Part I: How equity funds help you make money
Yesterday, we spoke about the returns you can get from a diversified equity fund. Today, we present you with five diversified equity funds you can consider investing in.
All the data presented is as on February 2, 2007.
Net Asset Value is the price of a unit of a fund.
Birla Sun Life Equity
NAV: Rs. 190.83
One-year return: 41.75%
Five year return: 49.42%
This is one fund that has evolved over the years.
From erratic performances, it is now a more stable product.
It shot to fame in 1999 with a dazzling performance of 280%. Investors then had to deal with two terrible years (2001 and 2002) when the fund did not do well. But the fund is now back on track.
The fund also had a concentrated portfolio. It tended to invest heavily in few stocks and sectors. For instance, in September 1998, it invested in only 23 stocks. In March 2000, the technology stocks were 62.13% of the entire portfolio.
This has changed and now the fund manager invests in many more stocks.
Franklin India Prima Plus
NAV: Rs. 146.15
One-year return: 49.09%
Five year return: 47.31%
Want a well-diversified fund that invests mainly in large-caps and gives fairly decent returns? Then Franklin India Prima Plus is your cup of tea.
Launched in September 1994, it started of as a stock collector and had nearly 200 stocks in its kitty by March 1996. The relentless cleaning of the portfolio took years and the January 2001 portfolio revealed 40 stocks. Today, the fund has around 36 stocks.
Thanks to big bets in technology stocks, the fund delivered 39% and 209% in 1998 and 1999 respectively (category average: 4.47% and 127%).
But those days of racy returns are over. While the fund delivers positive returns, it just about beats the average returns of the category. That is the essence of this fund: No flashy returns and no sleepless nights.
HDFC Equity
NAV: Rs. 153.66
One-year return: 36.66%
Five year return: 50.90%
Since 1995, HDFC Equity has always beaten the average returns of the category, barring 1996.
The fund is tilted towards large-cap stocks. The fund manager does not believe in filling his portfolio with stocks. He tends to have around 30 stocks in his portfolio. He also does not hesitate to move in and out of performing sectors and stocks.
This fund has delivered great returns with low risk.
Magnum Contra
NAV: Rs. 39.55
One-year return: 45.56%
Five year return: 62.07%
Being contrarian in nature, this fund will focus on stocks that are currently 'out of favour'. Stocks that no one else is looking at and which don't seem to attract any other investors. But the fund manager will buy these stocks because he believes the fundamentals are good.
In 2004, this fund shot to fame as the second best performing fund with a 64.49% return. In 2005, it was the third best performing fund with a 71% return.
The fund is tilted towards large-cap stocks and is very well diversified with around 45 stocks.
You can invest in this fund to complement your other investments.
Reliance Vision
NAV: Rs. 188.01
One-year return: 41.91%
Five year return: 62.14%
Initially, the fund was not a great performer. But it stole the show in 2002 with a return of 74.58%. Sceptics who wrote it off as a stroke of luck had to shut up the next year when the fund delivered 155.16%. Just when the fund managed to wow everyone, it delivered only 19.81% in 2004.
These volatile returns are typical of the fund. If you plan to invest in this fund because of its returns, then get ready to hold tight when it falls or the returns are not that great. Invest in this fund with a long-term perspective in mind.
Part I: How equity funds help you make money
Value Research is a mutual fund research organisation.
