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Changes in Recommended Funds (As on December 2010)
February 19, 2011

The article highlights the changes in our recommended funds across various fund categories as of December 2010.


Author : iFAST Research Team



Untitled Document         

Table 1: Changes in Recommended funds

Recommended Funds as at June 2010 Recommended Funds as at December 2010
Equity Funds*
Diversified HDFC TOP 200 FUND NA
DSP ROCK TOP 100 EQUITY FUND NA
HDFC EQUITY FUND NA
Large Cap NA HDFC TOP 200 FUND
NA ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND
NA FRANKLIN INDIA BLUECHIP FUND
Multi Cap NA HDFC EQUITY FUND
NA FIDELITY EQUITY FUND
NA UTI OPPORTUNITIES FUND
Midcap & Small Cap DSP ROCK MICRO CAP FUND HDFC MID-CAP OPPORTUNITIES FUND
RELIANCE GROWTH FUND DSP ROCK SMALL AND MID CAP FUND
Contra & Value ICICI PRUDENTIAL DISCOVERY FUND ICICI PRUDENTIAL DISCOVERY FUND
UTI MASTER VALUE FUND NA
Dividend Yield UTI DIVIDEND YIELD FUND UTI DIVIDEND YIELD FUND
Index HDFC INDEX FUND SENSEX PLUS PLAN FRANKLIN INDIA INDEX FUND- BSE SENSEX PLAN
NA ICICI PRUDENTIAL INDEX FUND
ELSS HDFC TAXSAVER HDFC TAXSAVER
FIDELITY TAX ADVANTAGE FUND FIDELITY TAX ADVANTAGE FUND
Overseas FIDELITY INTERNATIONAL OPPORTUNITIES FUND NA
TATA GROWING ECONOMIES INFRASTRUCTURE FUND PLAN A NA
Global NA MIRAE ASSET CHINA ADVANTAGE FUND
NA PRINCIPAL GLOBAL OPPORTUNITIES FUND
Banking RELIANCE BANKING FUND RELIANCE BANKING FUND
Pharmaceuticals RELIANCE PHARMA FUND RELIANCE PHARMA FUND
Infrastructure ICICI PRUDENTIAL INFRASTRUCTURE FUND ICICI PRUDENTIAL INFRASTRUCTURE FUND
DSP ROCK INDIA T.I.G.E.R. FUND DSP ROCK INDIA T.I.G.E.R. FUND
FMCG FRANKLIN FMCG FUND MAGNUM SECTOR FUNDS UMBRELLA- FMCG FUND - Dividend
Technology DSP ROCK TECHNOLOGY.COM FUND ICICI PRUDENTIAL TECHNOLOGY FUND
  Debt Funds*
Floating Rate/Floater HDFC FLOATING RATE INCOME FUND LONG TERM PLAN CANARA ROBECO FLOATING RATE - SHORT TERM
BIRLA SUNLIFE FLOATING RATE FUND LONG TERM PLAN BIRLA SUNLIFE FLOATING RATE FUND LONG TERM PLAN
Ultra Short Term RELIANCE MONEY MANAGER FUND BIRLA SUNLIFE ULTRA SHORT TERM FUND- Dividend
LICMF INCOME PLUS FUND BNP PARIBAS MONEY PLUS FUND-Dividend
NA DWS ULTRA SHORT TERM FUND- Dividend
Short Term HDFC HIGH INTEREST FUND SHORT TERM PLAN TEMPLETON INDIA SHORT TERM INCOME PLAN
RELIANCE SHORT TERM FUND RELIANCE SHORT TERM FUND
Income BIRLA SUNLIFE DYNAMIC BOND FUND BIRLA SUNLIFE DYNAMIC BOND FUND
BNP PARIBAS FLEXI DEBT FUND NA
GILT -Short Term BIRLA SUNLIFE GILT PLUS LIQUID PLAN ICICI PRUDENTIAL GILT-TREASURY
GILT -Long Term BIRLA SUNLIFE GOVERNMENT SECURITIES FUND LONG TERM PLAN ICICI PRUDENTIAL GILT-INVESTMENT
MIP HDFC MULTIPLE YIELD FUND PLAN 2005 NA
RELIANCE MONTHLY INCOME PLAN NA
  Hybrid Funds*
Balanced HDFC PRUDENCE FUND HDFC PRUDENCE FUND
DSP ROCK BALANCED FUND DSP ROCK BALANCED FUND
MIP NA RELIANCE MONTHLY INCOME PLAN
NA HDFC MF MONTHLY INCOME PLAN- LONG TERM PLAN
*  We are recommending growth option for all our schemes unless otherwise specified

 
Recommended Funds are based on our in-house methodology which focuses on 3 main parameters:

  • performance over a 5 year time horizon
  • expense ratio
  • ability of the funds to withstand the downtrend in the markets

Once the ranking is done on the basis of the said methodology, funds with a track record of less than 2 years are removed and the top 2 funds are then studied for their investment strategy during bullish and bearish phases, portfolio action by the fund manager in terms of sectoral allocation and other parameters like asset allocation, asset size, and in the case of fixed income credit quality, average maturity, etc.

Our Recommended Funds list was first introduced in June 2009 and since then there have been some funds which have been in our list in all the last 4 reviews. These include HDFC Top 200 Fund, HDFC Equity Fund, ICICI Prudential Infrastructure Fund and Reliance Banking Fund (Equity Categories), Reliance Short Term Fund, Birla SunLife Dynamic Bond Fund (Debt Category) and HDFC Prudence Fund and DSP Rock Balanced Fund (Hybrid Category).

Changes in the Equity category

In the equity category, the major change has been in the diversified category, which has been divided into large cap and multi cap segments. The diversified category has funds which either invest only in large cap stocks or invest across market caps. This segregation helps investors identify which are the large cap funds, and which funds are multi cap. Conservative/moderately conservative /balanced investors as per their risk profile would prefer large cap funds since they are less volatile and have also shown outperformance during a long time horizon. However, aggressive and moderately aggressive investors, who are willing to take risks, should look at multi cap funds, wherein fund managers move across market caps depending on the opportunities available in the market.

As far as the funds in this category are concerned, we have removed DSP Rock  Top 100 Equity Fund and have moved in ICICI Prudential  Focused Bluechip Equity Fund and Franklin India Bluechip Equity Fund. However HDFC Top 200 Fund continues its innings in the new list of recommended funds as well.

In the multi cap category, HDFC Equity Fund remains in our recommended list and an addition of 2 funds namely, Fidelity Equity Fund and UTI Opportunities Fund have been made. In the midcap & smallcap funds we have removed DSP Rock Microcap Fund and Reliance Growth. The DSP Rock Microcap Fund became an open-ended fund on June 25, 2010 and an analysis of the same will be a bit skewed. As far as Reliance Growth Fund is concerned, since it has more than ~ 50% of its portfolio concentrated in the large cap space, we think it appropriate to move it from the midcap space. Hence 2 new funds, i.e., HDFC Mid-Cap Opportunities Fund and DSP Rock Small and Midcap Fund find a place in the recommended funds.

In the Contra & Value category, we have removed UTI Master Value Fund, since its ranking has gone down to the 10th position and we have stayed with ICICI Prudential Discovery Fund. For the Dividend Yield category, we continue with our existing recommended fund, i.e., UTI Dividend Yield Fund.

As far as Index Funds are concerned, HDFC Index Fund Sensex Plus Plan has been removed as it has more than 10% allocation to stocks outside the BSE Sensex, as a result of which the tracking error will be higher in this fund as compared to its peers. In its place Franklin India Index  Fund- BSE Sensex Plan and ICICI Prudential Index Fund have been added. For the Global Funds category, Fidelity International Opportunities Fund and Tata Growing Economies Infrastructure Fund Plan A have been removed and new funds, i.e., Mirae Asset China Advantage Fund and Principal Global Opportunities Fund have been included. Since we are positive on the emerging economies and believe that countries like China will be the main drivers of global economic growth in 2011, we consider these 2 funds to be the best bets in the said category.

For the ELSS category, we continue with our existing funds, i.e., HDFC TaxSaver Fund and Fidelity Tax Advantage Fund. As for sector funds, in the FMCG space, Franklin FMCG Fund has been replaced by Magnum Sector Funds-Umbrella-FMCG Fund, while for the Technology sector, DSP Rock Technology.com Fund has been removed and ICICI Prudential  Technology Fund has been added. Finally, ICICI Prudential Infrastructure Fund, DSP Rock India T.I.G.E.R.Fund, Reliance Banking Fund and Reliance Pharma Fund continue to be the best bets in their respective categories.

Changes in the Debt CATegory

Some of the funds in the Debt Category had to be removed because the information like YTM and average maturity are not publicly disclosed. Most of the HDFC Funds in the debt category were impacted due to this reason. For the Floater Funds category, HDFC Floating Rate Income Fund Long Term Plan has been replaced with Canara Robeco Floating Rate Fund along with the already existing fund, Birla SunLife Floating Rate Fund Long Term Plan. In the Ultra Short Term Funds category, Reliance Money Manager Fund and LICMF Income Plus Fund were removed and in its place Birla SunLife Ultra Short Term Fund, BNP Paribas Money Plus Fund and DWS Ultra Short Term Fund were added.

For the Income category, BNP Paribas Flexi Debt Fund has been removed due to its underperformance for some time now while Birla Sunlife Dynamic Bond Fund continues to be our top pick. In the Short Term Funds category, Reliance Short Term Fund continues to be the best performer, however Templeton India Short Term Income Plan has been included in this  category as it has been able to deliver high returns in spite of taking a bit of credit risk. As for Gilt funds, both Short term and Long term, ICICI Prudential Gilt-Treasury and ICICI Prudential Gilt-Investment have replaced Birla SunLife Gilt Plus Liquid Plan and Birla SunLife Government Securities Fund Long Term Plan.

Changes in the Hybrid Category

Our top picks in the Balanced funds category, i.e., HDFC Prudence Fund and DSP Rock Balanced Fund remain the same. As for MIPs, HDFC Multiple Yield Fund Plan 2005 has been replaced with HDFC MF Monthly Income Plan-Long Term Plan, while Reliance Monthly Income Plan continues to be the top pick in the current review as well.

 Conclusion

A review of our Recommended Funds is done on a half yearly basis and accordingly, some funds move out from the list and the new top 1 or 2 funds find its way into the list. We will be reviewing the performance of the funds on a monthly basis to see the strategies being adopted by the fund managers which will have an impact on the funds in the long term. We strongly believe that all the top funds included in the respective categories are the best among their peers. However we advise our investors to choose the funds depending on their risk profile and hold funds for a long term so as to yield the desired returns without being concerned much about the short-term volatility in the market.

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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