equity piks
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8/8/2019 Equity Piks
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November 16, 2010Visit us at www.sharekhan.com
The Indian markets romance with foreign institutional
investors (FIIs) continues. Last month the FIIs bought
Indian equities worth a whopping $6.4 billion, the highest
in any month since they were allowed to invest in the Indian
stock market. On the back of the record foreign fund inflow
the market recaptured the 20k peak last month after nearly
two and a half years. Now with the US Federal Reserve
(Fed) announcing a second round of quantitative easing
(QE2) to spur growth in the worlds largest economy, themarket has more reason to rejoice.
After the recent stimulus package of 5 trillion (yen) in Japan,
the Fed in the USA has provided another shot in the arm
for liquidity globally. In its recent meeting, the Fed
announced a package of $600 billion to buy government
securities over the next eight months. This is good news
for the emerging markets as excess liquidity and low
interest rates mean higher flows into the emerging markets
that are perceived to carry high risk.
With its strong growth revival and relatively better growthoutlook India would attract a fair share of the foreign inflows
looking for higher returns in the emerging markets. Though
the market has run up substantially and is close to its
previous peak, our research team suggests that the
valuations are quite comfortable unlike in 2007.
But mind you, in the long run this scenario of a liquidity
surge is also fraught with risks. The large capital flows
could have several implications for our economy not all of
which would be positive. The ability of the Reserve Bank of
India and the policy makers to enable the economy to absorb
the strong inflows would be important to avoid asset
bubbles. Moreover, there is always a risk of a speculative
run-up in commodities due to the huge liquidity globally.
India is quite vulnerable on that front due to its dependence
on imports especially for its energy requirements.
Sharekhans top equity fund picks
Sharekhan Ltd
Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East),
Mumbai 400 042, Maharashtra.
We have identified the best equity-oriented schemes
available in the market today based on the following 5
parameters: the past performance as indicated by the one,
two and three year returns, the Sharpe ratio and Information
ratio.
Sharpe indicates risk-adjusted returns, giving the returns
earned in excess of the risk-free rate for each unit of the
risk taken. The Sharpe ratio is also indicative of theconsistency of the returns as it takes into account the
volatility in the returns as measured by the standard
deviation.
Information Ratio is one of the most important tools in
active fund management. It is the ratio of active return
(the return over the index return) to active risk annualized.
A higher Information Ratio indicates better fund manger.
We have selected the schemes upon ranking on each of the
above 5 parameters and then calculated the maximum
value of each of the 5 parameters. Thereafter, we havecalculated the percentage underperformance or over
performance of each scheme (relative performance) in each
of the 5 parameters vis a vis maximum value among them.
For our final selection of schemes, we have generated a
total score for each scheme giving 60% weightage each to
the relative performance as indicated by the one, two and
three year returns, 20% weightage to the relative
performance as indicated by the Sharpe ratio and the
remaining 20% to the relative performance as indicated by
the Information ratio of the scheme.
All the returns stated below, for less than one year are
absolute and for more than one year the returns are
compunded annualised.
All the returns stated on next page, for less than one
year are absolute and for more than one year, the
returns are annualised.
http://www.sharekhan.com/http://www.sharekhan.com/ -
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Mutual Funds Mutual Gains
2Sharekhan November 16, 2010
Conservative/ Large-cap funds
Scheme Name NAV Returns as on Oct 31, 10 (%)
3 Months 1 Year 2 Years
Birla Sun Life Frontline 93.88 10.84 30.61 51.84Equity Fund - Plan A
Franklin India Bluechip 222.74 10.52 32.92 49.15
Principal Large Cap 30.77 11.89 32.85 59.28
DSP BlackRock Top 100 Eq 104.94 11.54 26.31 43.86
Tata Pure Equity 107.29 9.44 32.20 50.17
Indices
BSE Sensex 20032.34 12.11 26.10 43.20
Aggressive Funds
Mid-cap Category
Scheme Name NAV Returns as on Oct 31, 10 (%)
3 Months 1 Year 2 Years
IDFC Premier Equity 35.32 10.64 52.58 67.70Fund - Plan A
HDFC Mid-Cap Oppo 16.72 13.37 53.41 63.03
Sundaram Select Midcap 169.99 15.24 44.79 66.76
Birla Sun Life Mid Cap-Plan A 123.81 11.09 34.35 65.60
UTI Mid Cap Fund 34.99 8.60 43.54 60.31
Indices
BSE MID CAP 8302.56 12.08 38.17 61.29
Multi-cap Category
Scheme Name NAV Returns as on Oct 31, 10 (%)
3 Months 1 Year 2 Years
Reliance RSF - Equity 34.18 12.73 39.29 58.75
HDFC Equity Fund 300.72 14.41 44.01 65.33
Reliance Equity Oppo 38.48 11.78 55.27 69.17
HDFC Top 200 225.77 13.30 36.03 56.57
Templeton India Growth 132.40 14.36 41.49 57.23
Indices
BSE 500 8036.88 11.54 30.94 50.21
Thematic/Emerging trend funds
Scheme Name NAV Returns as on Oct 31, 10 (%)
3 Months 1 Year 2 Years
Fidelity India Special 20.12 11.72 37.94 51.46Situations
Birla Sun Life India GenNext 25.94 11.71 45.06 45.61
Tata Service Industries 27.13 10.33 24.04 54.31
UTI India Lifestyle 12.31 10.11 33.33 41.50
SBI Magnum COMMA 26.64 10.86 30.81 47.81
Indices
BSE Sensex 20032.34 12.11 26.10 43.20
Risk-return analysis
The charts on the following pages give you a snapshot of how the
mutual funds have performed on the risk-return parameters in
the past. We have used the bubble analysis method to measure
their performances on three parameters viz risk, return and fund
size. The risk is measured by standard deviation, which measures
the average deviation of the returns generated by a scheme
from its mean returns. We have tried to explain the same with
the help of a diagram, which is divided into four quadrants, with
each quadrant containing funds of a particular risk-return profile.
The size of the bubble indicates the size of the fund.
The funds in the high-risk high returns quadrant follow a veryaggressive approach and deliver high absolute returns compared
to its peers albeit at a higher risk.
The funds in the low-risk high returns quadrant outperform thepeer group on the risk-adjusted returns basis as they deliver
higher returns compared to its peers without exposing the
portfolio to very high risk.
The funds in the low-risk low returns quadrant are not veryaggressive and provide lower absolute returns, taking lower risks.
The funds in the high-risk low returns quadrant underperformthe peers on the risk adjusted returns basis as they adopt a
high-risk strategy but the returns fail to compensate the risktaken by the fund.
For all schemes, risk is measured in terms of two years volatility,
while returns are measured as two years monthly rolling returns
as on October 31, 2010.
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at
Sharekhan first understand the individuals investment objectives and risk-taking capacity, and then recommend a suitable portfolio.
So, we suggest that you get in touch with our Mutual Fund Advisor before investing in the best funds.
Balanced funds
Scheme Name NAV Returns as on Oct 31, 10 (%)
3 Months 1 Year 2 Years
Reliance RSF - Balanced 24.14 10.68 37.09 52.42
HDFC Balanced 57.09 9.65 38.73 49.47
HDFC Prudence 222.05 9.72 38.87 57.06
Birla Sun Life 95 323.00 7.77 28.98 48.55
DSP BlackRock Balanced 69.81 9.72 28.45 40.04
Indices
Crisil Balanced Fund Index 3631.93 8.16 19.78 31.87
Tax planning funds
Scheme Name NAV Returns as on Oct 31, 10 (%)
3 Months 1 Year 2 Years
ICICI Prudential Taxplan 150.27 10.84 41.51 61.07
Religare Tax Plan 18.88 11.19 39.15 58.86
Fidelity Tax Advantage 23.59 11.41 43.02 55.71
HDFC Taxsaver 252.02 12.86 42.26 59.66
HDFC Long Term Advantage 148.70 14.49 41.49 53.20
Indices
CNX500 4972.95 11.12 29.15 49.64
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Mutual Funds Mutual Gains
3Sharekhan November 16, 2010
Birla Sun Life India GenNext Fund
Birla Sun Life Infrastructure Fund -
Plan A
Fidelity India Special Situations Fund
ICICI Prudential Infrastructure Fund
Kotak Lifestyle Fund
Reliance Media &
Entet Fund
SBI Magnum COMMA Fund
Sundaram Rural
India Fund
Tata Service Industries Fund
UTI India Lifestyle Fund
DSP BlackRock Equity Fund
Fidelity India Growth Fund
HDFC Core & Satellite Fund
HDFC Equity Fund
HDFC Top 200
Reliance Equity
Opportunities Fund
Reliance Growth
Reliance RSF - Equity
Tata Capital Builder Fund
Templeton India Growth Fund
Tata Pure Equity Fund
Sundaram India Leadership Fund
Reliance Equity Advantage Fund
Principal Large Cap Fund
Kotak 30
HSBC Equity Fund
Franklin India Bluechip
DSP BlackRock Top 100 Equity Fund
Birla Sun Life Top 100 Fund
Birla Sun Life Frontline Equity Fund -
Plan A
Thematic/Emerging Trend Funds
Risk-Return matrix
==Average Rolling Returns====>
==Std.
Dev.====>
HIGHER RISK
LOWER RETURNS
HIGHER RISK
HIGHER RETURNS
LOWER RISK
LOWER RETURNS
LOWER RISK
HIGHER RETURNS
Equity Diversified/Conservative Funds
Risk-Return matrix
==Average Rolling Returns====>
==Std.
Dev.====>
HIGHER RISK
LOWER RETURNS
HIGHER RISK
HIGHER RETURNS
LOWER RISK
LOWER RETURNSLOWER RISK
HIGHER RETURNS
Multicap Funds
Risk-Return matrix
==Std.
Dev.====>
HIGHER RISK
LOWER RETURNS
HIGHER RISK
HIGHER RETURNS
LOWER RISKLOWER RETURNS
LOWER RISK
HIGHER RETURNS
==Average Rolling Returns====>
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Mutual Funds Mutual Gains
4Sharekhan November 16, 2010
HSBC Tax Saver Equity Fund
Religare Tax Plan
Reliance Tax Saver (ELSS) Fund
HDFC TaxsaverHDFC Long Term
Advantage Fund
Franklin India Taxshield
ICICI Prudential Taxplan
DSP BlackRock Tax Saver Fund
Fidelity Tax Advantage Fund
Sundaram Taxsaver
Birla Sun Life 95Birla Sun Life 95
DSP BlackRock Balanced Fund
Canara Robeco Balance
HDFC Balanced Fund
Reliance RSF - Balanced
SBI Magnum
Balanced Fund
Sundaram Balanced Fund
Tata Balanced Fund
UTI Balanced Fund
HDFC Prudence Fund
Disclaimer
This document has been prepared by Sharekhan Ltd.(SHAREKHAN) This Document is subject to changes without prior notice and is intended only for the person or entity to which it is addressed to and may contain
confidential and/or privileged material and is not for any type of circulation. Any review, retransmission, or any other use is prohibited. Kindly note that this document does not constitute an offer or solicitation for
the purchase or sale of any financial instrument or as an official confirmation of any transaction.
Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. SHAREKHAN will not treat recipients as customers by virtue of their receiving this report.
The information contained herein is from publicly available data or other sources believed to be reliable. While we would endeavour to update the information herein on reasonable basis, SHAREKHAN, its subsidiaries
and associated companies, their directors and employees (SHAREKHAN and affiliates) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance, or other reasonsthat may prevent SHAREKHAN and affiliates from doing so. We do not represent that information contained herein is accurate or complete and it should not be relied upon as such. This document is prepared for assistance
only and is not intended to be and must not alone betaken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document should make
such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult
its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. We do not undertake to advise you as to any change of our
views. Affiliates of Sharekhan may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication,
availability or use would be contrary to law, regulation or which would subject SHAREKHAN and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may
not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
SHAREKHAN & affiliates may have used the information set forth herein before publication and may have positions in, may from time to time purchase or sell or may be materially interested in any of the securities mentioned
or related securities. SHAREKHAN may from time to time solicit from, or perform investment banking, or other services for, any company mentioned herein. Without limiting any of the foregoing, in no event shall
SHAREKHAN, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. Any comments or statements made herein are those
of the analyst and do not necessarily reflect those of SHAREKHAN.
Tax Planning Funds
Risk-Return matrix
==Average Rolling Returns====>
==Std.
Dev.====>
HIGHER RISK
LOWER RETURNS
HIGHER RISK
HIGHER RETURNS
LOWER RISK
LOWER RETURNS
LOWER RISK
HIGHER RETURNS
Balanced Funds
Risk-Return matrix
==Average Rolling Returns====>
==Std.
Dev.====>
HIGHER RISK
LOWER RETURNS
HIGHER RISK
HIGHER RETURNS
LOWER RISK
LOWER RETURNS
LOWER RISK
HIGHER RETURNS
Disclaimer: Mutual fund investments are subject to market risk. Please read the offer document carefully before investing.Past performance may or may not be sustained in the future.
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