This article was earlier carried with the title Mutual Funds: Gainers & Losers on May 3, 2005. Unfortunately an error crept into the article since the query, which was run to compute year-to-date returns, failed to factor in dividends declared by UTI Master Value Fund and Sundaram India Leadership Fund; as a result the funds emerged as the biggest losers. In view of the same, we at Personalfn have revisited the article with an updated losers' list.
It has been a rather interesting run for the equity markets in calendar year 2005. The year began at a time when markets were in the midst of a bull run and investors' excitement levels seemed unbounded.
After touching record highs, the markets lost steam and how! The unbridled optimism now seems like a thing of the past and investors have adopted a cautious approach.
At Personalfn we decided to study how schemes from the diversified equity funds category have performed on a year-to-date basis and determine who the top gainers and losers are.
Winners take it all. . .
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Losers take the fall. . .
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Let us start off with the gainers. Magnum Emerging Business (16.51%) emerges as the leader followed by fund house peer Magnum Global (11.52%). Clearly funds investing pre-dominantly in the mid cap segment (for example Reliance Growth (9.00%), Chola Mid cap (6.47%) among others) have clocked impressive growth figures during the period under consideration.
The benchmark indices only further corroborate these observations; while the BSE Sensex (which broadly represents stocks of the large cap variety) has shed 7.85%, the S&P CNX Midcap 200 has gained 4.85% during the January 2005 to April 2005 period.
The impressive performances pitched in by funds of the mid cap variety notwithstanding, investors would do well to appreciate the risks associated with such investing.
Not only do mid cap/small cap companies tend to be under researched there is a greater chance that you may miss factoring in some 'reasons not to buy'. And even after investing in such companies, regular information is hard to come by.
Rank top performing funds across categories
Now for the interesting part -- the losers, i.e. funds which inflicted maximum financial damage on their investors.
Unlike the top gainers category where funds investing in the mid cap variety ruled the roost, there is no single perceptible trend in the losers' category.
Funds with a large cap bias in their holdings, for example Franklin India Bluechip (-8.31%), DSP ML Top 100 (-8.68%) and Sundaram Growth (-6.32%) feature in the list.
Another category on the receiving end is funds of the "opportunities" variety i.e. ones who have a flexible investment mandate to move across market segments i.e. HSBC India Opportunities (-9.00%), Deutsche Alpha Equity (-8.60%) and Deutsche Investment Opportunity (-8.43%).
While a 4-month time frame is too short to draw conclusions on an equity-oriented asset class, nevertheless monitoring your investments on a regular basis always helps. It can bring out some relevant trends in the investment scenario to the investors' notice.
Also monitoring investments regularly can help investors assess how well their investments are performing and take necessary corrective measures.
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