Financial Daily from THE HINDU group of publications
Monday, May 10, 2004
Columns - Mutual Confidence
SBI Magnum Contra in top notch
PERFORMANCE figures clocked by mutual funds almost always have a revelation or two. This time, the lead achieved by SBI MF's Magnum Contra Fund has come up as a clear surprise.
The scheme, which essentially chases undervalued stocks that are said to have good upside potential, has recorded 13.3 per cent returns for the one-month period ended April 30. The tally has exceeded the numbers turned in by any of its closest rivals the likes of Alliance Buy India, Canglobal and Sundaram Select Midcap.
The point is that Magnum Contra has not really been a top name in the MF league tables. In fact, there are good chances that it may not have been one of your favourite funds. In other words, you would have to be a very savvy and diligent investor in order to focus on the right scheme at the right time.
Casual investors would not have readily known about the investments being made by Magnum Contra or the promise they hold. And for such participants, it makes sense to spread their allocations over a number of schemes.
It would have been far easier to spot a potential winner in Reliance Banking Fund, thanks to the advances registered recently by so many banking stocks. This purely sectoral scheme, with a tidy score of 16.06 per cent, is actually the No. 2 performer for the three-months period ended April 2004. It has even managed to beat such truly broadbased ones as Kotak 30 and Tata Life Sciences & Tech.
But all said and done, investors in equity funds may generally be in for some trouble in the days ahead. The swings in the market are being seen as clear signs of instability and there are absolutely no indications that the bourses will regain composure in the near term.
At this juncture, election results are on top of everybody's mind and the picture is likely to be unclear till such time the outcome is finally known. Most investors, it can be safely presumed, are waiting for clarity to return before they make fresh allocations.
Just in case the market takes a sharp plunge, the last one-year's performance figures may start looking like a deviation. However, fund managers would certainly not like investors to write off their schemes so easily and so early. The fact that investors in leading equity funds have made decent money over the past one year or so cannot be denied.
Simply consider the numbers, as recorded by Value Research. There are quite a few players with 100 per cent-plus one-year scores. For the record, the top performers (as on April 30) include Tata Equity Opportuinities, HSBC Equity, Reliance Growth, Tata Pure Equity and Franklin India Prima.
Some investors would, given the uncertainty associated with the polls, undoubtedly feel the urge to book profits and move their money elsewhere. That could mean increased inflows into certain debt funds and other alternative vehicles. Such investors would like to keep their capital safe, away from the hustle and bustle of equities.
And the more intrepid ones would perhaps retain a part of their savings in funds with the hope of recording further gains just in case the market moves northwards again.
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