At Personalfn, we routinely interact with clients who wish to invest in a scheme or with a fund house, simply because it won an award. We are routinely asked -- "what are your views/comments on the fund house/scheme given that it's won an award?" Our view is quite simple -- we are happy for the fund house/scheme in question for its achievement. Period.
Don't get us wrong. We have nothing against awards per se. However the credentials of some awards i.e. the basis on which they are awarded merits debate. For example, who is the entity that has instituted the award? Is it respected and trustworthy? Second, on what basis was the award given out.
For example, let's consider the case of a finance/money magazine giving out awards to fund houses. In that case, one must find out if the winning fund house's investment philosophy, processes and performance (among other factors) were evaluated and what weightage was allotted to each parameter? Also was the fund house evaluated on factors like ethical behaviour? Or was it just a case of barter (the fund house places advertisements in the magazine and the magazine offers an award in return) driving the award?
And finally -- why should a fund house/scheme winning an award make it right for investors across the board? Perhaps an impressive showing by the fund house on the returns front (thanks to extraordinary risk-taking) was the reason for winning the award. Similarly, the award-winning scheme may be an aggressively managed one that successfully rode the rising markets. But certainly neither the fund house nor the scheme would be appropriate for an investor with a conservative risk appetite.
As we said before, we have nothing against awards. However making an investment decision based solely on an award may not be the right move.
It was a good week for investors as equity markets closed in positive terrain. The BSE Sensex posted a gain of 2.71% before closing at 19,363 points; the S&P CNX Nifty closed at 2.75% (up by 5,763 points). The CNX Midcap rose by 4.84% and closed at 7,994 points.
| Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| Taurus Starshare | 71.05 | 5.90% | 8.03% | 58.81% | 77.76% | 8.18% | 0.48% |
| Tauras Discovery Stock | 27.63 | 5.78% | 13.75% | 62.43% | 85.19% | 9.30% | 0.30% |
| ABN AMRO Future Leaders | 13.79 | 5.67% | 5.11% | 23.65% | 33.75% | 7.43% | 0.17% |
| JM Equity | 53.42 | 5.57% | 0.03% | 37.27% | 37.01% | 6.98% | 0.37% |
| Tata Equity P/E | 41.50 | 5.38% | 1.81% | 40.90% | 66.00% | 7.60% | 0.39% |
(Standard Deviation highlights the element of risk associated with the fund. Sharpe Ratio is a measure of the returns offered by the fund vis-�-vis those offered by a risk-free instrument)
Mid cap funds dominated proceedings in the equity funds segment. Funds from Taurus Mutual Fund i.e. Taurus Starshare (5.90%) and Taurus Discovery Stock (5.78%) occupied the top two slots, followed by ABN AMRO Future Leaders ( 5.67%) and JM Equity (5.57%).
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| Templeton Income | 27.63 | 0.56% | 0.45% | 6.29% | 7.92% | 0.92% | -0.08% |
| Reliance [ Get Quote] Income | 24.90 | 0.45% | 0.78% | 6.28% | 7.62% | 0.72% | -0.01% |
| ICICI [ Get Quote] Pru. Income | 23.86 | 0.43% | 0.76% | 7.69% | 7.52% | 1.07% | -0.01% |
| HDFC [ Get Quote] Income | 17.74 | 0.42% | 0.65% | 6.16% | 6.17% | 0.87% | -0.21% |
| Birla Income Plus | 33.47 | 0.33% | 0.42% | 8.75% | 10.20% | 1.01% | 0.00% |
The 10-Yr 8.07% GOI yield closed at 7.93% (November 30, 2007, source: Reserve Bank of India [ Get Quote] website), 1 basis point below the previous weekly close. Bond yields and prices are inversely related, with falling yields translating into higher bond prices and net asset value (NAV) for debt fund investors.
Templeton Income (0.56%) topped the long-term debt funds segment. Reliance Income (0.45%) and ICICI Prudential Income (0.43%) occupied second and third positions respectively.
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| LIC [ Get Quote] MF Balanced | 65.82 | 5.45% | 9.72% | 49.17% | 45.42% | 6.07% | 0.37% |
| FT India Balanced | 45.35 | 2.75% | 0.55% | 28.91% | 40.47% | 4.98% | 0.45% |
| Escorts Balanced | 70.41 | 2.61% | 0.53% | 37.37% | 51.92% | 5.57% | 0.46% |
| DSP ML Balance | 52.86 | 2.55% | 2.34% | 23.91% | 39.34% | 4.98% | 0.46% |
| Kotak Balance | 30.68 | 2.54% | 2.34% | 32.88% | 42.16% | 5.18% | 0.45% |
LIC MF Balanced (5.45%) towered head and shoulders above its peers in the balanced funds segment. FT India Balanced (2.75%) and Escorts Balanced (2.61%) also featured in the top performers' list.
Oddly, despite the fact that many individuals are convinced of the importance of making investments to provide for their future needs, not many appreciate the importance of a financial planner. To begin with, he can help you sift through the vast (and ever-growing) list of investment avenues on offer and select the ones that are right for you. His expertise in various avenues like equities, mutual funds, fixed income instruments and insurance, among others is vital in creating the right portfolio.
The financial planner's role in providing unbiased advice and creating a portfolio that is right for you cannot be overstated. Given the contribution that a financial planner can make in helping you achieve your financial goals, you would do well to engage the services of a competent, honest and experienced financial planner.
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