Stock markets inched up further over the previous week. The BSE Sensex ended the week at 9,521 points, up by 147 points (1.57%). The S&P CNX Nifty closed at 2,901 points up by 1.75% (50 points). The CNX Midcap index closed higher by 12 points (0.28%) for the week to close at 4,224 points.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| BIRLA SUN LIFE EQUITY | 131.00 | 2.86% | 3.86% | 30.21% | 72.94% | 7.04% | 0.47% |
| SUNDARAM INDIA LEADERSHIP | 23.18 | 2.70% | 9.02% | 41.03% | 81.56% | 5.14% | 0.83% |
| TATA PURE EQUITY | 45.52 | 2.60% | 6.11% | 27.42% | 61.51% | 5.95% | 0.43% |
| ABN AMRO EQUITY OPP | 15.80 | 2.54% | 5.93% | 42.22% | - | 5.28% | 0.94% |
| HDFC CORE & SATELLITE | 19.79 | 2.53% | 6.77% | 34.17% | 76.48% | 4.92% | 0.76% |
(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.)
The week gone by was a good one for funds from the diversified equity segment. Birla Sun Life Equity (2.86%) emerged as the topper in this segment. It was closely followed by Sundaram India Leadership (2.70%).
Category leaders Sundaram Growth (2.00%) and Franklin India Bluechip (1.50%) had a good week. However, HSBC Equity (-0.46%) languished in negative terrain. While midcap majors Magnum Global (2.01%) and Sundaram Select Midcap (1.43%) had a decent week, Franklin India Prima (0.23%) turned in an ordinary performance.
We have rarely seen a time when the mutual fund investor has been overwhelmed with so many investment options. Even as this article is being written, there are at least half a dozen new fund offers' (NFOs) in the market.
There are thematic funds targeting the services and infrastructure sectors, the India story and the contrarian style of investing among other themes. Then there are tax-saving NFOs, several of them close-ended.
In other funds, the investor is spoilt for choice, that is why it is even more imperative for him to stay razor sharp in identifying his investment objectives and make investments that will effectively fulfill them. Remember that your investment objectives define which funds, both existing and NFOs, must make it to your portfolio.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| LIC BOND | 19.01 | 0.20% | 0.84% | 2.84% | 5.35% | 0.51% | -0.53% |
| MAGNUM INCOME | 19.03 | 0.15% | 0.69% | 1.99% | 5.20% | 0.65% | -0.57% |
| TATA DYNAMIC BOND | 11.29 | 0.13% | 0.40% | 2.39% | 7.02% | 0.46% | -0.35% |
| SUNDARAM BOND SAVER | 21.89 | 0.13% | 0.51% | 1.73% | 3.39% | 0.60% | -0.71% |
| PRUICICI LONGTERM | 14.47 | 0.12% | 0.55% | 2.31% | 8.27% | 0.73% | 0.21% |
The benchmark 7.38% 2015 yield closed at 7.09%, down by 1 basis point over the previous week. Yield is inversely related to bond prices; a fall in bond prices leads to an upward movement in the yield and vice-versa.
LIC Bond (0.20%) ended the week as the topper in the debt fund category followed by Magnum Income (0.15%). Tata Dynamic Bond and Sundaram Bond Saver occupied the third place jointly with returns of 0.13%.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-year | 3-year | SD | SR |
| BOB BALANCED | 21.18 | 3.32% | 5.06% | 56.08% | - | 4.98% | 0.40% |
| MAGNUM BALANCED | 20.08 | 2.24% | 4.31% | 61.24% | 55.43% | 3.14% | 1.12% |
| JM BALANCED | 17.43 | 2.11% | 5.76% | 42.17% | 29.67% | 4.19% | 0.32% |
| TATA BALANCED | 38.39 | 1.95% | 6.05% | 44.26% | 43.31% | 4.66% | 0.38% |
| UTI US 2002 | 12.06 | 1.69% | 3.88% | 34.15% | 27.13% | 3.48% | 0.31% |
Balanced funds had a good week benefiting from the upswing in the equity markets. BOB Balanced (3.32%) took the first spot in this segment followed by Magnum Balanced (2.24%) and JM Balanced (2.11%). Category leader HDFC Prudence (0.48%) had an average week.
A lot of investors who are finalising their tax-saving investments have expressed concern over the high stock market levels. For these investors, the high stock market valuations act as a barrier for investing in tax-saving funds/ELSS (equity-linked savings scheme).
In fact, the 9,500-point Sensex level has 'spooked' even the most aggressive investors. One desolate investor in particular indicated that he would rather 'invest' in a mediclaim for tax-saving rather than invest in a tax-saving fund at this stage.
To allay such concerns, we would like to reiterate that tax-saving funds bring a slightly different value proposition to the table for the aggressive investor. For one, they have a tax benefit (under Section 80C), so they are a part of 'compulsory investments' for the aggressive investor.
The only other tax-saving option that fits in the high-risk, high-return investment category is ULIPs (unit-linked insurance plans) and we have our views on the high expenses over there.
Tax-saving funds have a mandatory 3-year lock-in, so even if stock markets are expensive going by present valuations, they are certainly attractive over the 3-5 year investment time frame. Even the most 'cautious' equity investor needs to keep that in mind while conducting his tax-planning exercise.
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