Investors had a good time as markets closed on a positive terrain last week. But the week was not without its fair share of volatility that seems to have become a perfect feature with the markets in recent times.
The BSE Sensex posted a gain of 1.79% to close at 6,346 points, while the S&P CNX Nifty appreciated by 2.18% to end at 2,012 points.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| ALLIANCE EQUITY | 78.77 | 5.99% | 13.42% | 46.01% | 48.90% | 38.07% | 8.44% | 0.53% |
| UTI THEMATIC MID CAP | 12.38 | 4.83% | 9.65% | - | - | 33.62% | 9.10% | 0.56% |
| KOTAK GLOBAL INDIA | 13.47 | 4.20% | 7.19% | - | - | 36.81% | 6.25% | 0.41% |
| RELIANCE VISION | 79.02 | 4.08% | 8.45% | 23.88% | 72.70% | 25.22% | 7.47% | 0.58% |
| DSP ML EQUITY | 26.42 | 4.06% | 10.45% | 30.29% | 43.71% | 23.05% | 7.88% | 0.53% |
(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.)
Funds investing predominantly in the mid-cap segment, featured in the weekly top performers list. Alliance Equity (5.99%) surfaced as the leader followed by UTI Thematic Mid cap (4.83%).
It was a mixed week for the category leaders: while HSBC Equity (3.02%) clocked smart returns, Franklin India Bluechip (1.89%) and HDFC Top 200 (1.61%) had an ordinary week.
Investing in equities is universally accepted as a long-term phenomenon. That is why it's rather peculiar that there are very few options wherein investors can stay invested with a long-term perspective with the hope that they will do better than the short-term opportunistic investors.
On a positive note, a few fund houses have taken note of this deficiency and initiated measures like positioning some of their offerings as long-term ones.
Also investments through the systematic investment plan route have been promoted by waiving off the entry loads; similarly exiting SIP investments prematurely is discouraged by charging an exit load on redemptions within 12 months.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| LIBRA BOND | 12.18 | 0.16% | 1.48% | 1.50% | 5.00% | 6.13% | 1.45% | -0.25% |
| TATA INCOME | 21.59 | 0.13% | 0.47% | 0.34% | 6.77% | 10.32% | 0.98% | -0.21% |
| PRU ICICI INC | 19.45 | 0.11% | 1.24% | -0.01% | 7.67% | 10.79% | 1.17% | -0.17% |
| LIC BOND | 17.95 | 0.09% | 1.00% | 0.83% | 7.98% | 10.93% | 1.00% | -0.21% |
| ESCORTS INC | 20.50 | 0.09% | 0.62% | 4.92% | 9.63% | 11.49% | 2.14% | 0.21% |
The euphoria in the equity markets didn't spillover to the debt markets; yields rose marginally after falling for two weeks in a row.
The benchmark 7.37% 2014 GOI yield closed at 6.77% (December 17, 2004), 7 basis points above the previous weekly close. Rising yields translate into lower bond prices and net asset value (NAV) for debt fund investors. Conventional long-term debt funds came to the fore, Libra Bond (0.16%) emerged as the top performer followed by Tata Income (0.13%).
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| MAGNUM BALANCED | 17.17 | 2.88% | 9.50% | 37.58% | 31.73% | 16.45% | 6.00% | 0.54% |
| ING BALANCED | 11.13 | 2.77% | 7.02% | 18.91% | 20.95% | 3.48% | 5.46% | 0.32% |
| PRU ICICI BAL | 18.49 | 2.55% | 4.64% | 17.32% | 28.62% | 13.36% | 5.17% | 0.43% |
| PRINCIPAL BALANCED | 13.51 | 2.27% | 6.55% | 20.30% | 27.04% | 4.96% | 5.62% | 0.42% |
| KOTAK BALANCE | 15.90 | 2.23% | 6.22% | 24.78% | 29.47% | 15.13% | 5.41% | 0.44% |
The balanced funds segment drew from the strong growth in the equity markets. Magnum Balanced (2.88%) surfaced as the weekly top performer followed by ING Balanced (2.77%). It was a rather modest week for category leader HDFC Prudence (1.56%).
Personalfn spoke with Shyam Bhat, AVP-Investments, Principal AMC, to obtain his views on the markets and how retail investors should position themselves going forward.
His advice for retail investors was "At all times I would advise investors to invest in a manner appropriate to their age, income stream, return expectations and risk appetite."
The message is forthright, don't let market occurrences influence your investment decisions. Stick to investments in tune with your risk-appetite at all times.
Speaking of investments, investors must also ensure that their expectations are aligned to their investments i.e. they should consider the risk-return trade off for evaluating their investments.
An investor in Monthly Income Plans (MIPs), which typically invest 15-25% of their corpus in equities, shouldn't compare returns clocked by his investments to those delivered by diversified equity funds.
Such a comparison would be inappropriate because both MIPs and diversified equity funds are unique offerings with distinct inherent risks and the returns are commensurate with the risk borne.
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