The good times continued for fund investors as equity markets closed in positive terrain for the third week in a row.
Benchmark indices posted modest weekly gains; the BSE Sensex appreciated by 0.74% to close shy of the 6,500 points mark, while the S&P CNX Nifty posted a gain of 0.22 per cent to end at 1,992 points. However the week was not without its fair share of volatility.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | SD | SR |
| TAURUS STARSHARE | 19.33 | 2.22% | 6.80% | 73.36% | 50.64% | 9.76% | 0.47% |
| DISCOVERY STOCK | 10.50 | 2.14% | 13.88% | 73.27% | 39.35% | NA | NA |
| GIC GROWTH II | 23.57 | 2.08% | 6.60% | 52.85% | 34.21% | 7.16% | 0.45% |
| ING VYSYA SEL. STOCKS | 14.00 | 1.97% | 9.63% | 49.09% | 25.22% | 8.17% | 0.42% |
| BOB GROWTH | 17.15 | 1.96% | 9.58% | 50.84% | - | 8.83% | 0.29% |
(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.)
Taurus Starshare (2.22 per cent) surfaced as the top performer from the diversified equity funds segment followed by Discovery Stock (2.14 per cent). The category leaders had a mixed week, HDFC Top 200 (1.07 per cent) and Franklin India Bluechip (0.82 per cent) delivered average performances while HSBC Equity (-0.24 per cent) languished in negative territory.
The party in the mid cap segment has continued relentlessly for some time now. Fund houses have done their bit to capitalise on the euphoria by launching a number of mid cap and flexi cap funds. On a positive note, this provides investors a wider range of investment avenues to choose from.
However, investors are rarely informed of the risk levels they take on by investing in funds of the aforementioned variety. In the midst of the exuberance, it is easy for investors to throw caution to winds and get invested contrary to their risk-appetite. We recommend that investors get invested for the right reasons like building a comprehensive portfolio or achieving their investment objectives and not because of the frenzy around them.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| DEUTSCHE PREM. BOND | 11.33 | 0.90% | 1.32% | 3.73% | 1.77% | 0.83% | -0.22% |
| UTI BOND | 19.57 | 0.51% | 1.68% | 5.55% | 3.58% | 0.77% | -0.24% |
| DSP ML BOND | 23.17 | 0.41% | 0.75% | 3.98% | 1.31% | 0.86% | -0.30% |
| JM INCOME | 27.14 | 0.39% | 0.54% | 3.42% | 1.76% | 0.78% | -0.26% |
| MAGNUM INCOME | 18.40 | 0.36% | 0.55% | 3.17% | -0.44% | 0.82% | -0.41% |
Debt fund investors also had a good week as bond yields continuing their southward journey. Bond yields and prices share an inverse relation with falling yields translating into higher bond prices. The benchmark 7.38 per cent 2015 GOI yield closed at 7.00 per cent (May 20, 2005), a whopping 17 basis points below the previous weekly close.
Deutsche Premier Bond (0.90 per cent) stood heads and shoulders above its peers; UTI Bond (0.51 per cent) and DSP ML Bond (0.41 per cent) occupied second and third positions respectively.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | SD | SR |
| HDFC PRUDENCE | 63.65 | 1.28% | 6.98% | 43.02% | 43.10% | 5.50% | 0.53% |
| BOB BALANCED | 16.23 | 1.25% | 4.24% | 46.61% | - | 6.61% | 0.32% |
| JM BALANCED | 13.04 | 1.16% | 2.11% | 24.43% | 20.19% | 4.71% | 0.33% |
| BIRLA BALANCE | 17.72 | 0.91% | 3.08% | 24.53% | 27.10% | 5.71% | 0.36% |
| MAGNUM BALANCED | 19.40 | 0.78% | 6.24% | - | - | 5.49% | 0.51% |
Balanced funds benefited from the surge in both the equity and debt markets. Category leader HDFC Prudence (1.28 per cent) emerged as the top performer in the balanced funds segment. BOB Balanced (1.25 per cent) and JM Balanced (1.16 per cent) also featured in the top performers list.
For some time now we have strongly propagated the cause of investing in mutual funds using the Systematic Investment Plan route because of the numerous advantages it offers. However there is a flipside to SIPs as well that is almost never presented to investors.
For example investing via the SIP route enables investors to benefit from rupee-cost averaging; but this strategy can fail in a rising market. Similarly investors tend to be misinformed about the tenure for which they are required to be invested in order to escape without an exit load.
We are not suggesting that investors shun the SIP route in favour of lump sum investing. However there is a need for investors to make more informed decisions and the broker/distributor community has a vital role to play on this front.
Money Simplified, a publication from Personalfn, is now arguably India's most popular online financial planning guide! Get your free copy today! Click here
