After rising sharply for two weeks in a row, markets cooled off and ended the week in negative terrain. The BSE Sensex posted a loss of 1.56% to end at 5,687 points, while the S&P CNX Nifty shed 1.37% to close at 1,795 points.
The markets also experienced bouts of volatility during the course of the week.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | Incep. | SD | SR |
| HDFC CORE AND SATELLITE | 10.43 | -0.72% | NA | NA | NA | 2.98% | NA | NA |
| MAGNUM EMERGING BUSINESS | 10.14 | -0.78% | NA | NA | NA | -0.78% | NA | NA |
| GIC GROWTH II | 17.55 | -0.96% | 1.21% | -0.23% | 25.45% | 6.36% | 6.93% | 0.35% |
| FRANKLIN INDIA PRIMA PLUS | 53.65 | -1.03% | 3.27% | 1.94% | 37.67% | 19.53% | 7.64% | 0.49% |
| PRU ICICI DYNAMIC PLAN | 21.20 | -1.24% | 7.22% | 5.51% | 18.03% | 47.31% | 9.10% | 0.30% |
(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.)
Equity funds across categories found themselves in the red. The funds that suffered the least HDFC Core & Satellite (-0.72%) and Magnum Emerging Business (-0.78%) were recently launched funds; high cash reserves was the saving grace for these funds.
The performance of category leaders -- Franklin India Bluechip (-1.45%), HDFC Top 200 (-1.52%) and HSBC Equity Fund (-2.97%) was mediocre as well.
For most investors in mutual fund schemes, returns are all that really matters. Relevant areas like the scheme's expenses are often given the miss. The importance of these areas only gets magnified in avenues like monthly income plans where the returns tend to be competitive.
We put top-performing MIPs under the scanner to test their performance on the 'expenses' parameter, and came up with some interesting results. While some players performed remarkably well, a few were off-target by significant margins. This is one parameter, on which investors must scrutinise all their investments.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | Incep. | SD | SR |
| DEUTSCHE DYN. BOND | 9.92 | 0.33% | 0.48% | -2.59% | NA | -0.60% | 1.03% | -0.57% |
| DSP ML BOND | 22.40 | 0.27% | -0.16% | -2.62% | -1.87% | 11.35% | 1.46% | -0.03% |
| CANINCOME | 11.34 | 0.22% | 0.41% | 0.38% | 0.89% | 6.19% | 1.30% | -0.04% |
| HDFC INCOME FUND | 15.47 | 0.20% | -0.14% | -2.53% | -1.43% | 10.96% | 1.38% | 0.01% |
| PRINCIPAL PNB DEBT | 18.63 | 0.17% | -0.09% | -6.74% | -5.68% | 12.31% | 2.03% | -0.05% |
Yields continued to inch northwards and the 10-Yr benchmark 7.37% 2014 GOI yield closed at 6.77% (October 15, 2004) 19 basis points above the previous weekly close.
Despite the rising yields, conventional long-term debt funds came to the fore and emerged as weekly top performers. Deutsche Dynamic Bond (0.33%) emerged as the top-performing fund in the debt funds segment followed by DSP ML Bond (0.27%).
Over the past 12 months, floating rate funds have emerged as top performers, thanks to the periodical readjustment in coupon rates. However their feasibility as conventional long-term investment avenues needs to be questioned.
During the period under consideration, floating rate funds have offered returns that can be described as modest, at best. Investors must realise that capital preservation should be treated as the primary objective for floating rate funds, while clocking returns is a secondary motive.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| DSP ML BAL | 19.62 | -0.76% | 3.54% | 27.24% | 33.05% | 13.47% | 5.53% | 0.52% |
| ING BALANCED | 9.90 | -1.00% | 3.23% | 13.66% | 21.87% | 0.91% | 6.41% | 0.28% |
| FT INDIA BALANCED | 17.13 | -1.10% | 1.90% | 25.77% | 34.00% | 10.53% | 5.80% | 0.43% |
| HDFC BALANCE | 17.87 | -1.10% | 3.01% | 18.13% | 26.94% | 15.50% | 6.00% | 0.37% |
| JM BALANCED | 11.56 | -1.11% | 3.40% | 10.36% | 19.75% | 13.81% | 5.69% | 0.27% |
Balanced funds were at the receiving end due to the poor performance in the equity markets. DSP ML Balanced (-0.76%) emerged as the weekly topper followed by ING Balanced (-1.00%). Category leader HDFC Prudence (-2.11%) had a poor week.
There is a notion doing the rounds that mutual funds are dull and boring, while equities provide investor with the much-needed excitement. However, the same excitement comes with a tag -- disproportionate risk levels. When markets fall (they do so when you least expect them to) and your portfolio size sheds 40% in a couple of days without a sound reason, the excitement can seem unwarranted.
Investments are serious business and are meant to achieve your pre-determined financial objectives, not provide thrills. For that visit the nearest amusement park!
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