Broadly speaking, any investor who is planning his finances needs to commence by setting investment objectives. These objectives would depend on his specific needs and aspirations. Also, the objectives would typically run over varied time frames; for example, short-term (going on a vacation), medium-term (buying a car) and long-term (planning for retirement).
The next step would be to make investments to achieve the desired objectives. The same would entail drawing up investment plans, taking into account factors like the investor's risk profile and existing portfolio. An investment advisor/financial planner would typically have a role to play at this stage.
A vital step that links the aforementioned steps involves quantifying investment objectives. In other words, each investment objective needs to be converted into monetary terms. For example, if the investor wishes to provide for his children's education, he needs to be unambiguously aware of the money that he will need to set aside for this task.
Investors expect the investment advisor to pitch in at this stage too. Number-crunching isn't everybody's cup of tea. Or is it? Actually, the presence of easy-to-use calculators can make the seemingly complex number-crunching look like child's play. For example, Personalfn's Education Planner can help investors provide for their children's education by keying in elementary information like the child's present age, time on hand and cost of education, among others.
Click here for Personalfn's Quick Calcs section
Not too long ago, we discussed the importance of investors actively participating in the investment process, as the same will lead to more informed investment decisions being made. We believe investors involving themselves in the numerical computation will only further this cause.
It was a volatile week at the markets; the benchmark indices ended the week in positive terrain, albeit marginally. The BSE Sensex rose by 0.70%, before settling at 14,163 points; the S&P CNX Nifty closed at 4,171 points, up by 0.63%. The CNX Midcap posted a gain of 1.07% and closed at 5,651 points.
Leading open-ended equity funds
| Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| Reliance Pharma | 24.54 | 4.30% | 11.35% | 25.51% | 67.72% | 8.68% | 0.27% |
| Magnum Emerg. Businesses | 32.08 | 2.89% | 6.26% | 8.82% | 55.35% | 8.16% | 0.30% |
| Sundaram Capex Opp. | 18.70 | 2.37% | 6.33% | 8.50% | 60.51% | 8.88% | 0.34% |
| Can Emerg. Equities | 17.45 | 2.23% | 7.19% | 10.16% | 47.63% | 8.10% | 0.29% |
| Magnum Multiplier Plus | 56.36 | 2.18% | 3.41% | 7.29% | 57.08% | 7.65% | 0.43% |
(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.)
Sector and thematic funds dominated proceedings in the equity funds segment. Reliance Pharma (4.30%) towered head and shoulders above its peers. Magnum Emerging Businesses (2.89%) and Sundaram Capex Opportunities (2.37%) came in at second and third positions respectively.
Leading open-ended long-term debt funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| DBS Chola Gilt Inv. | 19.02 | 1.16% | 1.41% | 2.31% | 5.93% | 1.13% | -0.29% |
| JM GSec RP | 21.44 | 0.41% | 0.57% | 1.91% | 4.20% | 0.48% | -0.56% |
| DBS Chola Triple Ace | 23.94 | 0.20% | -1.42% | 0.50% | 1.69% | 0.48% | -0.76% |
| Escorts Floating | 10.80 | 0.19% | 0.77% | 3.40% | 5.59% | 0.30% | -0.28% |
| Tata Dynamic Bond | 12.31 | 0.18% | 0.84% | 4.24% | 7.08% | 0.21% | -0.73% |
The 10-Yr 8.07% GOI yield closed at 8.15% (June 15, 2007, source: Reserve Bank of India website), unchanged over the previous weekly close.
DBS Chola Gilt (1.16%) topped the long-term debt funds segment, followed by JM GSec RP (0.41%). DBS Chola Triple Ace (0.20%) also featured in the list.
Leading open-ended balanced fundsfunds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| BOB Balanced | 24.61 | 1.32% | 2.46% | 10.46% | 30.01% | 6.16% | 0.19% |
| Principal Balanced | 22.55 | 0.85% | 0.58% | 4.30% | 29.30% | 5.34% | 0.26% |
| Canbalanced II | 38.76 | 0.83% | 1.52% | 3.72% | 23.64% | 5.08% | 0.44% |
| HDFC Balanced | 31.68 | 0.76% | 1.35% | -0.04% | 26.60% | 4.88% | 0.28% |
| Canbalance | 28.94 | 0.73% | 2.15% | 3.43% | 25.01% | 4.47% | 0.20% |
BOB Balanced (1.32%) led the pack in the balanced funds segment. Principal Balanced (0.85%) and CanBalanced II (0.83%) occupied second and third positions respectively.
At times, investors are tempted to shift their investments from one fund to another. This involves bearing costs in terms of exit/entry load or both in some instances. Over the long-term, these costs add up and have a detrimental impact on the overall returns. This week, we conducted a study to demonstrate the impact of such churn. And the results were eye-opening!
In our view, an incessant portfolio churn is indicative of lack of consistency and discipline in investing, the two most important virtues required while managing finances. Investors would do well to imbibe these virtues and steer clear of churning their investments.
By Personalfn.com, a financial planning initiative
Your search for an honest financial planner ends here. Read on
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