The high point of the week was the breaching of the 6,500-point barrier by the BSE Sensex before it closed lower at 6,498 points (up 2.39%). The S&P CNX Nifty closed at 2,063 points (up 2.53%).
The feel-good factor continued unabated as the markets showed no signs of letting up.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| PRU ICICI EMERGING STAR | 11.45 | 4.71% | 12.02% | - | - | - | - |
| RELIANCE GROWTH | 110.34 | 3.38% | 11.08% | 63.15% | 43.06% | 7.97% | 0.66% |
| FRANKLIN INDIA PRIMA FUND | 106.51 | 3.19% | 8.99% | 57.56% | 35.75% | 8.51% | 0.63% |
| DSP ML TIGER | 13.62 | 3.04% | 12.65% | 36.22% | - | 5.81% | 0.84% |
| BIRLA MIDCAP | 30.58 | 3.03% | 8.79% | 50.62% | 33.04% | 7.32% | 0.56% |
Equity funds were propped by a surge in mid caps. All the leading funds benefited from the mid cap rally. PruICICI Emerging Star (4.71%) witnessed the sharpest appreciation followed by Reliance Growth (3.38%).
With equity markets sustaining a robust streak, it's not surprising to find fund houses doing their bit to join the party. Mutual fund initial public offerings (IPOs) continue unabated with new themes and ideas, never mind if some of them are mere "remixes".
Mid cap funds, multi-cap funds and thematic funds are the order of the day making it that much more difficult for investors to make up their minds. The best way to assess IPOs is to see if they can add significant value to your existing investment portfolio and coincide with your risk profile.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| DEUTSCHE DYN. BOND | 10.15 | 0.72% | 2.30% | 2.79% | 1.70% | 1.13% | -0.37% |
| ING INCOME | 16.73 | 0.54% | 1.61% | 0.67% | 0.20% | 0.87% | -0.32% |
| KOTAK BOND DEP | 16.88 | 0.49% | 2.07% | 1.78% | 1.64% | 0.92% | -0.19% |
| ALLIANCE INCOME | 22.84 | 0.49% | 2.07% | 0.35% | 0.56% | 0.86% | -0.23% |
| JM INCOME | 26.55 | 0.48% | 1.12% | 1.38% | 0.83% | 0.89% | -0.22% |
Debt funds benefited from falling yields. The 10-Yr GOI benchmark yield fell by 11 points to 6.66 points. Bond yields and prices have an inverse relationship, a fall in bond yields leads to a rise in bond prices.
That explains the surge in NAVs of long-term debt funds over the week. Deutsche Dynamic Bond (0.72%) led the rankings with ING Income (0.54%) a distant second.
Never in the past have we seen such an emphatic appeal for long-term investing from the mutual fund industry. Templeton Pension Plan (TPP) is one fund that allows investors to benefit from long-term investing and gives them a tax benefit on it!
TPP is the country's first and only central government approved private sector pension scheme under Section 88. To put it simply, investments in TPP are eligible for Section 88 tax benefits (rebate). While TPP appears like any other tax-saving fund (ELSS) that is eligible for Section 88 tax benefits, it's a lot more tax-friendly.
An investor can claim tax benefits in TPP upto investments of Rs 70,000.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | SD | SR |
| KOTAK BALANCE | 16.32 | 2.23% | 7.62% | 25.90% | 31.31% | 5.49% | 0.46% |
| PRU ICICI BAL | 18.86 | 2.12% | 6.21% | 17.72% | 30.09% | 5.00% | 0.47% |
| ALLIANCE 1995 | 101.86 | 1.98% | 9.27% | 26.05% | 33.92% | 5.38% | 0.52% |
| HDFC PRUDENCE | 56.76 | 1.81% | 7.10% | 26.36% | 43.72% | 4.84% | 0.67% |
| BIRLA BALANCE | 17.62 | 1.56% | 7.27% | 18.16% | 27.89% | 5.05% | 0.48% |
It was a good week for balanced funds mainly on the back of a surge in equity markets and falling bond yields. Kotak Balance was the leader (2.23%) followed by PruICICI Balanced (2.12%). Category leader HDFC Prudence (1.81%) also made it to the top 5 balanced funds.
There is little doubt that few investment avenues can match the 'financial planning' potential of mutual funds.
Planning for child's education and retirement planning are two important milestones that mutual funds can help you deal with in a fairly uncomplicated manner.
This is mainly due to the long-term potential of equities that mutual funds can help you harness. While there are other avenues like stocks and small savings schemes like NSC and PPF that can also prove useful to meet the stated milestones, mutual funds provide the services of a professional fund manager who can get you a bigger bang out of the proverbial buck.
At Personalfn we have always endorsed long-term investments in equity-linked instruments. Therefore it is heartening to see investors and fund houses also singing the same tune.
Long-term investment options at the individual's disposal have also increased considerably. Hopefully, long-term investing will become a part of the investor's DNA and not just a passing fad.