Volatile! That word perhaps best sums up how the markets behaved in January 2005. During the month, the BSE Sensex shed 0.71% to close at 6,556 points; the S&P CNX Nifty was down by 1.11% and ended at 2,058 points. If December 2004 was a lucrative month for investors; January 2005 proved to be the proverbial eye-opener as investors encountered intense turbulence.
Leading Equity Funds
| Diversified Equity Funds |
NAV (Rs) |
1-Mth |
1-Yr |
3-Yr |
Incep. |
SD |
SR |
| ESCORTS GROWTH (G) |
28.14 |
3.91% |
27.58% |
37.47% |
30.96% |
6.71% |
0.39% |
| BOB GROWTH (G) |
15.50 |
2.92% |
27.30% |
- |
38.66% |
7.30% |
0.32% |
| RELIANCE VISION (G) |
83.14 |
1.29% |
30.35% |
70.48% |
25.54% |
7.51% |
0.37% |
| SUNDARAM SEL. MIDCAP (G) |
36.14 |
1.29% |
56.30% |
- |
67.62% |
8.30% |
0.45% |
| SUNDARAM LEADERSHIP (G) |
13.55 |
1.08% |
- |
- |
35.29% |
3.75% |
1.05% |
(Source: Credence Analytics. NAV data as on Jan 31, 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.)
Escorts Growth (3.91%) emerged as the top monthly performer, followed by BoB Growth (2.92%). In context of the market's behaviour, the performance pitched in by the top performers is noteworthy. Funds like Reliance Vision (1.29%), Sundaram Select Midcap (1.29%) and Chola Midcap (1.03%) which invest predominantly in the mid-cap segment also had a good month.
Category leaders Franklin India Bluechip (-1.48%), HSBC Equity (-1.57%) and HDFC Top 200 (-2.13%) trailed the indices and languished in negative terrain.
Fund houses continued to entice investors by launching mutual fund IPOs; funds of the mid cap and flexi cap variety are evidently the season's flavour. Investors must consider adding new schemes to their portfolio, if they are in tune with their risk profiles and can help them create a comprehensive and well-rounded portfolio. However if the offering is similar to that of existing, well-managed schemes in the market, investors should first consider investing in the latter. Existing funds have a history to show for, which forms a reasonable benchmark to gauge what the funds are capable of performing going forward.
Leading Debt Funds
| Debt Funds |
NAV (Rs) |
1-Mth |
3-Mth |
1-Yr |
Incep. |
SD |
SR |
| CANINCOME (G) |
11.51 |
0.88% |
2.25% |
3.04% |
6.05% |
0.50% |
-0.69% |
| JM INCOME (G) |
26.70 |
0.63% |
1.76% |
1.60% |
10.49% |
0.78% |
-0.57% |
| LIC MF BOND (G) |
18.10 |
0.59% |
1.61% |
1.54% |
10.84% |
0.62% |
-0.72% |
| RELIANCE INCOME (G) |
20.86 |
0.56% |
2.08% |
2.96% |
10.97% |
0.82% |
-0.42% |
| BIRLA BOND INDEX (G) |
10.57 |
0.55% |
1.55% |
-0.35% |
2.89% |
0.83% |
-0.66% |
(Source: Credence Analytics. NAV data as on Jan 31, 2005. Growth over 1-Yr is compounded annualised)
Investors in the debt funds segment had a reasonable month; top performing debt funds delivered positive returns. The benchmark 7.38% 2015 GOI yield was at 6.70% (January 31, 2005).
Canincome (0.88%) surfaced as the monthly topper; JM Income (0.63%) and LICMF Bond (0.59%) occupied second and third positions respectively.
Leading Balanced Funds
| Balanced Funds |
NAV (Rs) |
1-Mth |
1-Yr |
3-Yr |
Incep. |
SD |
SR |
| ESCORTS BALANCED (G) |
26.19 |
2.35% |
18.11% |
33.28% |
28.70% |
6.45% |
0.31% |
| KOTAK BALANCE |
16.83 |
1.22% |
35.39% |
30.93% |
16.00% |
5.83% |
0.38% |
| BOB BALANCED (G) |
14.21 |
0.50% |
21.43% |
- |
29.54% |
5.64% |
0.31% |
| HDFC BALANCED (G) |
19.87 |
0.36% |
19.68% |
25.98% |
17.18% |
4.77% |
0.29% |
| LIC MF BALANCED (G) |
27.36 |
0.31% |
13.22% |
18.71% |
5.98% |
5.28% |
0.18% |
(Source: Credence Analytics. NAV data as on Jan 31, 2004. Growth over 1-Yr is compounded annualised)
Volatility in the equity markets took their toll on the balanced funds segment as well. Escorts Balanced (2.35%) pitched in a smart performance and stood heads and shoulders above its peers. Category leader HDFC Prudence (-1.74%) had a poor month.
Investors must learn to be more discerning while making their investments. While the importance of returns cannot be undermined, factors like the fund's expenses and entry/exit loads should be given their due importance. Also basics of investing, like ensuring that the portfolio is well-diversified, must be adhered to at all times. Diversification across various parameters mitigates the risk levels that your portfolio is exposed to.
January 2005 was clearly a testing month for most investors; however such times can often demarcate serious long-term investors from those who are looking to make a quick buck. If you belong to the former category, you can treat the market's behaviour as an aberration and take this opportunity to further invest a portion of your surplus.
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