The financial year's first month proved to be a good one for investors as equity markets surged northwards and closed in positive terrain. The BSE Sensex posted a gain of 10.50 per cent to close at 17,287 points, while the S&P CNX Nifty closed at 5,166 points (up by 9.10 per cent). It was a particularly good month for investors in the mid cap segment; the CNX Midcap rose by 12.24 per ent, before settling at 7,005 points.
Foreign Institutional Investors and mutual funds were both net buyers in the domestic equity markets during the month. FIIs bought equities to the tune of Rs 5,927 m (as on April 29, 2008), while the corresponding number was Rs 1,264 m for mutual funds.
In recent times, 'inflation' has emerged as a buzz word of sorts. Simply put, inflation is a situation wherein too much money chases a limited number of goods. This leads to a fall in the value of money. Inflation is often expressed as a rise in the price level. For example, a product that costs Rs 100 now, would cost Rs 105 a year hence, assuming that prices rise at 5 per cent annually. While cutting down on expenses is one way of dealing with inflation, the other option is to invest in avenues that effectively counter inflation.
Monthly top performers: Open-ended equity funds
| Equity Funds | NAV (Rs) | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| Franklin Infotech | 42.51 | 17.58% | -7.82% | -20.22% | 8.45% | -0.03% |
| JM Emerging Leaders | 14.37 | 17.08% | -8.86% | 35.19% | 11.53% | 0.05% |
| Tata Life Sciences & Tech. | 46.71 | 15.08% | -11.60% | -4.34% | 9.54% | 0.03% |
| UTI Software | 20.90 | 14.46% | -11.63% | -25.43% | 9.46% | -0.03% |
| JM Financial [Get Quote] Services | 14.59 | 14.22% | -11.61% | 45.17% | 12.54% | 0.21% |
(Source: Credence Analytics. NAV data as on April 30, 2008.)
(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)
Sector funds dominated the proceedings in the equity funds segment. Franklin Infotech (17.58 per cent) led the pack, followed by JM Emerging Leaders (17.08 per cent). Tata Life Sciences & Technology (15.08 per cent) and UTI Software (14.46 per cent) came in at third and fourth positions respectively.
Monthly top performers: Long-term debt funds
| Debt Funds | NAV (Rs) | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| Grindlays Dynamic Bond | 15.28 | 1.31% | 6.25% | 11.98% | 0.52% | 0.41% |
| Grindlays GSec Invest. | 15.16 | 1.09% | 5.75% | 9.20% | 0.77% | 0.15% |
| ING Income | 20.35 | 0.96% | 5.87% | 11.43% | 0.59% | 0.13% |
| Grindlays Super Sav. Income | 18.90 | 0.96% | 5.18% | 11.51% | 0.61% | 0.20% |
| HDFC [Get Quote] Floating | 13.56 | 0.91% | 4.72% | 8.82% | 0.12% | 0.58% |
(Source: Credence Analytics. NAV data as on April 30, 2008.)
Funds from Standard Chartered Mutual Fund ruled the roost in the long-term debt funds segment. Grindlays Dynamic Bond (1.31 per cent) occupied the top slot, followed by Grindlays GSec Investment (1.09 per cent) and ING Income (0.96 per cent).
Monthly top performers: Balanced funds
| Balanced Funds | NAV (Rs) | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| LIC [Get Quote] MF Balanced | 55.42 | 9.71% | -7.23% | 27.20% | 9.29% | 0.09% |
| Birla Sun Life 95 | 218.84 | 8.25% | -4.32% | 20.00% | 7.20% | 0.12% |
| JM Balanced | 26.24 | 8.19% | -16.43% | 11.63% | 7.93% | 0.07% |
| DSP ML Balanced | 50.23 | 7.79% | -3.15% | 27.84% | 7.14% | 0.15% |
| UTI Variable Investment | 17.54 | 7.13% | -8.35% | 6.27% | 4.04% | - |
(Source: Credence Analytics. NAV data as on April 30, 2008.)
LIC Balanced (9.71 per cent) topped the balanced funds segment. Birla Sun Life 95 (8.25 per cent) and JM Balanced (8.19 per cent) also made it to the top performers' list.
Given that the financial year has just begun, tax-planning is unlikely to feature on many 'to-do' lists at the moment. This is simply because tax-planning is generally perceived as an 'end of the financial year' exercise. At Personalfn, we have always maintained that tax-planning is an integral part of investors' financial planning and deserves to be accorded due importance and thought. Hence, we believe that investors should start tax-planning from day one of the financial year.
Although, there are several tax-saving avenues available for investment, investors must consider their risk appetite before getting invested. For example, while market-linked avenues like tax-saving funds (commonly known as ELSS) and unit linked insurance plans may best suit risk-taking investors; assured return schemes are likely to find favour with risk-averse investors.
The small savings schemes segment perhaps represents the most comprehensive pool of assured return schemes. More importantly, a number of small savings schemes are eligible for tax benefits as well. As always, investors would do well to conduct a thorough evaluation of all the available options before making an investment decision.
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