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At Personalfn, we don’t thump our chests or proclaim
our achievements to the world at large. We tend to curb our enthusiasm.
However, we derive a great deal of satisfaction, when our initiatives
related to investment awareness begin to bear fruit.
In May 2007, we had written about how exit loads
charged by Asset Management Companies (AMCs) on the pretext of encouraging
long-term investing are nothing but a con job. Exit loads charged to
investors are employed to provide for, among other expenses, the mutual
fund distributor’s commission. In other words, the mutual fund distributor
is a major beneficiary of the monies collected by way of exit loads and
not the long-term investor, who continues to stay invested in the fund.
After exposing this façade put on by AMCs, we also
wrote to the regulator i.e. the Securities and Exchange Board of India (SEBI),
informing it of this practice which is unfair to long-term investors.
The latest issue of a personal finance magazine has a
news report, which suggests that our initiative has ruffled the ‘right’
feathers. An investor grievance forum, headed by a leading personality has
taken up the issue of exit loads. The article also suggests that the
Finance Ministry has taken note of the matter, as well.
We are pleased to know that our efforts in setting the
ball rolling, are translating into investors’ interests being safeguarded
and the cause of investor empowerment being furthered. Rest assured,
Personalfn will always be at the forefront in championing investors’
causes.
It was a good week for investors as equity markets
continued their northward journey for the fifth week in a row. The BSE
Sensex rose by 2.06% to close at 15,273 points, while the S&P CNX Nifty
settled at 4,505 points (up by 2.74%). Investors in the mid cap segment
had reason to cheer; the CNX Midcap posted a gain 3.50%, before closing at
6,205 points.
Leading open-ended equity funds
| Equity Funds |
NAV (Rs) |
1-Wk |
1-Mth |
6-Mth |
1-Yr |
SD |
SR |
| Magnum COMMA |
19.00 |
5.38% |
17.87% |
13.70% |
48.21% |
8.78% |
0.29% |
| JM Emerg. Leaders |
12.74 |
5.26% |
14.07% |
16.10% |
20.49% |
7.24% |
0.10% |
| Reliance Pharma
|
27.14 |
5.24% |
13.35% |
31.36% |
69.95% |
8.55% |
0.28% |
| JM Basic |
26.97 |
4.96% |
20.09% |
38.16% |
88.60% |
8.69% |
0.43% |
| JM HI FI |
12.16 |
4.91% |
20.42% |
6.99% |
38.07% |
9.75% |
0.10% |
(Source: Credence Analytics. NAV data as on July 13, 2007.)
(Standard Deviation highlights the element of risk associated with
the fund. Sharpe Ratio is a measure of the returns offered by the
fund vis-à-vis those offered by a risk-free instrument)
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Schemes from JM Financial Mutual Fund dominated the
equity funds segment. Magnum COMMA (5.38%) led the pack, followed by JM
Emerging Leaders (5.26%). JM Basic (4.96%) and JM HI FI (4.91%) also
featured among the top performers.
Leading open-ended long-term debt funds
| Debt Funds |
NAV (Rs) |
1-Wk |
1-Mth |
6-Mth |
1-Yr |
SD |
SR |
| ICICI Pru. Income
|
22.14 |
1.34% |
2.55% |
3.01% |
7.56% |
0.63% |
-0.18% |
| Templeton Income |
26.58 |
1.24% |
2.58% |
3.64% |
6.87% |
0.53% |
-0.28% |
| HDFC Income |
17.08 |
1.12% |
2.48% |
2.39% |
5.42% |
0.60% |
-0.46% |
| Templeton Inc.
Builder |
25.44 |
1.12% |
2.08% |
1.79% |
5.81% |
0.57% |
-0.42% |
| Birla Income Plus |
31.65 |
1.02% |
2.74% |
4.69% |
7.79% |
0.56% |
-0.11% |
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(Source: Credence Analytics. NAV data as on July 13, 2007.)
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The 10-Yr benchmark 8.07% GOI yield closed at 8.08%
(July 13, 2007), 9 basis points above the previous weekly close. Bond
yields and prices are inversely related, with rising yields translating
into lower prices and net asset value (NAV) for debt fund investors.
ICICI Prudential Income (1.34%) emerged as the top
performer in the long-term debt funds segment. Templeton Income (1.24%)
and HDFC Income (1.12%) occupied second and third positions respectively.
Leading open-ended balanced funds
| Balanced Funds |
NAV (Rs) |
1-Wk |
1-Mth |
6-Mth |
1-Yr |
SD |
SR |
| JM
Balanced |
26.93 |
2.97% |
13.81% |
13.54% |
42.04% |
5.99% |
0.40% |
| Kotak
Balance |
26.48 |
2.88% |
8.98% |
10.21% |
27.96% |
5.16% |
0.35% |
|
Canbalanced II |
41.49 |
2.62% |
8.36% |
9.41% |
23.67% |
5.53% |
0.41% |
|
Canbalance |
31.08 |
2.57% |
8.44% |
8.41% |
26.34% |
5.05% |
0.21% |
| LIC
MF Balanced |
47.45 |
2.43% |
10.88% |
2.66% |
24.35% |
5.75% |
0.26% |
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(Source: Credence Analytics. NAV data as on July 13, 2007.)
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Balanced funds drew from the conducive conditions in
the equity markets. JM Balanced (2.97%) led the balanced funds segment,
followed by Kotak Balance (2.88%).
Recently, we received many client queries pertaining to
two funds from Franklin Templeton Mutual Fund i.e. Franklin India Prima
Plus (FIPP) and Franklin India Flexi Cap (FIFC). Investors wanted to know
if the funds had distinct investment propositions. Given the state of the
mutual fund industry, wherein most fund houses have similar offerings in
their arsenal, the investor’s dilemma is perfectly valid.
The investment proposition offered by the funds is
about as similar as chalk and cheese. While FIPP is a predominantly large
cap fund that invests a minor portion of its corpus in mid caps, FIFC is a
flexi cap fund that freely invests in stocks from across market segments.
This brings us to another issue faced by investors,
that of funds not having clearly laid out investment propositions. Even
worse is a scenario, wherein the AMC unilaterally alters the positioning
of a fund, leaving investors in the lurch.
We urge the regulator and other investor grievance
forums to look into this issue and to ensure that investors are not at the
receiving end of ‘wishy-washy’ tactics adopted by AMCs. |
