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What goes up must come down!

March 30, 2005 06:34 IST
The stock markets, like they have done over the past couple of years, went for a downward slide as March-end approached.

The BSE Sensex closed the week at 6,443 points, down by 257 points (3.83%). The S&P CNX Nifty ended the week down by 94 points (4.45%) to close at 2,015 points.

Investment experts advise investors to minimise risk by investing in a basket of investment instruments.

Gold happens to be one of them for its inflation-hedging prowess. But it should form a part of investors' portfolio only to the extent that their asset allocation permits them.

Leading Diversified Equity Funds

Diversified equity funds NAV (Rs) 1-Wk 1-Mth 6-Mth 1-Yr Incep. SD SR
JM EQUITY & DERIVATIVE 10.04 0.18% NA NA NA 0.20% NA NA
PRINCIPAL FOCUSSED ADV. 9.64 -2.63% NA NA NA -2.63% NA NA
PRINCIPAL DIV. YIELD 11.21 -3.03% 0.90% NA NA 12.10% 4.31% 0.46%
CHOLA GROWTH 16.35 -3.08% -1.39% 21.29% 25.48% 40.96% 6.47% 0.59%
GIC GROWTH II 22.4 -3.11% -2.61% 28.37% 44.05% 8.47% 6.08% 0.49%
(Source: Credence Analytics. NAV data as on March 24, 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.)

The last week, like the week before, was no different for schemes from the diversified equity funds segment. Mutual fund NAVs fell sharply.

JM Equity and Derivative (0.18%) was the only scheme, which managed to post positive returns. Principal Focussed Advantage (-2.63%) took the number two spot with Principal Dividend Yield (-3.03%) sitting at number three.HDFC Top 200 (-3.72%), HSBC Equity (-4.14%) and Franklin India Bluechip (-4.61%), all fared poorly.

Yet another IPO beckons the mutual fund investor! Fidelity Equity Fund is the latest IPO to hit the market. Personalfn has come out with a clear view on the same.

Leading Debt Funds

Debt funds NAV (Rs) 1-Wk 1-Mth 6-Mth 1-Yr Incep. SD SR
DEUTSCHE DYN. BOND 10.26 0.35% 0.26% 3.30% 2.33% 1.95% 1.03% -0.37%
DEUTSCHE PREM. BOND 11.18 0.31% 0.38% 0.93% 1.07% 1.64% 0.96% -0.06%
TEMPLETON
INC. BUILD. ACC
23.37 0.24% 0.38% 1.16% -0.07% 11.53% 0.83% -0.24%
ALLIANCE INCOME 23.09 0.22% 0.23% 1.11% 0.55% 10.94% 0.84% -0.24%
PRU ICICI FLEX INCOME 12.16 0.19% 0.35% 1.69% 2.12% 8.05% 0.67% -0.17%
(Source: Credence Analytics. NAV data as on March 24, 2005. Growth over 1-Yr is compounded annualised)

Debt funds, unlike their diversified equity counterparts, managed to stay positive. The 10-year GOI remained unchanged at 6.67%. Schemes from the Deutsche stable hogged the limelight this week.

Deutsche Dynamic Bond (0.35%) led from the front closely followed by Deutsche Premier (0.31%) and Templeton Income Builder (0.24%).

Investors should also keep an eye on inflation as it plays a role in determining the 'real rate of return'. With oil prices on a northward journey, concerns have been raised about its impact on inflation and in effect the debt market returns.

Leading Balanced Funds

Balanced funds NAV (Rs) 1-Wk 1-Mth 6-Mth 1-Yr Incep. SD SR
UTI VARIABLE INV. ILP 12.29 -1.19% -0.91% 6.78% 10.64% 18.45% 3.44% 0.37%
SUNDARAM BAL G 20.29 -1.50% -0.20% 12.56% 27.20% 15.69% 4.71% 0.52%
KOTAK BALANCE 17.22 -2.41% -1.18% 21.59% 41.91% 16.04% 5.68% 0.49%
PRINCIPAL BALANCED G 13.94 -2.52% -0.99% 16.36% 23.25% 5.33% 5.33% 0.51%
BOB BALANCED G 14.76 -2.64% -1.93% 16.68% 32.26% 29.63% 6.35% 0.29%
(Source: Credence Analytics. NAV data as on March 24, 2005. Growth over 1-Yr is compounded annualised)

As balanced funds are linked to equity markets, they too had to face the wrath of falling markets. UTI Variable Investment (-1.19%) emerged as the leader followed by Sundaram Balanced (-1.50%) and Kotak Balanced (-2.41%).

If markets correct further, risk-taking investors should use this opportunity to increase their allocations to equity/balanced funds. Investors who have taken the SIP route, will stand to benefit from falling markets in any case.

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