With equity markets touching record highs in 2004, investors in equity-oriented funds had ample reason to rejoice. The BSE Sensex appreciated by 5.92% during the month to close at 6,603 points, while the S&P CNX Nifty posted a gain of 6.23% to end at 2,081 points.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| TAURUS DISCOVERY | 9.56 | 17.16% | 23.51% | 38.80% | -0.25% | 8.35% | 0.43% |
| TAURUS STARSHARE | 17.29 | 16.04% | 32.39% | 49.80% | 4.52% | 7.95% | 0.52% |
| MAGNUM GLOBAL | 15.88 | 14.16% | 66.50% | 54.26% | 10.99% | 7.07% | 0.70% |
| BONANZA EXCL. GROWTH | 17.93 | 13.99% | 4.98% | 46.19% | 11.75% | 8.93% | 0.36% |
| MAGNUM EMERGING BUS. | 13.04 | 13.89% | - | - | 27.59% | 4.44% | 2.30% |
(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 investing pre-dominantly in the mid cap segment emerged as top performers in December 2004; Taurus Discovery (17.16%) and Taurus Starshare (16.04%) occupied the first and the second positions respectively.
Funds from SBI Mutual Fund i.e. Magnum Global (14.16%) and Magnum Emerging Business (13.89%) featured in the list as well.
It was a rather modest month for the category leaders HSBC Equity (10.29%), HDFC Top 200 (9.32%) and Franklin India Bluechip (7.81%). On the other hand funds like Reliance Growth (13.15%) and Franklin India Prima (12.92%) with significant holdings in the mid cap segment clocked smart returns.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| DEUTSCHE DYN. BOND | 10.13 | 1.17% | 1.35% | 0.00% | 1.24% | 1.00% | -0.45% |
| ALLIANCE INCOME | 22.83 | 1.06% | 0.32% | 8.13% | 11.12% | 0.96% | -0.22% |
| KOTAK BOND99 | 16.86 | 1.03% | 1.36% | 8.32% | 10.65% | 1.08% | -0.17% |
| DSP-ML BOND FUND | 22.67 | 0.95% | 0.00% | 7.78% | 11.19% | 0.99% | -0.25% |
| PRU ICICI INCOME | 19.50 | 0.89% | -0.09% | 7.69% | 10.77% | 1.09% | -0.22% |
Investors in the debt funds segment had a reasonable month as yields were on a descent for a better part of the month.
Falling yields translate into higher bond prices and NAV (net asset value) for debt fund investors. The benchmark 7.37% 2014 GOI yield closed at 6.61% (December 31, 2004). Deutsche Dynamic (1.17%) emerged as the monthly topper followed by Alliance Income (1.06%).
2004 will be remembered as a watershed year, when debt fund investors had to deal with a hitherto unseen and even unanticipated event negative returns on long-term debt funds.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Mth | 1-Yr | 3-Yr | Incep. | SD | SR |
| CANGANGA | 14.17 | 9.25% | 15.79% | 28.66% | 7.21% | 6.66% | 0.42% |
| KOTAK BALANCE | 16.62 | 9.14% | 23.49% | 31.85% | 16.01% | 5.28% | 0.48% |
| HDFC PRUDENCE | 57.75 | 8.35% | 23.94% | 44.50% | 21.23% | 4.49% | 0.72% |
| PRINCIPAL BALANCED | 13.94 | 7.81% | 17.74% | 29.16% | 5.59% | 5.36% | 0.46% |
| MAGNUM BALANCED | 17.89 | 7.71% | 33.29% | 34.16% | 16.91% | 5.30% | 0.64% |
Top performing balanced funds delivered returns ranging from 7.71% to 9.25% during December 2004. Canganga (9.25%) surfaced as the leading balanced fund. Category leader HDFC Prudence (8.35%) and Magnum Balanced (7.71%) also featured in the monthly top performers' list.
2004 proved to be a mixed year for investors; while those investing in equity-oriented funds drew from the surge in equity markets, the risk-averse ones found the going tough. They had to contend with modest returns and few options to choose from. Factors like the fund manager and his investment style have an important bearing on the performance of investments.
A fund manager who has a 'punter-like' approach to investments may deliver a smart performance over the short-term; but a serious investor styled fund manger is likely to best protect investors' interests over the long-term.
Going forward investors should pay greater importance to such aspects and entrust their funds with the right fund manager.
Our advice for investors -- get invested at this stage only if you have a long-term perspective (at least a 3-Yr period) and utilise the SIP (systematic investment plan) route.
