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Changes in Recommended Funds (December 2009) March 19, 2010
The article highlights the changes in our recommended funds across various fund categories as of December 2009.
Author : iFAST Research Team

Untitled Document

  Recommended Funds as of June 2009 Recommended Funds as of Dec 2009
Equity Funds
Equity: Diversified HDFC TOP 200 FUND - GROWTH HDFC TOP 200 FUND - GROWTH
DSP BLACKROCK TOP 100 EQUITY - REGULAR PLAN - GROWTH DSP BLACKROCK TOP 100 EQUITY - REGULAR PLAN - GROWTH
HDFC EQUITY FUND - GROWTH HDFC EQUITY FUND - GROWTH
Equity: Mid cap & Small cap BIRLA SUN LIFE MIDCAP FUND PLAN A- GROWTH  RELIANCE GROWTH FUND -GROWTH
NA SUNDARAM SELECT MIDCAP APPRECIATION- GROWTH 
Equity: Infrastructure ICICI PRUDENTIAL INFRASTRUCTURE FUND - GROWTH ICICI PRUDENTIAL INFRASTRUCTURE FUND - GROWTH 
NA DSP BLACKROCK INDIA T.I.G.E.R. FUND - REGULAR PLAN - GROWTH 
Equity: Banking & Financial
Services Sector  		 RELIANCE BANKING FUND- GROWTH RELIANCE BANKING FUND- GROWTH
Equity: Contra & Value SBI MSFU CONTRA- GROWTH ICICI PRUDENTIAL DISCOVERY FUND - GROWTH
Equity: Dividend Yield NA UTI DIVIDEND YIELD FUND- GROWTH
Equity: ELSS NA HDFC TAXSAVER - GROWTH
NA SUNDARAM BNP PARIBAS TAXSAVER OPEN ENDED- GROWTH
Equity: Index HDFC INDEX FUND SENSEX PLUS PLAN- GROWTH HDFC INDEX FUND SENSEX PLUS PLAN- GROWTH
Equity: Global NA PRINCIPAL GLOBAL OPPORTUNITIES FUND- GROWTH
NA SUNDARAM BNP PARIBAS GLOBAL ADVANTAGE- GROWTH
NA FIDELITY INTERNATIONAL OPPORTUNITIES FUND- GROWTH
Bond Funds
Debt: Floater HDFC FLOATING RATE INCOME FUND LONG TERM PLAN- GROWTH  BSL FLOATING RATE LONG TERM- GROWTH 
KOTAK FLOATER LONG TERM- GROWTH  HDFC FLOATING RATE INCOME FUND LONG TERM PLAN- GROWTH 
Debt: Short Term RELIANCE SHORT TERM FUND- GROWTH  RELIANCE SHORT TERM FUND- GROWTH 
JM SHORT TERM FUND- GROWTH  JM SHORT TERM FUND- GROWTH 
Debt: Liquid Plus DWS ULTRA SHORT TERM FUND- GROWTH  TEMPLETON INDIA ULTRA SHORT BOND FUND- GROWTH 
Debt: Income ICICI PRUDENTIAL LONG TERM PLAN- CUMULATIVE  ICICI PRUDENTIAL LONG TERM PLAN- CUMULATIVE 
BSL DYNAMIC BOND FUND RETAIL - GROWTH  BSL DYNAMIC BOND FUND RETAIL - GROWTH 
Debt: Gilt - Short Term MAGNUM GILT FUND SHORT TERM FUND- GROWTH  ICICI PRUDENTIAL GILT FUND TREASURY PLAN- GROWTH 
Debt: Gilt - Long Term FT INDIA GOVERNMENT SECURITIES FUND LONG TERM PLAN- GROWTH  FT INDIA GOVERNMENT SECURITIES FUND LONG TERM PLAN- GROWTH 
Hybrid Funds
Balanced Funds HDFC PRUDENCE FUND - GROWTH  HDFC PRUDENCE FUND - GROWTH 
DSP BLACKROCK BALANCED FUND-GROWTH  DSP BLACKROCK BALANCED FUND-GROWTH 
Monthly Income Plan (MIP) BSL MIP II SAVINGS 5 PLAN- GROWTH  UTI MONTHLY INCOME SCHEME-GROWTH 
NA HDFC MF MIP - LONG TERM PLAN - GROWTH 
NA = Not Applicable

While assessing funds to derive the list of Recommended Funds, we have looked at past performance, expense ratios and resilience of the funds. (Click here for more details on the methodology)

The past performance of the mutual funds schemes takes up a large part of our consideration. Although the past performance is not an indicative of future performance, we believe that past performance can still give us an indication of the quality of the fund management team. We look specifically at cumulative performance over various time horizons (from one-year to five-year period) and returns as per calendar year   rank funds.

Most of the changes in recommended funds are on account of new categories / classifications added on our platform (for recommended funds), or the number of recommended funds within a category being increased / decreased. A few changes were also on account of a revision in the classification of certain previously recommended funds.

 New categories / classifications added on our platform for recommended funds

The new categories that were added on our platform include:

Equity: Dividend Yield – Dividend yield funds are funds that invest primarily in high dividend yield stocks and as a result, provide a steady stream of cash flows by the way of dividends. Due to their strategy, the dividend yield funds are expected to be less volatile compared to other equity funds and a safer alternative in the equity space during market turbulence.

Equity: Mid Cap & Small Cap – These funds invest a majority of their portfolio in mid or small-cap stocks. Since these funds target mid-cap companies, the risk and returns are greater than that of an equity diversified fund. This fund category is suitable for an investor with an above average risk appetite. 

Debt: Liquid Plus – These funds are meant for investors who want stability in returns and want to park their investment for short term. In terms of risk and return, they are positioned between liquid funds and short-term funds. Usually, these funds invest in debt and money market instruments with maturity periods ranging between 90 days and 180 days.

Equity: ELSS – These are equity tax planning funds which provide exemption up to Rs. 1 lakh under Section 80C of the Income Tax Act. There is a lock-in period of 3 years from the date of investment into these funds.

Equity: Global – These funds invest primarily in global or international markets. Some of the funds use the fund of funds route, while some invest directly in foreign securities. Investing in global funds is subject to currency risk and is suitable for investors with an above average risk profile.

 
Increase / Decrease in number of recommended funds for different categories

In certain fund categories like Equity: Mid Cap & Small Cap, Equity: Infrastructure and Debt: Monthly Income Plan, we have increased the number of recommended funds.

In certain categories like Debt: Gilt, Debt: Income, Equity: Index, Equity: Contra, and Balanced, the number of recommended funds have been reduced.

 
Previous Recommended Funds Have Not Gone Bad

We usually recommend funds that have the highest overall rank within their respective fund category / classification, unless they don’t have the requisite track record. So it may happen that a previously recommended fund no longer appears amongst the top ranked funds (within that category) for the relevant review period. Our observation has been that most of the previously recommended funds that have been replaced, have not performed poorly, but have been dropped by mere one or two ranks (overall list) as a result of which they have been replaced.

The high turnover in the recommended funds list is otherwise on account of new categories / classifications added on our platform (for recommended funds), increase / decrease in the number of recommended funds within a category, or because of changes in classifications of a few funds. 

Other than choosing the right fund to invest in, a critical aspect for investing is choosing the right fund category / classification within the relevant asset class, be it equity or debt. If you have chosen the right fund category to invest in, most funds within that category are likely to deliver good.
 
The Research team is part of iFAST Financial India Pvt Ltd.
iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.

 

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