It was a good week for investors as the markets continued to inch northwards. The BSE Sensex posted a gain of 1.97 per cent to close at 5,218 points while the S&P CNX Nifty rose by 1.55 per cent to end at 1,634 points.
However this week's big news was inflation! Data released this week showed that inflation figures had breached the 8 per cent mark and touched a record high of 8.17 per cent.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| CHOLA MID CAP G | 10.99 | 4.67% | NA | NA | NA | 4.87% | NA | NA |
| HDFC EQUITY G | 52.82 | 4.53% | 7.35% | 44.11% | 48.93% | 19.47% | 6.77% | 0.53% |
| BOINANZA EXCL G | 13.71 | 4.26% | 10.48% | 15.36% | 36.23% | 8.84% | 8.68% | 0.27% |
| CANBONUS | 12.95 | 4.18% | 4.77% | 26.71% | 22.35% | 3.70% | 7.17% | 0.31% |
| FRANKLIN PRIMA FUND | 82.43 | 4.16% | 8.60% | 69.78% | 70.47% | 21.65% | 7.70% | 0.57% |
(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.)
Equity fund investors hit a purple patch as equity markets closed in positive terrain for the second week in a row. The week's top performers ranged from 4.16 per cent to 4.67 per cent. Keeping with the recent trend, funds investing predominantly in the midcap segment dominated the proceedings. Recently launched fund, Chola Midcap (4.67 per cent), emerged as the week's top performer followed by HDFC Equity (4.53 per cent).
It was a mixed week for the category leaders in the equity funds segment. HDFC Top 200 (3.15 per cent) had a good week, while Franklin India Bluechip (2.39 per cent) had a modest one.
Presently we are experiencing a slew of mutual fund IPOs, a situation similar to the one experienced a few months ago. A performance analysis of IPOs launched around 6 months ago reveals that investors have not gained significantly on account of their investments; infact IPOs from categories like monthly income plans have been at the receiving end. The lesson to be learnt is rather simple; invest in an IPO only if it fits into your portfolio and an IPO should not be seen as a sure-fire investment to clock above-average returns.
Leading Income Funds
| Income Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| RELIANCE INC | 20.44 | 0.56% | 1.02% | 3.06% | 9.41% | 11.35% | 1.23% | 0.04% |
| UTI BOND FUND | 18.60 | 0.55% | 0.58% | 1.71% | 7.93% | 10.37% | 0.94% | -0.09% |
| DSP ML BOND | 22.46 | 0.47% | 0.40% | 0.76% | 9.19% | 11.57% | 1.17% | 0.01% |
| SUNDARAM SEL. DEBT DYN. | 12.08 | 0.43% | 1.17% | 2.82% | NA | 9.92% | 1.37% | 0.17% |
| ALLIANCE INCOME | 22.81 | 0.43% | 0.61% | 2.01% | 9.43% | 11.62% | 1.00% | 0.04% |
The benchmark 7.37 per cent 2014 GOI yield closed at 5.86 per cent (September 3, 2004), 23 basis points below the previous weekly close despite high inflation figures. The falling yields were largely a result of aggressive buying triggered by a Reserve Bank of India directive on investment norms for banks. Conventional income funds came to the fore with Reliance Income (0.56 per cent) surfacing as the weekly topper.
Investors have a range of investment options that can enable them to counter the impact of inflation; from the investors' perspective making the right choices in tune with their profile is the key.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| ESCORTS BAL G | 21.85 | 3.22% | 3.29% | 33.08% | 28.30% | 25.81% | 5.97% | 0.34% |
| CANGANGA | 11.06 | 2.98% | 4.05% | 22.06% | 21.28% | 4.65% | 6.74% | 0.28% |
| HDFC PRUDENCE G | 48.16 | 2.94% | 5.79% | 33.90% | 39.89% | 19.88% | 4.53% | 0.64% |
| CANTRIPLE | 30.75 | 2.81% | 3.15% | 21.64% | 22.25% | 7.60% | 5.84% | 0.29% |
| HDFC BALANCE G | 16.97 | 2.51% | 4.01% | 24.88% | 23.28% | 14.48% | 4.94% | 0.36% |
Funds from HDFC mutual fund dominated the proceedings with HDFC Prudence (2.94 per cent) and HDFC Balanced (2.51 per cent) featuring among the weekly top performers. Escorts Balanced (3.22 per cent) topped the balanced funds segment.
Volatile conditions in both the equity and debt markets have forced investors to reconsider conventional instrument like fixed deposits. Despite their shortcomings like inability to counter inflation and poor liquidity, fixed deposits hold value for the typically risk-averse investor. However investors must try and ensure that the downsides of investing in FDs are reduced to the extent possible.
There has been a fair degree of discussion surrounding MIPs and whether they hold any utility for investors in the present scenario. The strongest arguments pitched against MIPs have been based on the negative returns offered by them. But a study over the 6-mth tenure reveals that the top performers have delivered smart returns; a far cry from all the talk about negative returns. Investors who are invested in the appropriate schemes would have little reason to complain.
Seek professional help and get the right investments. It's your best bet at becoming insulated from the market's vagaries.
