A question that we at Personalfn routinely encounter from prospective investors is, "Is fund XYZ an investment-worthy proposition?" Now that's a tricky question to answer because the answer could be both -- yes and no.
Yes -- if the fund makes the grade on certain defined parameters. No -- despite having made the grade, the fund need not be right for the investor in question.
For us to be able to make a recommendation, we need to be unambiguously aware of the prospective investor's risk profile, investment portfolio and financial objectives, among other factors.
This scenario stems from the fact that there is no such thing as a universally valid investment proposition. The concept of "one size fits all" doesn't work while investing. For example, a mutual fund scheme which makes a perfect fit in an investor's portfolio could be grossly unsuitable for another.
A diversified equity fund with a proven track record across longer time frames and market phases could merit inclusion in a 30-year old risk-taking investor's portfolio. However the same fund should perhaps not find place in a 65-year old retiree's portfolio who has no appetite for taking on risk and for whom capital protection and assured income is a priority.
A review of the investor's investment portfolio and financial objectives is relevant as well. An investor, whose portfolio is lop-sided in favour of mid cap funds, shouldn't be making any further investments in mid/small cap funds. Instead, he should consider adding to his portfolio a large cap fund, to make his portfolio a well-diversified (across market segments) one.
Similarly, an investor who holds a debt-dominated portfolio and is planning for his retirement 30 years hence, would do well to hike the equity component by investing in some diversified equity funds.
The key lies making an investment that is right for the investor, after giving due consideration to a range of parameters. The Personalfn Research Team recently listed its leading picks from the equity funds segment, which investors should consider adding to their portfolios.
Expectedly, the recommendation came with a caveat. The allocation to each/either of the funds needs to be made in line with the investors' needs and risk profile. To incorporate that element of customisation in the investment portfolio, investors need to contact their financial planner/investment advisor.
Last week was good for investors, as markets closed in positive terrain. The BSE Sensex posted a gain of 0.90% and closed at 14,183 points; the S&P CNX Nifty ended at 4,090 points (up by 0.94%). Mid cap stocks stole a march over their large cap peers. The CNX Midcap rose by 1.05% and closed at 5,283 points.
Leading open-ended diversified equity funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| ING Vysya ATM | 11.28 | 3.30% | 8.57% | 40.12% | - | 8.73% | 0.11% |
| StanChart Classic | 16.35 | 2.74% | 9.07% | 41.60% | 33.33% | 7.43% | 0.33% |
| ABN AMRO Dividend Yield | 11.28 | 2.68% | 10.21% | 31.37% | 1.36% | 6.87% | 0.04% |
| DBS Chola Opportunities | 29.01 | 2.65% | 9.10% | 64.92% | 45.93% | 6.58% | 0.43% |
| Birla Dividend Yield | 43.95 | 2.52% | 9.03% | 32.30% | 13.57% | 5.51% | 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.)
ING Vysya ATM (3.30%) surfaced as the top performer in the diversified equity funds segment, followed by StanChart Classic (2.74%) and ABN AMRO Dividend Yield (2.68%).
Leading open-ended long-term debt funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| DSP ML Bond | 24.83 | 0.32% | 0.46% | 2.95% | 4.25% | 0.32% | -0.52% |
| Birla Dynamic Bond | 11.31 | 0.27% | 0.33% | 3.26% | 5.98% | 0.14% | -0.59% |
| Birla Sun Life Income | 25.64 | 0.23% | 0.03% | 4.66% | 7.26% | 0.37% | -0.18% |
| Birla Income Plus | 30.28 | 0.22% | -0.09% | 2.90% | 4.99% | 0.30% | -0.55% |
| ABN AMRO Flexi Debt | 11.40 | 0.16% | 0.66% | 5.02% | 8.67% | 0.35% | -0.09% |
Funds from Birla Sun Life Mutual Fund dominated proceedings in the long-term debt funds segment. DSP ML Bond (0.32%) led the pack, while Birla Dynamic Bond (0.27%) occupied second position. Birla Sun Life Income (0.23%) and Birla Income Plus (0.22%) also featured among the top performers.
Few would dispute the fact that conditions in debt markets haven't been conducive from a long-term (over 12 months) investment perspective for some time now. Interest rates are on the rise and factors like growing inflationary pressures and rising demand for credit could well push interest rates even higher.
In light of the same, the Personalfn Research Team put forth leading debt fund categories, which investors should consider for making investments in 2007.
Leading open-ended balanced funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| BOB Balanced | 22.87 | 2.56% | 4.67% | 19.74% | 10.22% | 5.80% | 0.30% |
| Escorts Balanced | 48.54 | 2.16% | 7.94% | 28.24% | 29.48% | 4.38% | 0.54% |
| CanBalance II | 38.27 | 1.81% | 4.85% | 20.88% | 34.56% | 4.67% | 0.56% |
| Tata Balanced | 51.11 | 1.77% | 6.73% | 33.70% | 34.65% | 4.83% | 0.48% |
| PruICICI Balanced | 35.93 | 1.64% | 7.64% | 31.04% | 29.80% | 4.40% | 0.55% |
BOB Balanced (2.56%) topped the balanced funds segment. Escorts Balanced (2.16%) and CanBalance II (1.81%) came in at second and third positions respectively.
In conclusion, we would like to reiterate our view on the importance of having access to credible and expert advice that is customised to meet "your" needs.
Investors would do well to associate themselves with a financial planner/investment advisor who can deliver on that front. And if your advisor pursues the 'one size fits all' approach, it's time you started looking elsewhere.
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