Markets test investors' resolve

The markets after seeing some volatility in the past few weeks, took a definite direction this week…downwards! The BSE Sensex ended the week at 6,248 points, down substantially by 232 points, a fall of 3.58 per cent. The S&P CNX Nifty ended this week at 1,956 points, down by 3.69 per cent. High risk investors can consider beefing up their equity fund portfolios.

Leading Diversified Equity Funds

Diversified equity funds	NAV (Rs)	1-Wk	1-Mth	6-Mth	1-Yr	SD	SR
KOTAK OPP.	13.13	-0.29%	0.63%	27.44%	-	3.43%	1.08%
KOTAK MID-CAP	10.11	-0.51%	-1.85%	-	-	NA	NA
SAHARA MIDCAP	10.10	-0.85%	-4.92%	-	-	3.45%	0.22%
BIRLA ADVANTAGE	64.05	-0.90%	-4.27%	24.44%	18.81%	7.49%	0.55%
BIRLA INDIA OPP.	27.27	-1.16%	-3.50%	11.58%	23.12%	6.77%	0.47%

(Source: Credence Analytics. NAV data as on Apr 15, 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.)

Funds from the diversified equity segment felt the heat of the of the market slide. All of them languished in negative terrain. It was a case of identifying funds that were least hit. Funds from the Kotak and Birla stable took four of the top five positions this week. Kotak Opportunities (-0.29 per cent) 'led' the pack this week followed by Kotak Midcap (-0.51 per cent) and Sahara Midcap (-0.85 per cent).

Category leaders Franklin India Bluechip (-3.36 per cent), HDFC Top 200 (-3.11 per cent) and HSBC Equity (-2.42 per cent), continuing from last week, witnessed a sharp decline.

'Tis the season of midcaps and in keeping with the times, HSBC has launched its midcap fund. Its investment mandate is to generate long-term capital appreciation through investments in mid cap stocks. But an interesting deviation being followed by HSBC is an imposition of a cap on net assets. This is a first of its kind in the mutual fund industry in the Indian context.

Franklin India Bluechip, in recent times, has not been able to live upto its reputation of yore, which is delivering smart returns over an 11-Yr period. The fund has faithfully adhered to its mandate of holding a large cap concentrated portfolio. While this has worked wonders over the years, the last couple of rallies have seen mid cap stocks steal the thunder. With the result, large cap stocks/funds took a backseat and Franklin Bluechip's dismal show reflects that reality.

Leading Debt Funds

Debt funds	NAV (Rs)	1-Wk	1-Mth	6-Mth	1-Yr	SD	SR
UTI BOND FUND	19.20	0.39%	0.59%	3.46%	1.38%	0.80%	-0.25%
DEUTSCHE PREM. BOND	11.18	0.29%	0.23%	1.75%	-0.11%	0.97%	-0.12%
MAGNUM INCOME	18.30	0.17%	0.00%	2.02%	-1.33%	0.89%	-0.34%
DEUTSCHE DYN. BOND	10.23	0.16%	-0.05%	3.14%	0.51%	0.97%	-0.41%
HDFC HIGH INTEREST	23.17	0.16%	0.33%	2.72%	-0.62%	0.91%	-0.24%

(Source: Credence Analytics. NAV data as on Apr 15, 2005. Growth over 1-Yr is compounded annualised)

The 10-Yr GOI yield remained stable at 7.00 per cent; unchanged from last week. Bond prices and yields share an inverse relationship. UTI Bond Fund emerged the leader (0.39 per cent) amongst the debt funds with Deutsche Premier Bond (0.29 per cent) and Magnum Income (0.17 per cent) following behind.

Leading Balanced Funds

Balanced funds	NAV (Rs)	1-Wk	1-Mth	6-Mth	1-Yr	SD	SR
HDFC PRUDENCE	59.88	-0.26%	-1.45%	20.53%	24.85%	5.20%	0.63%
TATA BALANCED	29.20	-0.66%	-2.68%	21.05%	23.94%	5.73%	0.58%
BIRLA BALANCE	17.46	-0.74%	-3.32%	12.50%	7.38%	5.46%	0.46%
UNIT SCHEME 2002	9.26	-0.96%	-3.64%	9.72%	6.93%	4.13%	0.41%
ALLIANCE 1995	101.10	-1.05%	-3.23%	17.33%	16.10%	5.37%	0.56%

(Source: Credence Analytics. NAV data as on Apr 15, 2005. Growth over 1-Yr is compounded annualised)

Balanced funds mirrored the fall of the diversified equity fund segment. All schemes from the balanced fund segment posted negative returns. HDFC Prudence (-0.26 per cent) emerged the least affected, followed by Tata Balanced (-0.66 per cent) Birla Balanced (-0.74 per cent).

For some time now, we at Personalfn, have observed some irregularities in distribution of mutual fund IPOs. In our view such instances work to the detriment of all parties concerned – the fund house (loses face and investors), the distributor (loses business) and the investor (is harried into filling endless application forms). We believe instances like these need to be brought to the attention of the concerned regulators as it tarnishes the mutual fund industry at the cost of filling the collection bank's coffers.

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