Patience is key for retail investors

Last week, the markets finally managed to close in the positive terrain after hovering in negative territory for three weeks in a row. The BSE Sensex posted a modest gain of 1.12 per cent to close at 4,889 points while the S&P CNX Nifty rose by 0.80 per cent to end at 1,521 points. However the markets experienced their fair share of turbulence and bad days also.

Leading Diversified Equity Funds

Diversified Equity Funds	NAV (Rs)	1-Wk	1-Mth	1-Yr	3-Yr	Incep.	SD	SR
FRANKLIN BLUECHIP G	46.65	1.30%	-13.58%	79.77%	31.13%	26.60%	8.10%	0.35%
BIRLA DIVIDEND YIELD G	19.75	1.23%	-15.78%	67.94%	NA	69.54%	9.40%	0.48%
DEUTSCHE INVESTMENT OPP G	8.59	1.06%	-15.70%	NA	NA	-13.23%	8.23%	-0.90%
DEUTSCHE ALPHA EQUITY G	18.37	0.93%	-14.95%	83.33%	NA	20.67%	9.09%	0.41%
MAGNUM EQUITY	11.27	0.81%	-14.17%	71.63%	17.81%	11.12%	7.53%	0.22%

(Data sourced from Credence Analytics.)
(NAV data as on June 04, 2004. Growth over 1-Yr is compounded annualised)
(Standard deviation indicates by how much the values have deviated from the mean of the values.
It measures by how much the investor has diverged from the mean return either upwards or downwards.
It highlights the element of risk associated with the fund.)

It was a modest week for diversified equity funds. Category leader Franklin India Bluechip (1.30 per cent) topped the weekly performers list as well; while Birla Dividend Yield (1.23 per cent) occupied the second position. Leading equity fund HDFC Top 200 (0.59 per cent) had an ordinary week.

While mutual fund investors are known to keenly track returns on their schemes, important aspects like loads charged are often ignored by them. Entry loads charged by funds represent a fee charged to enable investors to participate in the scheme. This fee is deducted from the amount invested and a proportionately lower amount is invested into the fund.

In order to counter this (apart from looking for funds with lower loads), the possibility of investing through the systematic investment plan route should be explored. Funds have been known to waive off entry loads for investors who opt to invest through the SIP route vis-à-vis lump sum investments. The next time you see your fund's fact sheet, make sure to inspect how it performs on the load front. Try to ensure that you get as much money as possible working for you.

Leading Income Funds

Income Funds	NAV (Rs)	1-Wk	1-Mth	6-Mth	1-Yr	Incep.	SD	SR
PRU ICICI FLOATING RATE G	10.59	0.09%	0.37%	2.32%	4.97%	4.96%	0.03%	-5.10%
BIRLA FLOATING RATE LTP G	10.52	0.09%	0.38%	2.29%	5.15%	5.15%	0.07%	-1.92%
TEMPLETON FLOAT LTP G	11.53	0.09%	0.37%	2.44%	5.04%	6.28%	0.11%	-0.44%
DSP ML FLOATING RATE G	10.53	0.09%	0.39%	2.32%	4.98%	4.96%	0.03%	-5.64%
GRINDLAYS FLOAT. RATE PLAN	10.08	0.09%	0.38%	NA	NA	0.78%	0.04%	-3.22%

(Data sourced from Credence Analytics.)
(NAV data as on June 04, 2004, Growth over 1-Yr is compounded annualised)
(The Sharpe Ratio is a measure of the returns offered by the fund vis-à-vis those offered by a risk-free instrument)

There was no relief in sight for debt fund investors as yields continued to inch upwards. Bond prices and yields share an inverse relation with rising yields translating into lower bond prices. The 10-Yr benchmark 7.37 per cent 2013 GOI yield closed at 5.27 per cent (June 4, 2004), three basis points above the previous weekly close. Floating rate funds came to the fore this week and delivered range-bound returns. PruICICI Floating Rate surfaced as the leader followed by Birla Floating Rate.

Leading Balanced Funds

Balanced Funds	NAV (Rs)	1-Wk	1-Mth	1-Yr	3-Yr	Incep.	SD	SR
FT INDIA BALANCE GR G	13.85	0.61%	-6.91%	31.39%	NA	16.98%	5.15%	0.33%
HDFC BALANCE G	15.49	0.51%	-9.69%	38.29%	18.12%	12.72%	5.22%	0.23%
ESCORTS BAL G	19.19	0.37%	-11.83%	44.78%	23.35%	22.94%	6.27%	0.23%
MAGNUM BALANCE	12.73	0.32%	-11.10%	67.25%	17.78%	13.48%	5.81%	0.29%
PRINCIPAL BAL G	10.63	0.28%	-9.99%	50.99%	17.44%	-0.04%	5.75%	0.24%

(Data sourced from Credence Analytics.)
(NAV data as on June 04, 2004. Growth over 1-Yr is compounded annualised)

It was a mediocre week for both the equity and debt markets, and the results showed in the performance of balanced funds. FT India Balance (0.61 per cent) emerged as the weekly top performer, followed by HDFC Balance (0.51 per cent).

Personalfn interviewed Mr. N. Prasad, CIO, Sundaram Mutual wherein he shared his views on a wide variety of topics ranging from the markets to the mutual funds industry. He stressed on the need for the industry to introduce more products which could satisfy investor's varied needs.

His view on the markets was "expect a normal market in 2004 where there could be ups and downs and volatility. The one-sided secular run which we saw in 2003 is unlikely to be repeated". And his advice for the retail investor was simple "be patient".

Yet again an industry expert stresses on the need to stay invested over the long-term and not look for quick gains. Use the lows in the markets to get invested in small portions and spread your investments over a period of time.

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