Growth funds have been hit more in the last month (since the US attacks) then they have been over the last 4-6 months. We maintain that growth funds are ideal for investors below 40 years. The risk profile of growth funds would be unpalatable for investors over 40 years. But investors should be more discernible and must invest in equity funds to build wealth over a period of 3-5 years, rather than enter and exit at every rise and slump in equity markets. (Do your own mutual fund rankings here.)

BALANCED FUNDS	NAV (Rs)	1-MTH	6-MTH	1-YR	INCEP.
ZURICH PRUDENCE G	16.4	-6.4%	-3.5%	-11.9%	11.7%
SUNDARAM BAL G	8.2	-7.1%	-8.5%	-13.8%	-15.7%
HDFC BAL G	8.4	-8.1%	-8.9%	-15.0%	-15.5%
DHANASAHAYOG	7.3	-5.5%	-8.2%	-16.3%	0.6%
FRANKLIN BAL G	7.9	-6.0%	-4.8%	-17.3%	-17.2%

Balanced funds have done well largely due to the fixed income component. Like their growth counterparts, their equity component has seen some harrowing times, which got even more pronounced after September 11. But unlike growth funds, balanced funds had the good fortune of falling back upon their fixed income securities to cut equity losses and also to participate in the ‘bull run’ in bond prices. But post-US attacks, even balanced fund managers are at their wits end, as they have seen an erosion in both equity and fixed income components. Investors who are more than 40 years old (but less than 50 years) can look at balanced funds as these funds have a lower risk profile (as compared to equity funds). However, even then they must select balanced funds with a very conservative approach to fund management.

INCOME FUNDS	NAV (Rs)	1-MTH	6-MTH	1-YR	INCEP.
PNB DEBT FUND (G)	14.1	0.1%	8.7%	20.5%	15.9%
PIONEER ITI INC BUILD (G)	17.4	-0.1%	8.4%	17.5%	13.8%
IDBI PRI DEP BOND G	12.0	-0.3%	7.8%	17.1%	16.4%
K BOND WHOLESALE G	12.8	-0.6%	7.4%	17.1%	13.7%
GRINDLAYS SP SAV G	11.8	-0.5%	7.9%	16.7%	16.0%

Income funds (bond funds and gilt funds) have witnessed a dream run over the last few months with the sharp run-up in bond prices. But as warned ominously by income fund managers this was too good to last. But even they may not have perceived that it would take a couple of airplanes to ram into the WTC to usher a fall in domestic bond prices. In any case that is exactly what happened and income fund investors did not like it one bit and they exited completely or shifted to liquid funds to cut losses. Income funds are for investors across the board regardless of how old they may be. However, older investors (above 40 years) would appreciate its safety and consistency more than younger investors who may want to invest in equity funds as they have more ‘time’ on their side.