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Broadly speaking, any investor who is planning his
finances needs to commence by setting investment objectives. These
objectives would depend on his specific needs and aspirations. Also, the
objectives would typically run over varied time frames; for example,
short-term (going on a vacation), medium-term (buying a car) and long-term
(planning for retirement).
The next step would be to make investments to achieve
the desired objectives. The same would entail drawing up investment plans,
taking into account factors like the investor’s risk profile and existing
portfolio. An investment advisor/financial planner would typically have a
role to play at this stage.
A vital step that links the aforementioned steps
involves quantifying investment objectives. In other words, each
investment objective needs to be converted into monetary terms. For
example, if the investor wishes to provide for his children’s education,
he needs to be unambiguously aware of the money that he will need to set
aside for this task.
Investors expect the investment advisor to pitch in at
this stage too. Number-crunching isn’t everybody’s cup of tea. Or is it?
Actually, the presence of easy-to-use calculators can make the seemingly
complex number-crunching look like child’s play. For example,
Personalfn’s Education Planner can help investors provide for their
children’s education by keying in elementary information like the child’s
present age, time on hand and cost of education, among others.
Click here for Personalfn’s Quick Calcs sectionNot too long ago, we discussed the importance of
investors actively participating in the investment process, as the same
will lead to more informed investment decisions being made. We believe
investors involving themselves in the numerical computation will only
further this cause.
It was a volatile week at the markets; the benchmark
indices ended the week in positive terrain, albeit marginally. The BSE
Sensex rose by 0.70%, before settling at 14,163 points; the S&P CNX Nifty
closed at 4,171 points, up by 0.63%. The CNX Midcap posted a gain of 1.07%
and closed at 5,651 points.
Leading open-ended equity funds
| Equity Funds |
NAV (Rs) |
1-Wk |
1-Mth |
6-Mth |
1-Yr |
SD |
SR |
| Reliance Pharma |
24.54 |
4.30% |
11.35% |
25.51% |
67.72% |
8.68% |
0.27% |
| Magnum Emerg.
Businesses |
32.08 |
2.89% |
6.26% |
8.82% |
55.35% |
8.16% |
0.30% |
| Sundaram Capex Opp.
|
18.70 |
2.37% |
6.33% |
8.50% |
60.51% |
8.88% |
0.34% |
| Can Emerg.
Equities |
17.45 |
2.23% |
7.19% |
10.16% |
47.63% |
8.10% |
0.29% |
| Magnum Multiplier
Plus |
56.36 |
2.18% |
3.41% |
7.29% |
57.08% |
7.65% |
0.43% |
(Source: Credence Analytics. NAV data as on June 15, 2007.)
(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.) |
Sector and thematic funds dominated proceedings in the
equity funds segment. Reliance Pharma (4.30%) towered head and shoulders
above its peers. Magnum Emerging Businesses (2.89%) and Sundaram Capex
Opportunities (2.37%) came in at second and third positions respectively.
Leading open-ended
long-term debt funds
| Debt Funds |
NAV (Rs) |
1-Wk |
1-Mth |
6-Mth |
1-Yr |
SD |
SR |
| DBS Chola Gilt
Inv. |
19.02 |
1.16% |
1.41% |
2.31% |
5.93% |
1.13% |
-0.29% |
| JM GSec RP |
21.44 |
0.41% |
0.57% |
1.91% |
4.20% |
0.48% |
-0.56% |
| DBS Chola Triple
Ace |
23.94 |
0.20% |
-1.42% |
0.50% |
1.69% |
0.48% |
-0.76% |
| Escorts Floating
|
10.80 |
0.19% |
0.77% |
3.40% |
5.59% |
0.30% |
-0.28% |
| Tata Dynamic Bond
|
12.31 |
0.18% |
0.84% |
4.24% |
7.08% |
0.21% |
-0.73% |
|
(Source: Credence Analytics. NAV data as on June 15, 2007.) |
The 10-Yr 8.07% GOI yield closed at 8.15% (June 15,
2007, source: Reserve Bank of India website), unchanged over the previous
weekly close.
DBS Chola Gilt (1.16%) topped the long-term debt funds
segment, followed by JM GSec RP (0.41%). DBS Chola Triple Ace (0.20%) also
featured in the list.
Leading open-ended
balanced fundsfunds
| Balanced Funds |
NAV (Rs) |
1-Wk |
1-Mth |
6-Mth |
1-Yr |
SD |
SR |
| BOB Balanced |
24.61 |
1.32% |
2.46% |
10.46% |
30.01% |
6.16% |
0.19% |
| Principal Balanced
|
22.55 |
0.85% |
0.58% |
4.30% |
29.30% |
5.34% |
0.26% |
| Canbalanced II |
38.76 |
0.83% |
1.52% |
3.72% |
23.64% |
5.08% |
0.44% |
| HDFC Balanced |
31.68 |
0.76% |
1.35% |
-0.04% |
26.60% |
4.88% |
0.28% |
| Canbalance |
28.94 |
0.73% |
2.15% |
3.43% |
25.01% |
4.47% |
0.20% |
|
(Source: Credence Analytics. NAV data as on June 15, 2007.) |
BOB Balanced (1.32%) led the pack in the balanced funds
segment. Principal Balanced (0.85%) and CanBalanced II (0.83%) occupied
second and third positions respectively.
At times, investors are tempted to shift their
investments from one fund to another. This involves bearing costs in terms
of exit/entry load or both in some instances. Over the long-term, these
costs add up and have a detrimental impact on the overall returns. This
week,
we conducted a study to demonstrate the impact of such churn. And the
results were eye-opening!
In our view, an incessant portfolio churn is indicative
of lack of consistency and discipline in investing, the two most important
virtues required while managing finances. Investors would do well to
imbibe these virtues and steer clear of churning their investments.
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