The BSE Sensex rose sharply by 0.57% over the week to close at 5,964 points, while the S&P CNX Nifty posted a gain of 0.54% to close at 1,873 points. This growth posted by the indices would have been even sharper had it not been for a correction on Thursday. The BSE Sensex briefly crossed the 6,000 level before settling lower during the short Mahurat trading on Friday.
Leading Diversified Equity Funds
| SCHEME NAME | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | 5-Yr | SD | SR |
| MAGNUM MULTIPLIER PLUS | 17.68 | 8.60% | 7.02% | 33.99% | 35.76% | -1.61% | 7.94% | 0.49% |
| GIC FORTUNE 94 | 15.70 | 4.11% | 5.94% | 25.50% | 49.54% | 13.41% | 8.04% | 0.47% |
| FRANKLIN INDIA BLUECHIP (G) | 55.68 | 3.38% | 2.22% | 31.07% | 45.52% | 22.65% | 7.30% | 0.54% |
| TATA GROWTH FUND (G) | 15.25 | 3.20% | 3.93% | 35.51% | 39.76% | 27.80% | 6.95% | 0.54% |
| DSP ML OPPORTUNITIES FUND (G) | 22.20 | 3.16% | 2.35% | 33.09% | 51.48% | - | 7.33% | 0.59% |
(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.)
This week saw large cap stocks post significant gains with mid caps taking a backseat. This can be gauged from the fact that we did not have the regular mid cap equity funds figuring in the rankings.
Instead we had the largest private sector large cap fund -- Franklin Bluechip (3.38%) and DSP ML Opportunities (3.16%), which currently has a lot of large caps in its portfolio.
With BSE Sensex pushing the 6,000-points level, we thought this was a good time to do a review of Index Funds. Index funds are equipped to offer some distinct advantages to investors.
When stock markets witness a downturn, index funds move with them and offer investors better protection vis-à-vis their diversified equity fund counterparts, which tend to slide faster. While delivering returns is vital, the importance of capital preservation cannot be undermined by the investor.
Index funds also score on the expenses parameter. They typically have lower management fees and trading expenses, which in turn translates into better returns for investors.
Leading Debt Funds
| SCHEME NAME | NAV (Rs) | 1-Wk | 1-Mth | 3-Mth | SD | SR |
| CANCIGO (G) | 13.47 | 0.60% | 0.97% | 5.81% | 1.70% | 0.13% |
| CHOLA INCOME PLUS (G) | 10.22 | 0.32% | 0.28% | 1.52% | 0.28% | -0.13% |
| BIRLA DYNAMIC BOND FUND (G) | 10.06 | 0.20% | 0.47% | - | - | - |
| CHOLA FLOATING RATE (G) | 10.10 | 0.13% | 0.42% | - | 0.02% | -6.67% |
| PRINCIPAL FLOATING RATE FMP (G) | 10.09 | 0.13% | 0.44% | - | 0.09% | -1.83% |
Debt fund investors continue to be plagued by rising crude and inflationary concerns. This had its impact on bond markets with bond prices witnessing a decline (i.e. bond yields rose). Floating rate funds got the due investor attention and this is apparent from the rankings.
Leading Balanced Funds
| SCHEME NAME | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | 5-Yr | SD | SR |
| MAGNUM BALANCED FUND | 15.44 | 2.39% | 3.90% | 33.02% | 28.97% | 15.27% | 5.17% | 0.57% |
| HDFC PRUDENCE (GR) | 51.14 | 1.90% | 1.39% | 24.09% | 41.33% | 20.18% | 4.95% | 0.63% |
| ING VYSYA BALANCED (G) | 10.17 | 1.80% | 1.70% | 14.66% | 22.13% | 1.50% | 5.16% | 0.31% |
| CANGANGA | 12.12 | 1.76% | 1.51% | 20.17% | 24.55% | 5.57% | 5.99% | 0.40% |
| KOTAK BALANCE | 15.17 | 1.66% | 2.13% | 26.79% | 28.01% | 13.66% | 4.62% | 0.51% |
One fund that has caught our eye over the past few months has been Principal Growth Fund (PGF). In our view, Principal Mutual Fund (net assets under management as on September 30, 2004 -- Rs 43.4 billion) is among the better-managed, process-driven fund houses in the country.
While its funds may not necessarily rank high on NAV returns, they do a good job in curtailing volatility in performance, which is underlined by lower standard deviation. PGF, its flagship diversified equity fund, has seen a smart turnaround in its performance. This coincided with the change of guard at the fund management level.
While PGF was historically a steady performer with a diversified equity portfolio, it never really did a lot in terms of posting impressive NAV gains. This has changed now, and PGF has matured into a 'performer' over the last several months now.
We believe investors need to give due credit to fund houses that are run on steady investment processes. With equity markets on the brink of 6,000 points (Sensex), and just about every equity fund manager talking of an imminent correction, it is important for investors to identify funds that are best positioned to counter the volatility.
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