It is time to review strategy for churning mutual fund portfolio.At high levels of market when selective stocks are going up, it is prudent to go for mutual funds which have a strategy based on special needs and focus , rather than on sensex performance.
At this time even savvy fund managers have been humbled. Consider the performance of the all time favourites of the market1. Sundaram select mid cap---has given returns of 8 percent in 1 month, dropping down to 48th rank in mutual funds returns. In 3 months it has given 12.8 percent, . In 6 months it has given 35.2 percent returns, ranking 125th among 171 funds. Its one year return still remains at no. 4--- at return 56.1 percent2.SBI Magnum contra--used to the first 3 ranks, year after year, has suddenly seen its performance eroded. In 3 months it has given just 13.7 percent returns, ranking 42nd among equity funds and in 6 months its returns are 40.2 percent, ranking 62nd among equity funds.3.reliance vision has dropped to 99th position in 3 month returns and reliance growth to 11th position.their 6 months rankings are 65th and 32nd respectively.
So which are the funds which are doing well.It is funds with special strategies which are doing well. These include investing in special industries as in the case of fidelity special situations or funds investing in services industry or infrastructure sectors .Also doing well are funds, having a mandate to switch between sectors. So following are the star performers which will continue to do well in 2007. Pru ICICI is the fund house with the maximum number of outperforming funds.1. PRU ICICI Services fund is giving a high performance, , its 1 month return is 13 percent, ranking no.3 among all mutual funds. At 27.2 percent, its returns are at no. 1 among all mfs.At 71 percent in 6 months, it again ranks 1st and in 1 year, its return is 52.9 percent, ranking 7th among all equity funds.2. SBI Magnum Global--continues its high returns, 23.1 percent in 3 months, 57.9 percent in 6 months, 55.9 percent in 1 year and 393.5 percent in 3 years.
Compare this to the average equity diversified fund returns of 28.8 percent in 1 year, 10.6 percent in 3 months, and just 66.8 percent in 3 years and you get an idea of the out performance.3. PRU ICICI Emerging star is the next fund doing well, giving returns of 12.37 percent in 1 month, 22.24 percent in 3 months, 52.16 percent in 6 months. Its returns rank among the top 5 in both 3 and 6 months.4. PRU ICIC Dynamic fund --has cleverly shifted between sectors to give returns of 18 percent in 3 months and 52 percent in 6 months.5.PRU ICICI Infrastructure fund has given 56 percent returns in 6 months, ranking 11th and 58 percent in 1 year, ranking 5th among all equity funds.
So what I have done is --stuck to old faves like sundaram select mid cap and others listed above but taken out all profit from them and invested that gradually in the above performing funds. A churn of mutual funds is in order to maximise returns. Now some will say stocks are a better option but seeing the above returns, I feel the correct mutual funds may be the way to go.
Mutual funds are the the way of the future. Consider the following facts At the beginning of the year 2006, only 1.7 percent of savings were in stock market. At the end of 2006, this went up to 6 percent of all savings, thanks largely to huge funds mopped up by mutual funds. That there is going to be further expansion and competition can be seen by following statisticsPenetration levels of mutual funds are as followsINDIA----3 PERCENTMALAYSIA--7.5 PERCENTEUROPE--30 PERCENTUSA--50 PERCENT.As we move on to the developed scale we are going to emulate the savings pattern of the west.