It has been quite a journey for investors over the last few weeks. Markets fell sharply from record highs and just when despondency was about to set in, they bounced back with a bang.
The positive sentiment was evident in this week's performance as well. The BSE Sensex appreciated by 2.55 per cent and closed at 8,687 points; the S&P CNX Nifty posted a weekly gain of 2.80 per cent to end at 2,620 points. Meanwhile the CNX Midcap rose by 2.15 per cent and closed the week at 3,779 points.
Leading Diversified Equity Funds
| Diversified Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| DISCOVERY STOCK | 13.13 | 3.79% | 6.40% | 23.52% | 67.05% | 10.65% | 0.27% |
| TAURUS STARSHARE | 25.15 | 3.54% | 8.87% | 27.28% | 72.50% | 8.59% | 0.36% |
| FRANKLIN OPPORTUNITIES | 16.00 | 3.09% | 9.07% | 35.36% | 53.99% | 6.59% | 0.39% |
| RELIANCE EQ. OPPORTUNITIES | 12.92 | 3.01% | 6.90% | 29.70% | - | 4.55% | 0.74% |
| FRANKLIN PRIMA PLUS | 84.11 | 2.99% | 9.60% | 27.65% | 49.13% | 6.04% | 0.42% |
(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.)
Discovery Stock (3.79 per cent) surfaced as the top performing fund followed by Taurus Starshare (3.54 per cent). Franklin India Opportunities (3.09 per cent) and Franklin Prima Plus (2.99 per cent) also featured in the top performers list.
Among the category leaders, Franklin India Bluechip (2.50 per cent) had a good week, while it was a modest one for HSBC Equity (1.89 per cent) and HDFC Top 200 (1.78 per cent).
This week Personalfn's research team profiled Franklin India Smaller Companies Fund, a close-ended diversified equity fund which will invest in small/mid cap stocks. Small/mid sized stocks are inherently high risk - high return investment propositions. These stocks can be very volatile over shorter time horizons; however they are capable of unlocking value and delivering attractive returns over longer time frames.
This is where the fund's close-ended nature can be of great utility. Thanks to the 5-yr time horizon, the fund manager can afford to make long-term calls and adopt a 'buy and hold' strategy. We believe that the fund is a high risk - high return investment proposition and that investors with the commensurate risk appetite and investment tenure can consider investing a portion of their long-term investible surplus in the fund.
Leading Debt Funds
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| TATA INCOME PLUS | 11.79 | 0.16% | 0.46% | 4.03% | 6.54% | 0.60% | -0.46% |
| TATA DYNAMIC BOND | 11.21 | 0.11% | 0.43% | 3.99% | 7.13% | 0.53% | -0.31% |
| RELIANCE INCOME | 21.80 | 0.10% | 0.35% | 2.47% | 6.61% | 0.75% | -0.26% |
| KOTAK FLEXI DEBT | 10.59 | 0.10% | 0.45% | 2.91% | - | 0.04% | -1.53% |
| LIC BOND | 18.82 | 0.10% | 0.48% | 2.63% | 5.89% | 0.61% | -0.47% |
It was a positive week for debt fund investors as yields moved southwards. Falling yields translate into higher bond prices and net asset value for debt fund investors. The 10-Yr benchmark 7.38 per cent 2015 GOI yield closed at 7.09 per cent (November 18, 2005), one basis point below the previous weekly close. Tata Income Plus (0.16 per cent) topped the debt funds segment. Tata Dynamic Bond (0.11 per cent) and Reliance Income (0.10 per cent) occupied second and third positions respectively.
With global interest rates and domestic inflation on the rise, the scenario continues to be an ambiguous one from the investment perspective. We believe it makes sense to maintain a cautious view. Our advice to you remains unchanged - go in for Monthly Income Plans with less than 15 per cent exposure to equities; also go in for short-term debt and floating rate funds.
Leading Balanced Funds
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 1-Yr | 3-Yr | SD | SR |
| JM BALANCED | 15.59 | 2.16% | 5.12% | 30.57% | 28.16% | 4.45% | 0.24% |
| UTI BALANCED | 42.35 | 2.02% | 5.06% | 24.27% | 32.46% | 4.28% | 0.31% |
| FT INDIA BALANCED | 23.13 | 1.85% | 5.04% | 30.60% | 37.71% | 4.33% | 0.34% |
| PRINCIPAL BALANCED | 16.99 | 1.74% | 4.88% | 33.57% | 37.01% | 4.81% | 0.32% |
| HDFC BALANCE | 24.13 | 1.59% | 4.23% | 28.19% | 33.83% | 4.66% | 0.31% |
Balanced funds drew from the positive conditions in both the debt and equity markets. JM Balanced (2.16 per cent) surfaced as the top performer followed by UTI Balanced (2.02 per cent). Category leader HDFC Prudence (1.42 per cent) had a good week.
At the risk of sounding monotonously boring, we have been exhorting investors to stick to the basics i.e. invest in line with their risk profiles, to have investment objectives in place and most importantly to block all the noise emanating around them. For example, while market soothsayers were busy predicting Sensex levels, we were propagating the systematic investment plan mode of investment.
After the events witnessed in markets over the past few weeks, our advice might seem prophetic. We maintain that changing market conditions don't change investors' risk profiles. Similarly despite all the excitement surrounding theme-based/sector-specific new fund offers, building a core portfolio from conventional funds with proven track records is vital.
Stick to the basics and you will have a better chance of achieving your financial goals. We believe this is, as good a time as any for you to get back to basics!
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