediocre week for the category leaders - HDFC Top 200 (-0.43%) and Franklin India Bluechip (-1.45%); HSBC Equity Fund (0.21%) ended the week in positive terrain.

    The sharp rise recently witnessed in the markets brought to light some interesting facts. We at Personalfn decided to put the performance of sector funds under the scanner. Most investors would believe that sector funds, which are essentially high risk-high return propositions, would have gained significantly from the sharp rise in markets. However the results of our study showed that diversified equity funds outperformed sector funds during the period under consideration. Sector fund investors need to evaluate if the disproportionate risk levels borne by them are worth the effort.

    Leading Income Funds
    Income Funds NAV (Rs) 1-Wk 1-Mth 6-Mth 1-Yr Incep. SD SR
    JM INCOME 26.34 0.52% 0.87% -1.10% 1.55% 10.74% 1.08% 0.04%
    DSP ML BOND 22.57 0.43% 1.25% -1.24% 0.92% 11.55% 1.11% 0.01%
    DEUTSCHE PREM. BOND 11.08 0.39% 0.82% -0.18% 2.95% 1.58% 0.93% 0.08%
    PRU ICICI INC 19.40 0.39% 0.74% -1.32% 0.68% 11.17% 1.01% -0.01%
    DEUTSCHE DYN. BOND 9.93 0.38% 0.63% -1.31% NA -0.52% 1.08% -0.53%
    (Source: Credence Analytics. NAV data as on Sept 24, 2004. Growth over 1-Yr is compounded annualised)

    The benchmark 7.37% 2014 GOI yield closed at 6.03% (September 24, 2004) 8 basis points below the previous weekly close. Bond yields and prices share an inverse relationship with higher bond prices translating into a higher net asset value (NAV) for the investors.

    Conventional income funds came to the fore; JM Income (0.52%) emerged as the leader in the income funds segment, while DSP ML Bond (0.43%) occupied the second position.

    Leading Balanced Funds
    Balanced Funds NAV (Rs) 1-Wk 1-Mth 1-Yr 3-Yr Incep. SD SR
    UNIT SCHEME 95 32.68 1.40% 7.71% 35.77% 28.78% 19.15% 4.70% 0.45%
    BOB BALANCED 12.65 1.20% 8.03% 27.01% NA 26.45% 7.06% 0.23%
    KOTAK BALANCE 14.61 1.06% 6.35% 34.56% 29.97% 13.15% 5.48% 0.40%
    CANGANGA 11.43 0.79% 7.63% 29.69% 27.22% 4.99% 6.84% 0.34%
    LIC BALANCE 24.81 0.78% 6.61% 19.74% 17.83% 5.30% 4.43% 0.27%
    (Source: Credence Analytics. NAV data as on Sept 24, 2004. Growth over 1-Yr is compounded annualised)

    Balanced funds had a modest week. Unit Scheme 95 (1.40%) surfaced as the top performer followed by BOB Balanced (1.20%). Category leader HDFC Prudence (0.03%) had a poor week.

    With equity markets showing some volatility, the one-way movement of the indices over the last 4 weeks has been disturbed. Investors who had invested in equity funds based on the strong undercurrent that markets had shown over the past few weeks will no doubt be disappointed at this. Moreover, there is nothing to suggest that this fall, although marginal, is a temporary one, and markets will continue on their northbound journey.

    Investors, who cannot take a call either ways, should consider investing in equity markets at regular intervals through the SIP route (systematic investment plan). Most mutual funds offer this plan and to make it even more lucrative for investors they have waived off entry loads on SIP investments.

    Personalfn offers personalised services for investments (including mutual funds, IPOs and bonds), home loans and life insurance in Mumbai. For free no-obligation consultancy, please click here. Not in Mumbai? You can still subscribe to FundSelect, our mutual fund advisory service!

     

     

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