Financial planning activity involves various steps. It starts with setting goals/objectives, selecting the right investment avenues, allocating assets to the short-listed avenues depending on the objective and finally executing the plan by investing. Now, if you are under the impression that your financial planning exercise is over, then you are mistaken.
On the contrary it only marks the beginning of another step that ideally should be carried on a regular basis, but is not given due importance, i e. regular tracking of your investments.
While tracking investments on a regular basis often finds a mention in the context of financial planning, it is rarely practiced. Tracking, in the reference of investing, means keeping a close watch on your investments to find out where they are headed and if they are performing in line with expectations/projections.
There are several reasons why your investment plans need to have a re-look and may require necessary adjustment. One such reason is when stock markets change their course over a period of time.
In such a scenario, you may have to redeem some of your equity investments (if you have accumulated more equity than what your asset allocation plan permits you to) or buy more (if stock markets decline and your equity allocation is way below what it should be) depending on your risk appetite.
We have always reiterated that investors should hold multiple investment portfolios, each catering to a particular need or objective. This again emphasises the importance of tracking investments as it has a direct bearing on your future needs. Thus, any wrong investment, if not tracked, can have an adverse impact on your portfolio and also on your financial requirements.
For investors, keeping a regular track of their investments provides them with the opportunity of identifying duds in their portfolio. Subsequently, they can do away with such non-performing investments and add the right investments to their portfolios.
Investors would do well to understand that investing is an ongoing financial planning exercise and not a one-time activity. As time progresses, needs change with one or more of your goals being achieved, thus prompting the need to revamp the portfolio regularly.
Investors who regularly track their investments find this a lot easier as they are aware of their portfolio and are well-placed to make timely adjustments.
Besides tracking of investments, diversification of portfolio is another essential aspect of financial planning. In our view, this must be regarded as one of the basic tenets of financial planning. Personalfn presents 5 ways to diversify your portfolio that should aid you in achieving the desirable degree of diversification in your portfolio.
After a good showing last week, this week again saw stock markets slide in negative terrain. The BSE Sensex shed 1.61% during the week to close at 13,072 points, while the S&P CNX Nifty ended at 3,822 points (down by 1.01%). The CNX Midcap fell by 0.10% and closed at 4,850 points.
Leading open-ended equity funds
| Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| Magnum Pharma | 33.66 | 2.28% | 2.19% | -3.25% | -2.99% | 7.47% | 0.22% |
| UTI Pharma & Healthcare | 21.46 | 2.19% | 3.07% | 0.47% | -6.82% | 7.03% | 0.12% |
| Franklin FMCG | 32.59 | 2.10% | -2.22% | -8.20% | -11.90% | 6.31% | 0.26% |
| Franklin Pharma | 28.67 | 1.70% | 3.39% | 4.29% | -3.37% | 6.39% | 0.20% |
| JM Healthcare | 16.88 | 1.50% | 1.08% | 4.78% | -6.64% | 6.84% | 0.15% |
(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.) http://www.personalfn.com/detail.asp?date=3/31/2007&story=5Funds from the pharma sector dominated proceedings in the equity funds segment. Magnum Pharma (2.28%) and UTI Pharma & Healthcare (2.19%) occupied the top two slots. Franklin FMCG (2.10%) and Franklin Pharma (1.70%) also featured among the top performers.
Leading open-ended long-term debt funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| DBS Chola Triple Ace | 24.23 | 1.12% | 1.30% | 1.72% | 3.33% | 0.30% | -0.93% |
| Libra Bond | 14.22 | 0.78% | 1.18% | 5.04% | 7.09% | 0.51% | -0.61% |
| Birla Floating | 12.33 | 0.29% | 0.83% | 3.80% | 6.76% | 0.09% | -0.62% |
| Principal Income | 10.52 | 0.28% | 0.52% | 2.54% | 7.00% | 0.36% | -0.10% |
| Birla Income Plus | 30.30 | 0.25% | 0.09% | 1.39% | 4.88% | 0.36% | -0.74% |
The 10-year 8.07% GOI yield closed at 7.94% (March 30, 2007, Source: RBI website), 1 basis points below the previous weekly close. Bond yields and prices are inversely related, with falling yields translating into higher bond prices and net asset value (NAV) for debt fund investors.
DBS Chola Triple Ace (1.12%) emerged as the best performer in the long-term debt funds segment. Libra Bond (0.78%) and Birla Floating (0.29%) came in at second and third positions respectively. Another fund from Birla Sun Life Mutual Fund i.e. Birla Income Plus (0.25%) also featured in the top performers' list.
Leading open-ended balanced funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| BOB Balanced | 22.07 | 0.78% | 1.80% | 0.78% | -5.79% | 6.01% | 0.16% |
| Birla Balance | 27.33 | 0.11% | 0.66% | 4.23% | 10.11% | 4.05% | 0.33% |
| Birla Sun Life 95 | 172.56 | 0.01% | -0.42% | 6.09% | 12.42% | 5.09% | 0.33% |
| Escorts Balance | 44.26 | -0.14% | 0.24% | 1.91% | 4.39% | 5.10% | 0.33% |
| HDFC Prudence | 110.13 | -0.17% | -1.22% | 6.72% | 15.82% | 4.22% | 0.48% |
BOB Balanced (0.78%) was the leading balanced fund over the week, followed by Birla Balance (0.11%) and Birla Sun Life 95 (0.01%).
Our advice to investors is that they track their portfolios and keep a close watch on their progress so that at any point in time their investments do not veer away in the wrong direction.
Taking the help of a competent and experienced financial advisor/consultant for this will definitely prove to be beneficial. He will not only help in drawing the investment plan but will also help in tracking the same regularly.
By Personalfn.com, a financial planning initiative. It can be reached at info@personalfn.com. Personalfn.com also publishes a free-to-download financial planning guide, Money Simplified. To get a copy of the latest issue - How ULIPs fit in - please click here.
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