Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | Incep. | SD | SR |
| MAGNUM EMERGING BUSINESS | 10.37 | 2.57% | NA | NA | NA | 1.47% | NA | NA |
| FRANKLIN PRIMA FUND | 87.34 | 1.74% | 3.79% | 7.23% | 60.32% | 22.01% | 9.41% | 0.53% |
| KOTAK GLOBAL INDIA SCHEME | 11.78 | 1.69% | 3.93% | 10.99% | NA | 19.66% | 8.00% | 0.24% |
| BIRLA MIDCAP | 25.11 | 1.17% | 1.21% | 8.28% | 51.08% | 57.79% | 7.87% | 0.47% |
| CHOLA MID CAP | 11.60 | 0.96% | 3.72% | NA | NA | 11.04% | 6.08% | 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.)
A word of caution -- since October 22, 2004 was a holiday, some funds have not provided NAV and other information related to their schemes. This weekly round up has been prepared using the available data.
A large number of diversified equity funds languished in the red. Magnum Emerging Business (2.57 per cent) a recently launched fund emerged as the weekly topper. Funds investing pre-dominantly in the mid-cap segment i.e. Franklin Prima (1.74 per cent), Birla Midcap (1.17 per cent) also made to the top performers list.
Category leader -- HDFC Top 200 (-0.86 per cent), HSBC Equity (-1.01 per cent) and Franklin India Bluechip (-1.57 per cent) had a poor week.
During the week, Birla Mutual Fund announced plans to buy out Alliance Capital Mutual Fund. What does this mean to Alliance Capital Mutual Fund investors? Unfortunately, it does not mean a great deal. Over the years, except for a brief flash in 1999-2000, Birla Mutual Fund hasn't really put in a performance of any note. 'High fund management turnover' is another problem that has plagued Birla Mutual Fund over the years.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| UTI BOND FUND | 18.60 | 0.34% | -0.12% | 0.35% | 7.19% | 10.14% | 1.00% | -0.16% |
| MAGNUM INCOME | 17.96 | 0.33% | -0.73% | -1.57% | 8.25% | 10.30% | 1.17% | -0.11% |
| ALLIANCE INCOME | 22.59 | 0.32% | -0.88% | -0.40% | 8.80% | 11.27% | 1.05% | -0.09% |
| DSP ML BOND | 22.46 | 0.31% | -0.21% | -0.88% | 8.94% | 11.36% | 1.21% | -0.05% |
| PRU ICICI INC | 19.30 | 0.25% | -0.26% | -0.86% | 8.53% | 10.94% | 1.17% | -0.01% |
It was a contrary week for debt fund investors as yields fell. Bond yields and prices share an inverse relationship with falling yields translating into higher bond prices and NAVs for investors. The benchmark 7.37 per cent 2014 GOI yield closed at 6.66 per cent (October 21, 2004), 11 basis points below the previous weekly close. Conventional bond funds came to the fore -- UTI Bond (0.34 per cent) surfaced as the weekly topper followed by Magnum Income (0.33 per cent).
Did someone say debt funds are dead? Then he hasn't seen Nilesh Shah's (Chief Investment Officer PruICICI Mutual Fund) latest presentation on debt funds. It got us thinking and Personalfn decided to interview Shah on his contrarian view on debt funds at this point in time.
Shah declared, "Investment in debt funds in small amounts at regular intervals protects investors from short-term market volatility and this strategy has been proven to be attractive in medium to long-term. We believe that at present level of interest rates, most of the negatives have already been factored in. However, in the short term there are still uncertainties mainly because of inflation and hence we are recommending gradual entry into debt funds at this stage".
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| CANGANGA | 11.71 | 0.17% | 2.63% | 25.45% | 25.12% | 5.22% | 6.96% | 0.36% |
| LIC BALANCE | 24.72 | -0.02% | -0.56% | 11.40% | 17.27% | 5.24% | 4.47% | 0.27% |
| TATA BALANCED | 24.15 | -0.04% | 1.43% | 30.54% | 30.94% | 14.90% | 6.17% | 0.45% |
| BIRLA BALANCE | 15.53 | -0.13% | 0.71% | 20.95% | 25.32% | 10.67% | 5.71% | 0.42% |
| KOTAK BALANCE | 14.64 | -0.16% | 0.60% | 28.30% | 27.75% | 12.99% | 6.13% | 0.39% |
Balanced funds took a hit due to the poor showing in the equity markets. Canganga (0.17 per cent) was the only fund to deliver positive returns followed by LIC Balance (-0.02 per cent). Category leader HDFC Prudence (-0.80 per cent) had a mediocre week.
Like balanced funds, another hybrid variety that has occupied a fair share of limelight in the recent times was the Monthly Income Plans, which professed to combine the 'stability of debt and power of equities'. This 'investment proposition' was tested fully in 2004 when debt markets witnessed above-average volatility, and the 70-80 per cent debt component provided MIPs anything but stability.
Investing in floating rate instruments is one way to stem the volatility in the debt components; we decide to test if fund managers were employing that option. The results of our study were interesting with varying degrees of utilisations being made by fund managers.
As volatility in equity and debt markets continues unabated, we reinforce a strategy that we have been advocating for some time now -- investing in smaller portions through the SIP route.
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