While mutual fund rankings often pitch forth the best performers across categories, the laggards tend to be ignored. The last few months have been testing ones for the equity markets, and have taken their toll on funds from the diversified equity segment. At Personalfn we decided to identify schemes most affected by market volatility over the last 6 months.

A query on Personalfn to find out which funds have suffered the most damage over the last 6 months throws up the following list.

They fell the hardest¦

Diversified Equity Funds	NAV (Rs)	1-Wk	1-Mth	6-Mth	1-Yr	Incep.
PRU ICICI GROWTH G	32.59	-0.9%	6.3%	-19.0%	28.5%	20.9%
PRU ICICI DYNAMIC PLAN	17.93	-0.7%	5.0%	-18.0%	22.2%	39.1%
ING GROWTH G	9.52	-0.4%	4.9%	-13.0%	36.2%	-0.6%
BIRLA ADVANTAGE B	46.72	-1.8%	6.1%	-12.9%	40.5%	21.1%
IL&FS GROWTH & VAL G	25.72	-1.0%	5.7%	-12.7%	50.3%	17.3%
TEMPLETON GROWTH G	27.35	-2.6%	3.4%	-12.7%	NA	31.3%
MASTERSHARE 91	25.11	-1.7%	4.7%	-12.4%	35.0%	7.2%
DSP ML TOP 100 G	20.38	-1.4%	5.3%	-11.9%	45.0%	70.3%
JM EQUITY G	13.94	-0.4%	6.3%	-11.7%	40.4%	3.6%
PRINCIPAL EQUITY G	15.51	-1.8%	2.4%	-11.5%	27.3%	5.6%

(Data sourced from Credence Analytics. NAV data as on August 13, 2004, Growth over 1-Yr is compounded annualised)

In what is otherwise a motley mix of diversified equity funds, one fund that stands out is the PruICICI Dynamic Plan. Despite being beaten by PruICICI Growth (-19.0%) over the 6-Mth period, PruICICI Dynamic Plan (-18.0%) has experienced a sharp erosion in its NAV as well. On a year-to-date performance, the fund (-22.1%) has been outperformed by its benchmark index i.e. the Nifty (-16.37%).

Now the interesting part, PruICICI Dynamic Plan's (PDP) investment mandate permits the fund to invest upto 100% of its corpus in equity/equity related instruments as well as debt, money market instruments and cash. Effectively we have a fund whose investment domain is probably the widest one among peers, but whose performance is nothing to write home about.

Flexibility in operation for the fund manager would be construed as a positive sign by investors. More freedom at the fund manager's disposal should ideally enable him to comfortably navigate changing market conditions. The keyword here is ideally. While the importance of a flexible investment mandate cannot be overstated; the same need not translate into good performance. Investors should note that these parameters when considered in isolation make little sense.

The next time you are scrutinising your portfolio, take a look at what the schemes you had invested in were stated to do vis-à-vis their performance. It can be your first step towards restructuring to achieve that ideal portfolio.

 

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