Opportunity To Re-build Your Portfolio

These are extraordinary times. And it requires a similar approach to your investment portfolio planning. Of course, you can safely park your in some debt instruments and rest in peace. But that is not investment portfolio planning. You might miss a once-in-a-lifetime chance of making picking up some stocks or equity funds, given that the markets are at a dirt cheap valuations. Yes, there are still risks of the equity markets tumbling further. As you cannot predict a bottom it is the time to do some equity diving. But remember the great lesson from the current crisis. Dont get into equities with borrowed money or money that you may require in the short term or near term. And the equity space, given the current volatility in the markets, it is a good idea to invest through mutual funds.

And how did the funds battle the past one year period, when the meltdown roughly started? During this period, the Sensex lost close to 43 per cent. As the current global crisis will not go away too soon, the performance of the different categories of funds gives a good idea of how to plan your investment portfolio.


In the past one year, the top five, best-performing equity funds lost between 31 per cent and 36 per cent. The fund manager has been able to cut your losses between 7-10 per cent at just 2 per cent fees. Once again mutual funds demonstrate their value even during an extraordinary period. Leading the equity diversified pack, Reliance RSF Equity lost close to 32 per cent, followed by IDFC Premier Equity (G) which lost 32.4 per cent. Two funds from HDFC stable, HDFC Growth Fund (G) and HDFC Top 200 Fund (G), fell between 32.4 to 34 per cent. Another top performing fund, ICICI Pru Infrastructure (G) lost over 36 per cent. In the ELSS segment, there were wide variations. Sundaram Tax Saver lost 31 per cent during this period while another top performer Principal Tax Saver lost 44 per cent. Among the balanced funds, there were more variations. UTI Mahila lost only 6 per cent while HDFC Prudence fell close to 30 per cent.

The long-term debt funds had a rollicking time during this period. ICICI Pru Gilt Inv Plan returned over 20, while Birla SL Gilt Plus-Regular (G) gained over 14 per cent. Other top performing funds also gave a return between 8 per cent to 16 per cent. Clearly, the overwhelming success of long-term debt funds indicate that investors have flocked to the safety of the bonds.

Among the short-term debt funds, ABN Amro Flexi Debt - RP (G) gave a return of over 9 per cent. The average return of top-performing short-term bond funds came close to 9 per cent. The one-year returns of the top performing liquid funds also averaged slightly below that of the short-term funds. Given the meltdown in the stock markets, your portfolio needs a lot of nurturing just like a sapling. And chances are that a little care will make this sapling an oak. Stay invested primarily in debt funds as the returns are not that bad and slowly and slowly put some money back into equities. Of course, remember this gospel. Stick to your asset allocation and dont get carried away.

By: Dia Shai

Article Directory: http://www.articledashboard.com

Vritika is an investment portfolio advisor and associate editor to profit.ndtv.com, providing market news india, stock market news and information on mutual funds in India.