The equity markets continued their resilient show even in the wake of 'distracting' news from the Reliance household. In the past, this would have been classified as a 'catastrophe' leading to a free fall in equity markets.
But not this time; on the contrary the BSE Sensex actually appreciated by 1.22% to close at 6,035 points. The S&P CNX Nifty appreciated 1.55% to close at 1,901 points.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| DISCOVERY STOCK | 8.18 | 4.07% | 15.54% | 26.35% | 30.15% | -1.81% | NA | NA |
| MAGNUM MULTIPLIER 93 | 18.83 | 3.92% | 19.48% | 42.28% | 34.79% | 7.49% | 8.14% | 0.48% |
| MAGNUM GLOBAL | 13.94 | 3.51% | 12.00% | 76.56% | 46.56% | 9.60% | 6.57% | 0.67% |
| ALLIANCE EQUITY | 71.91 | 3.07% | 13.48% | 54.33% | 45.28% | 36.49% | 7.09% | 0.60% |
| TATA PURE EQUITY | 27.41 | 2.76% | 9.80% | 40.56% | 43.06% | 30.80% | 7.68% | 0.57% |
(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 was an exceptionally good week for Magnum funds (SBI Mutual Fund) in the diversified equity segment; and at least one fund in particular -- Magnum Global Fund (3.51%) continues to figure in the stakes. Discovery Stock (4.07%) was the surprise entrant at the top.
Leading diversified equity funds had an indifferent week - HSBC Equity (0.58%), Franklin Bluechip (0.50%) and HDFC Top 200 (0.19%).
Mid cap stocks sustained their growth trajectory while large caps were at their subdued best. That explains why Magnum Global and Discovery Stock are in the limelight at the expense of their large cap peers -- Franklin Bluechip and HDFC Top 200.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-MTH | 1-Yr | Incep. | SD | SR |
| LIBRA BOND | 12.09 | 0.70% | -0.67% | -1.00% | 1.98% | 6.01% | 1.13% | -0.33% |
| LIC BOND | 17.81 | 0.22% | -0.06% | -1.34% | 0.65% | 10.90% | 0.89% | -0.22% |
| ESCORTS INCOME PLAN | 20.42 | 0.21% | 0.46% | 1.45% | 5.42% | 11.53% | 0.43% | 0.24% |
| CANINCOME | 11.26 | 0.20% | -0.05% | -0.31% | 1.26% | 5.53% | 0.95% | -0.18% |
| ING VYSYA SELECT DEBT | 10.05 | 0.19% | 0.02% | NA | NA | 0.33% | 0.18% | -3.15% |
The 10-Yr benchmark 7.37% 2014 GOI yield closed at 7.21% (November 25, 2004), 10 basis points above the previous weekly close. Long-term debt funds had a reasonably good week; they at least managed to remain in positive territory, which is an achievement under the circumstances.
Libra Bond (0.70%) was the weekly topper by a significant margin.
The way debt markets have been reacting over the past few months, just about every investor is concerned, given that more than 60% of mutual fund assets are invested in debt.
While common sense and investment thumb rules dictate that investors stick to short-term debt funds/floating rate funds, we are beginning to hear 'voices of dissent' from leading fund debt managers who are recommending that investors consider phased investments in long-term debt funds. We have charted out a likely investment strategy for the debt fund investors.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| MAGNUM BALANCED | 16.34 | 3.09% | 11.54% | 42.22% | 29.76% | 15.93% | 5.41% | 0.57% |
| BOB BALANCED | 13.50 | 1.96% | 7.91% | 27.39% | NA | 29.13% | 6.15% | 0.29% |
| TATA BALANCED | 25.98 | 1.49% | 8.16% | 26.98% | 31.21% | 15.67% | 5.28% | 0.52% |
| ING BALANCED | 10.59 | 1.44% | 8.28% | 21.94% | 19.73% | 2.40% | 4.91% | 0.34% |
| CANGANGA | 12.80 | 1.27% | 9.31% | 28.13% | 23.95% | 6.15% | 6.77% | 0.37% |
Balanced funds were beneficiaries of robust equity markets. Magnum Balanced (3.09%) led the rankings to make it even better for SBI Mutual Fund. Category leader HDFC Prudence (0.99%) had a modest week.
Within the debt funds segment, liquid funds continue to attract lot of investor attention. Given the degree of uncertainty in debt markets and lack of investment opportunities on the equity side, liquid funds are the preferred options for a lot of investors.
And liquid funds haven't fared too badly under the circumstances. In fact, they have done a lot better than peers in the debt funds category.
December is the time when tax-paying investors put pen to paper to finalise their tax-saving investment strategy. An important cog in the tax-saving wheel is the tax-saving mutual fund or the equity-linked saving scheme (ELSS).
Tax-saving funds have a 3-Yr lock-in which makes it that much easier for the fund manager to buy companies with long-term potential. That means lower portfolio churn and therefore lower costs, right? If you read our story on tax-saving funds, you don't come out with that impression.
Tax-saving funds have high expensive ratios and they are a lot more expensive than their diversified equity peers.
Most equity fund managers sound cautious about markets at these levels and find the risk-reward ratio untenable for further investments. Investors can consider booking a portion of their profits at these levels.
Fresh investments should be considered only in a phased manner, preferably through the systematic investment plan (SIP).
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