It was one of those weeks when it seemed like the equity markets could do no wrong. The BSE Sensex touched record highs during the week; it posted a gain of 4.77% to close the week at 6,323 points while the S&P CNX Nifty rose by 4.94% to end at 1,995 points.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | Incep. | SD | SR |
| PRINCIPAL EQUITY | 18.70 | 6.19% | 10.00% | 21.04% | 23.11% | 7.48% | 6.10% | 0.42% |
| SUNDARAM SEL. FOCUS | 26.20 | 5.72% | 8.14% | 27.18% | 25.64% | 50.98% | 6.76% | 0.51% |
| UTI THEMATIC LARGE CAP | 10.71 | 5.62% | 8.62% | 28.26% | - | 8.07% | 8.44% | 0.13% |
| HDFC TOP 200 | 48.34 | 5.48% | 9.03% | 31.37% | 35.97% | 29.51% | 7.32% | 0.57% |
| DSP ML TIGER | 12.65 | 5.33% | 9.43% | - | - | 27.01% | 4.66% | 0.90% |
Principal Equity Fund (6.19%) emerged as the top performing fund from the diversified equity funds segment followed by Sundaram Select Focus (5.72%) and UTI Thematic Large Cap (5.62%).
Contrary to the trend witnessed in the recent past when funds investing in the mid cap segment would emerge as top performers, this week funds of the large cap variety came to the fore. The reversal in trend was perhaps best reflected in Magnum Global's (1.43%) modest performance.
Category leaders HDFC Top 200 (5.48%), HSBC Equity (4.74%) and Franklin India Bluechip (3.79%) had a good week as well.
Mutual funds have a fairly large number of critics; the most common grouse being that they are dull, boring and not remunerative enough. Quite oddly the last few weeks (when the markets rose sharply) provided evidence of how mutual funds have an edge over stocks.
At a time when the stock prices of a given corporate were tumbling, the net asset value (NAV) of mutual funds from an AMC promoted by the same corporate rose sharply. The reason lies in the AMC-Trustee-Sponsor relationship which works in the investors' favour.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | Incep. | SD | SR |
| DEUTSCHE DYN. BOND | 10.05 | 1.34% | 1.48% | 0.17% | 2.13% | 0.64% | 1.02% | -0.49% |
| ALLIANCE INCOME | 22.66 | 1.34% | 0.74% | -1.73% | 0.45% | 11.13% | 1.01% | -0.17% |
| KOTAK BOND DEP | 16.72 | 1.18% | 0.98% | -0.34% | 1.84% | 10.64% | 1.18% | -0.10% |
| DSP ML BOND | 22.53 | 1.11% | 0.73% | -1.26% | 0.65% | 11.22% | 1.15% | -0.15% |
| UTI - BOND ADVANTAGE | 16.94 | 1.00% | 0.54% | -1.78% | 0.31% | 10.22% | 1.32% | -0.13% |
It was a good week for the debt markets as yields fell; yields and bond prices share an inverse relation with falling yields translating into higher bond prices and net asset value (NAV) for debt fund investors.
The benchmark 7.37% 2014 GOI yield closed at 6.79% (December 3, 2004), 42 basis points below the previous weekly close. In the debt funds segment, Deutsche Dynamic (1.34%) shared the top slot with Alliance Income (1.34%).
In our view, the debt markets present an investment opportunity at current levels. We believe that interest rates have peaked and therefore there is an opportunity to lock-in money at these higher levels.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| JM BALANCED | 12.27 | 3.20% | 4.34% | 11.62% | 19.36% | 14.31% | 4.23% | 0.33% |
| ESCORTS BAL | 24.48 | 2.91% | 5.10% | 22.41% | 31.90% | 27.77% | 5.88% | 0.41% |
| BIRLA BALANCE | 16.91 | 2.80% | 5.89% | 20.96% | 25.67% | 12.27% | 5.13% | 0.46% |
| DSP ML BAL | 21.07 | 2.73% | 4.98% | 27.08% | 31.91% | 14.59% | 4.46% | 0.62% |
| ALLIANCE 1995 | 96.38 | 2.63% | 7.99% | 27.28% | 31.27% | 27.05% | 5.35% | 0.49% |
Investors in the balanced funds segment had no reason to complain either; balanced funds posted smart growths powered by strong growths in both equity and debt markets. The top performers ranged from 2.63% to 3.20%; JM Balanced (3.20%) emerged as the weekly topper followed by Escorts Balanced (2.91%). Category leader HDFC Prudence (2.51%) had a reasonable week.
How long the surge in the markets will last is anyone's guess. However, what investors do have within their control are their portfolios.
Investors must resist the temptation to get invested with a view to rake in quick profits and should instead utilise the opportunity to book a part of their profits and restructure their portfolios.
This will ensure that investors have something to show for, irrespective of how the markets behave hereafter.