October 2004 was nothing like September for mutual fund investors. Equity markets witnessed relatively modest growth unlike the robust rally last month. The BSE Sensex posted a monthly gain of 2.60% to close at 5,672 points (September 29, 2004), while the S&P CNX Nifty rose by 3.41% to close at 1,787 points.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Mth | 1-Yr | 3-Yrs | Incep. | SD | SR |
| CANGLOBAL | 10.04 | 6.70% | 43.22% | 30.48% | 6.61% | 6.62% | 0.51% |
| CANBONUS | 14.56 | 5.89% | 30.12% | 29.79% | 4.61% | 7.39% | 0.43% |
| CHOLA MID CAP | 11.86 | 5.80% | - | - | 13.83% | 0.36% | 11.21% |
| LIC INDEX FUND (SENSEX AP) | 13.81 | 5.62% | 13.37% | - | 25.72% | 6.73% | 0.23% |
| MAGNUM GLOBAL FUND | 14.78 | 5.20% | 66.84% | 47.74% | 8.49% | 6.69% | 0.65% |
(The Sharpe Ratio is a measure of the returns offered by the fund vis-à-vis those offered by a risk-free instrument) (Standard deviation highlights the element of risk associated with the fund.)
Canglobal (6.70%) emerged as the topper followed by its sibling -- Canbonus (5.89%). Mid cap stocks continued their good show and this saw a lot of mid cap funds feature among the leaders.
Chola Mid Cap and Magnum Global Fund also benefited from the mid cap rally. However, a noteworthy feature is the appearance of index funds in the rankings.
While there is only one -- LIC Index Fund (App) in the top 5 equity funds, the top 10 funds reveal some more index funds.
Category leaders had a mixed week. While HSBC Equity Fund slumped marginally (-0.05%), Franklin Bluechip (0.04%) fared slightly better and HDFC Top 200 Fund (2.21%) had a modest month.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Mth | 3-Mths | Incep. | SD | SR |
| BIRLA FLOATING RATE LTP | 10.72 | 0.46% | 1.24% | 5.06% | 0.06% | -2.29% |
| DSP-ML FLOATING RATE | 10.74 | 0.40% | 1.28% | 4.96% | 0.03% | -4.45% |
| CHOLA FLOATING RATE | 10.08 | 0.39% | 0.81% | 0.81% | 0.01% | -16.64% |
| GRINDLAYS FLOATING RATE STP | 10.27 | 0.39% | 1.18% | 2.70% | 2.07% | -0.46% |
| LIC FLOATING RATE | 10.25 | 0.39% | 1.18% | 2.43% | 0.05% | -3.99% |
Volatility in debt markets ensured that conventional long-term debt funds had a rough time. Floating rate funds, a more or less permanent feature in our rankings, emerged as the leaders once again.
The most significant development during the month from the debt fund investor's perspective was the announcement of the Monetary Policy.
A hike in the repo rate, status quo on the bank rate and higher projections for inflation were the key points of the Monetary Policy announced by the Reserve Bank of India. We have tried to analyse how this impacts investors. We also spoke to leading debt fund managers to determine their take on the Monetary Policy and on the future of long-term debt funds.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Mth | 1-Yr | 3-Yrs | Incep. | SD | SR |
| MAGNUM BALANCED FUND | 15.09 | 4.72% | 36.18% | 29.15% | 15.03% | 5.20% | 0.57% |
| CANGANGA | 11.83 | 3.23% | 25.02% | 25.67% | 5.32% | 6.80% | 0.39% |
| CANTRIPLE PLUS | 32.06 | 3.19% | 22.27% | 25.19% | 7.87% | 6.01% | 0.36% |
| TATA BALANCE FUND | 24.31 | 2.37% | 29.10% | 30.92% | 14.94% | 5.25% | 0.51% |
| DSP-ML BALANCED FUND | 19.69 | 2.29% | 29.71% | 32.58% | 13.44% | 4.86% | 0.58% |
Balanced funds benefited from the modest rise in equity markets despite a fluid debt market scenario. Magnum Balanced Fund (4.72%) was the leader, which has been the case for some time now. Category leader -- HDFC Prudence Fund (0.80%) had a disappointing week.
Mutual fund mergers that created a flutter within the investing community earlier, resurfaced with news of Birla Mutual Fund's proposed buyout of Alliance Capital Mutual Fund.
Whenever investors are confronted with a merger, there is the usual introspection and uncertainty on whether to continue with the merged scheme or to hunt for better investment options. Here are 5 tips to deal with fund mergers.
With debt markets witnessing turbulence, equity markets placed precariously on the threshold of 5,900 (Sensex), where does the investor put his money?
The answer to this question depends on your investment time frame and ability to absorb near-term volatility.
Go for systematic investment plans (SIPs) as opposed to lump sum investments. SIPs are better placed to counter volatility in the interim period and benefit from rupee-cost averaging.
