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Home  » Business » Negative sentiment hits MF investors

Negative sentiment hits MF investors

January 24, 2005 16:41 IST
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It was a dull week at the stock markets. The BSE Sensex was up marginally by 9 points (0.14%) to close at 6,183 points. However, the Nifty took a small hit as it slipped to 1,925 points (down 6 points), a fall of 0.31%.

But the stock market, like it has done innumerable times over the years, again took the investors for a seesaw ride during the week.

Leading Diversified Equity Funds

Diversified Equity Funds NAV (Rs) 1-Wk 1-Mth 1-Yr 3-Yr Incep. SD SR
GIC D'MAT 15.65 0.19% -2.43% 9.75% 26.34% 5.85% 6.52% 0.40%
KOTAK GLOBAL INDIA 12.83 -0.30% -6.37% NA NA 30.36% 7.91% 0.26%
DSP ML EQUITY 26.61 -0.30% -1.08% 27.82% 43.07% 22.86% 8.27% 0.53%
FRANKLIN INDIA PRIMA 104.34 -0.45% -1.48% 32.16% 69.33% 23.42% 9.33% 0.58%
SUNDARAM INDIA LEADERSHIP 12.77 -0.57% -2.36% NA NA 27.49% 3.96% 0.94%
(Source: Credence Analytics. NAV data as on Jan 20, 2005. Growth over 1-Yr is compounded annualised) (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.)

Mutual funds from the diversified equity funds segment languished in the negative terrain during the week; GIC D'MAT (0.19%) was the only scheme to post positive returns. It was a mixed week as funds from both the large cap and mid cap segment featured among the weekly top performers.

Category leaders HSBC Equity (-2.73%), HDFC Top 200 (-1.82%) and Franklin India Bluechip (-1.26%) had a poor week as well.

Mutual fund IPO (initial public offering) activity continues unabated. Franklin India Flexi Cap Fund (FIFCF) is the latest to join the bandwagon. As the name suggests, FIFCF can move its corpus across market capitalisations to take advantage of the 'flavour of the day'. However, investors would do well to take into account their own risk-appetite before investing in such a scheme.

Leading Debt Funds

Debt Funds NAV (Rs) 1-Wk 1-Mth 6-Mth 1-Yr. Incep. SD SR
ESCORTS INCOME PLAN 20.59 0.09% 0.36% 2.09% 4.61% 11.39% 0.42% 0.16%
CANINCOME 11.43 0.08% 0.39% 1.58% 2.24% 5.83% 0.67% -0.30%
CHOLA FREEDOM INC. 10.53 0.07% 0.30% 1.84% 3.79% 9.54% 0.22% -0.58%
SUNDARAM SEL. DEBT DYN. 12.11 0.06% 0.23% 1.08% 0.68% 8.40% NA NA
ING VYSYA SELECT DEBT 10.17 0.06% 0.60% NA NA 1.43% 0.37% -0.60%
(Source: Credence Analytics. NAV data as on Jan 20, 2005. Growth over 1-Yr is compounded annualised)

The 10-Yr benchmark GOI yield closed at 6.71% (January 20, 2005). Inflation easing up to an 8-month low was a positive development. Conventional long-term debt funds came to the fore. Escorts Income Plan (0.09%) emerged as the top performer followed by Canincome (0.08%).

Leading Balanced Funds

Balanced Funds NAV (Rs) 1-Wk 1-Mth 1-Yr 3-Yr Incep. SD SR
UTI BALANCED FUND 34.85 0.06% -1.94% 16.28% 25.93% 19.24% 5.22% 0.40%
UTI VARIABLE INV. ILP 12.05 -0.35% -1.18% 6.69% NA 19.00% 3.63% 0.30%
SUNDARAM BAL 19.48 -0.50% -2.71% 15.79% 26.79% 15.30% 5.28% 0.43%
DSP ML BAL 21.18 -0.56% -2.80% 17.73% 30.96% 14.34% 5.25% 0.51%
HDFC BALANCE 19.14 -0.79% -1.88% 15.09% 24.10% 16.31% 5.21% 0.41%
(Source: Credence Analytics. NAV data as on Jan 20, 2005. Growth over 1-Yr is compounded annualised)

UTI Balanced (0.06%) was the sole fund from the balanced funds segment to clock positive returns. Category leader HDFC Prudence (-1.80%) had a modest week.

Investors afford disproportionate importance to returns while evaluating their investments. While the importance of returns cannot be denied, they also need to factor in the cost of investing in the mutual fund. Higher costs take a toll on the returns generated for investors and it would be foolhardy to ignore them.

To conclude, as we have consistently advocated, investors' investments should be a reflection of their risk appetites. They shouldn't sway to the tune of the markets; instead they should use common sense and select investments that suit their risk profile.

As markets correct, we believe long-term investors should take this opportunity to increase allocations to equities.

Click here to get a free copy the latest issue of Money Simplified - The Definitive Guide to Tax Panning.

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