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Mutual funds: The 6-month scorecard

July 14, 2004 14:28 IST

The bulls ruled year 2003. As a result equity funds, good and average, all turned in fantastic returns. But it takes a bad patch in the stock markets for the good funds to stand out.

Year 2004 has provided a perfect opportunity to do just that!

During the period under consideration, the benchmark indices i.e. the BSE Sensex and the S&P CNX Nifty lost 17.65% and 19.61%, respectively.

And they all fell down. . .
Diversified Equity FundsNAV (Rs)6-Mth
K 30 G 22.43-6.23%
MAGNUM GLOBAL 10.62-6.49%
HSBC EQUITY GR 25.29-8.37%
PRINCIPAL GROWTH G 18.23-8.44%
HDFC CAPITAL BLD. G 22.36-8.63%
FRANKLIN INDIA PRIMA PLUS G 46.17-8.83%
ALLIANCE EQUITY G 51.86-10.28%
BIRLA MIDCAP G 20.97-11.44%
PRINCIPAL EQ G 15.16-12.07%
FRANKLIN BLUECHIP G 47.04-12.12%
Sensex--17.65%
But they fell the hardest!
Diversified Equity FundsNAV (Rs)6-Mth
PRU ICICI DYNAMIC PLAN 16.88-27.60%
PRU ICICI GROWTH G 30.54-23.09%
BOB GROWTH G 11.00-20.12%
RELIANCE VISION G 56.26-19.80%
SUNDARAM SELECT MIDCAP 21.76-18.99%
GIC FORTUNE 94 13.22-18.70%
MASTERGAIN 92 14.40-18.54%
TEMPLETON GROWTH D 21.01-18.20%
DSP ML EQUITY 18.19-18.12%
MASTERGROWTH 93 19.30-17.97%
Sensex--17.65%

(Data sourced from Credence Analytics. NAV data as on June 30, 2004)

Diversified equity funds across board have recorded falls, not a single fund has been spared. However the list also manages to throw up some surprises, funds like K30 (-6.23%) have recorded rather modest losses as compared to others like Pru ICICI Dynamic Plan (-27.60%).

Critics might argue that a 6-month period is too short to assess a fund's performance; however a fund's ability to preserve investor's capital in a bearish phase needs to be tested. Let's find out what helped some funds to curb their downswings vis--vis others.

  • Find out how your investments have performed in the last 6 months

    Diversification: Diversification always helps to protect your downside. For example a scheme like HSBC Equity Fund (-8.37%) which has over 50 stocks will generally prove to be smart bargain especially in rough times. By investing in a large number of stocks across various sectors, the fund provides a much-needed cushion against volatile market conditions.

    Management style: Funds like Principal Growth Fund (-8.44%) and Principal Equity Fund (-12.07%) which are managed conservatively often find themselves among the laggards in rising markets, however their utility comes to fore in times like the present one. These funds emerge as forerunners in preventing capital erosion.

    Investment objective: Funds like HDFC Capital Builder (-8.63%) are reasonably immune to the vagaries of the market, thanks to their "value and growth" investment style. Such funds invest in undervalued stocks and wait for them to achieve their proper valuations. Mid-cap stocks haven't borne a major brunt of the falling markets, which explains the presence of Franklin India Prima Plus (-8.83%) and Birla Midcap (-11.44%) among the better performing funds.

    While picking a quality mutual fund is never easy, rising markets often make the task seem a lot easier. Exercise a greater degree of caution, because tough times can and do separate the men from the boys.



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