We usually see a flurry of tax-saving funds (also referred as equity linked saving scheme/ELSS) being launched towards the end of the financial year.
This practice has almost become a trend and this year is no different. Three tax-saving funds, HSBC Tax Saver Equity Fund (HTSF), Lotus India Tax Plan (LITP) and DSP ML Tax Saver Fund (DMTSF) have already been launched this year.
The Personalfn Research Team has covered all the three tax-saving funds, i.e. HTSF, LITP and DMTSF and has given its view on them.
Broadly, all the three tax-saving funds have the same things going for them. They offer a tax benefit under Section 80C; also they can invest in stocks from across market capitalisations and hold up to 20% in debt and money market instruments. Conversely, there are some stark differences as well -- HSBC Mutual Fund has close to 4 years of experience in the domestic mutual fund industry, while it is the second month for Lotus India Mutual Fund.
DSP ML Mutual Fund has in its arsenal a number of well-managed equity funds with impressive track records. Also the fund house is among the few which didn't succumb to the temptation of launching new fund offers (NFOs) to capitalise on rising markets; each of its offerings has a truly unique investment proposition on offer for investors.
Our advice for investors -- opt for funds like HDFC Long Term Advantage and HDFC TaxSaver which have proven track records to show for, over longer timeframes. A revised view can be taken on the aforementioned tax-saving fund NFOs after they have put in a consistent performance over 3-5 years over various market phases (particularly the downturns).
It was another good week for investors as the market closed in the positive terrain. The BSE Sensex posted a gain 1.04% and closed the week at 13,845 points, while the S&P CNX Nifty rose by 1.19% to end at 3,998 points. CNX Midcap appreciated by 1.46% and closed at 5,127 points.
Leading open-ended diversified equity funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| Magnum Midcap | 22.34 | 4.74% | 11.87% | 28.39% | 56.11% | 8.05% | 0.46% |
| ING Vysya Domestic Opp. | 27.26 | 4.09% | 6.53% | 27.80% | 50.36% | 5.87% | 0.50% |
| Magnum Global | 34.50 | 3.51% | 12.05% | 30.78% | 67.23% | 7.16% | 0.62% |
| UTI India Adv. Equity | 8.21 | 3.40% | 8.60% | 25.54% | 24.58% | 5.96% | 0.29% |
| Tata Mid Cap | 14.11 | 3.40% | 4.91% | 18.78% | 30.61% | 7.77% | 0.21% |
(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.)
Funds with predominantly mid cap holdings featured in this week's top performers' list. It was particularly a good week for SBI Mutual Fund as two of its funds featured among top performers in the diversified equity funds segment. Magnum Midcap (4.74%) topped the list, followed by ING Vysya Domestic Opportunities (4.09%) and Magnum Global (3.51%). UTI India Advantage Equity (3.40%) and Tata Mid Cap (3.40%) also featured in the list.
Leading open-ended long-term debt funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| Escorts Income Plan | 22.57 | 0.33% | 1.01% | 3.07% | 5.20% | 0.23% | -0.63% |
| ABN AMRO Flexi Debt | 11.29 | 0.29% | 1.37% | 4.93% | 7.97% | 0.29% | -0.23% |
| DWS Premier Bond | 12.28 | 0.26% | 1.65% | 4.10% | 4.19% | 0.69% | -0.13% |
| PruICICI Income | 21.65 | 0.22% | 1.42% | 5.24% | 6.41% | 0.47% | -0.16% |
| Birla Sun Life Income | 25.62 | 0.21% | 2.02% | 5.44% | 7.54% | 0.44% | -0.08% |
The 10-year 7.59% GOI yield closed at 7.42% (December 1, 2006), 1 basis point below the previous weekly close. Bond prices and yields are inversely related, with falling yields translating into higher bond prices and net asset values (NAVs) for debt fund investors.
Escorts Income Plan (0.33%) emerged as the best performer in the long-term debt funds segment. ABN AMRO Flexi Debt (0.29%) and DWS Premier Bond (0.26%) occupied the second and third slots respectively.
Leading open-ended balanced funds| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-year | SD | SR |
| HDFC Prudence | 113.61 | 2.92% | 5.02% | 27.91% | 37.74% | 3.72% | 0.68% |
| LIC Balanced | 45.73 | 2.69% | 5.27% | 23.06% | 33.67% | 4.97% | 0.37% |
| Canbalance | 28.68 | 2.32% | 5.67% | 14.58% | 22.67% | 4.49% | 0.21% |
| JM Balanced | 23.49 | 2.31% | 7.55% | 24.22% | 46.54% | 5.02% | 0.45% |
| Magnum Balanced | 26.19 | 1.67% | 7.12% | 22.44% | 38.72% | 4.86% | 0.54% |
HDFC Prudence (2.92%) was the leader in the balanced funds segment over the week. LIC Balanced (2.69%) occupied the second position followed by Canbalance (2.32%).
Conventionally, fixed deposits (FDs) have been popular investment avenues with risk-averse investors. The proposition of assured returns and safety of capital, makes FDs an apt fit in their portfolio. However, the straitjacketed nature of FDs tends to be a bit of a dampener.
Thankfully, 'new-age FDs' are now an evolved lot! Investors can choose between varied options like variable rate FDs, tax-saving FDs and FDs with a monthly income option among others. Our advice - investors would do well to scrutinise the various options available to them and then select the one that suits their needs the best.
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