This may have been one of the more abbreviated weeks on the stock markets, but there was plenty of action nonetheless. After moving northwards for seven weeks in a row, equity markets finally lost steam and closed in negative terrain.
The BSE Sensex posted a loss of 3.04% to close at 11,237 points, while the S&P CNX Nifty shed 3.15% to end at 3,346 points. The CNX Midcap closed at 4,764 points (down by 3.74%).
The sharp fall over the last two days of the week had many Personalfn clients calling in/writing in to elicit our views on the stock markets. Over the short-term, our view is that it would be hazardous to predict stock market movements with any degree of accuracy.
The only assertion we can make is that investors can expect above-average volatility. Over the long term, our view remains unchanged -- we continue to be positive over a 3-5 year time horizon.
Furthermore, we reiterate our view that investors should refrain from making lump sum investments at this stage and instead resort to the systematic investment plan (SIP) route.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-year | 3-year | SD | SR |
| DEUTSCHE ALPHA EQUITY | 46.95 | 0.11% | 14.57% | 81.91% | 70.68% | 6.95% | 0.41% |
| MAGNUM COMMA | 14.97 | 0.00% | 13.67% | - | - | 5.53% | 0.93% |
| MAGNUM CONTRA | 25.2 | -0.87% | 10.75% | 108.15% | 101.90% | 4.39% | 1.43% |
| QUANTUM LONG-TERM EQUITY | 10.26 | -1.06% | 1.58% | - | - | NA | NA |
| MAGNUM MIDCAP | 19.78 | -1.54% | 4.82% | 98.40% | - | 4.70% | 1.19% |
(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.)
Expectedly, this was a subdued week for diversified equity funds segment. Deutsche Alpha Equity (0.11%) took the first spot. Magnum Comma's performance remained unchanged over the last week, while Magnum Contra (-0.87%) and Quantum Long Term Equity (-1.06%) took third and fourth positions, respectively
The last few weeks have been rather interesting for equity fund investors. With the markets being volatile, they have experienced both euphoria and agony in a matter of a few weeks.
We believe this is a good time for investors to take a reality check of their true risk appetite. It is common for investors to get carried away in a rising market and take on unwarranted risk. More than ever, it is critical in these markets that investors stay faithful to their risk profile and investment objectives while making investments.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| BIRLA SUN LIFE INCOME | 24.05 | 0.23% | 0.69% | 1.69% | 4.04% | 0.70% | -0.55% |
| TEMPLETON INC | 24.62 | 0.22% | 0.88% | 0.53% | 3.00% | 0.60% | -0.71% |
| TATA DYNAMIC BOND FUND | 10.23 | 0.22% | 0.24% | 1.66% | 5.56% | 0.42% | -0.64% |
| PRINCIPAL PNB DEBT | 19.80 | 0.22% | 0.60% | 1.45% | 4.52% | 1.17% | -0.50% |
| TATA INCOME PLUS R1 | 11.95 | 0.21% | 0.45% | 1.85% | 6.32% | 0.54% | -0.60% |
Birla Sun Life Income (0.23%) was the leading debt fund over the week. Templeton Income and Tata Dynamic Bond Fund both charted similar growth paths (0.22%) to take the joint-second position.
The yield on the 10-year benchmark 7.38% GOI paper appreciated to 7.44% (up 0.02% or 2 basis points). Yields share an inverse relationship with bond prices. Higher yields translate into a decline in bond prices and with it a fall in bond fund NAVs (net asset values).
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-year | 3-year | SD | SR |
| UTI VARIABLE INVEST ILP G | 15.34 | -0.66% | 1.32% | 24.95% | 25.15% | 2.23% | 0.31% |
| UTI BALANCED FUND | 51.29 | -2.19% | 2.97% | 43.55% | 40.50% | 3.71% | 0.44% |
| SUNDARAM BAL G | 30.46 | -2.22% | 4.49% | 48.72% | 43.45% | 3.71% | 0.50% |
| HDFC PRUDENCE G | 94.84 | -2.27% | 1.86% | 56.54% | 55.61% | 4.07% | 0.58% |
| CANBALANCE G | 27.70 | -2.46% | 2.86% | 32.03% | 27.00% | 3.53% | 0.23% |
Balanced funds from UTI Mutual Fund dominated the rankings this week. Although all balanced funds were in negative territory, UTI Variable Investment (-0.66%) and UTI Balanced Fund (-2.19%) curtailed losses a lot more effectively than the competition. One reason for this is that these funds maintain conservative equity allocations.
As far as SIP investing goes, we have always advocated it as a far more efficient and convenient form of investing. Its biggest advantage is that it can help reduce the average cost of investments over a period of time.
By getting invested across time horizons and market cycles, investors stand a better chance of lowering their investment cost vis-à-vis a lump sum investment. In fact, if you have ongoing SIP investments, the present downturn in stock markets is an opportunity for you.
More importantly, SIP investing does away with the need to time markets -- something most retail investors are incapable of doing and shouldn't indulge in anyway.
Also, SIP investing is lighter on the wallet. It enables retail investors to access markets with smaller investments, thereby making the investment process more feasible.
With stock markets showing high turbulence, investors are sure to be exposed to a number of 'tips' and 'sure-fire' money making opportunities.
Our advice to investors -- block all the noise. Instead, stick to your financial plan, get invested for the long haul and continue to make investments using the SIP route.
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