Monthly review of key market segments within India including Equity (Domestic and International), Fixed Income, Currency, Economic Indicators, Mutual Funds & Recommended Portfolios (India).
2. Monthly Markets Update - India
October 2011
Key Points
Despite the volatility witnessed, we continue to remain positive on the US equities for the next
three years.
As for the Chinese economy, although inflation continues to be a threat, yet we are of the
opinion that the country will loosen its monetary stance in the second half of the year.
We believe that the Indian market will remain range bound on account of the negative short-
term macro parameters and the continuing gloomy atmosphere in the global environment.
On the Fixed Income side, we are expecting some more rate hikes in the current fiscal itself
before the central bank presses the pause button on rates.
The Indian mutual fund industry saw a decrease in its assets (average assets under
management) by 4.06% to Rs. 7, 17,129 crores in the third quarter (July – September) of 2011 in
comparison to the second quarter (April – June) of 2011.
A look at the performance of funds shows that all the Equity oriented categories have delivered
negative returns while the debt focused categories are in the positive territory in the month of
September.
3. Monthly Markets Update - India
October 2011
Equity Markets Update
International Markets (As at September 2011 end)
Earnings Earnings
2011 2011 2010 P/E P/E P/E Growth Growth
MTD YTD Return (%) Yr 2011 Yr 2012 Yr 2013 2011 (%) 2012 (%)
Asia ex Japan (MSCI Asia ex
Japan) -13.39% -21.33% 17.00% 10.8 9.5 8.4 7.40% 14.00%
Emerging Markets (MSCI EM) -14.78% -23.16% 16.40% 9.5 8.6 7.7 8.90% 11.30%
Europe (Stoxx 600) -4.74% -18.35% 8.60% 9.6 8.6 7.9 6.70% 11.30%
Japan (Nikkei 225) -2.85% -14.94% -3.00% 13.9 12.2 10.3 7.00% 14.40%
USA (S&P 500) -7.18% -10.05% 12.80% 11.7 10.5 9.4 16.40% 11.70%
Australia (S&P/ASX 200) -6.70% -16.32% -2.60% 10.7 9.7 8.9 9.90% 11.10%
Brazil (IBOV) -7.38% -24.50% 1.00% 9.2 8.2 7.1 9.00% 12.10%
China (HS Mainland 100) -16.98% -24.79% 2.20% 8.6 7.5 6.7 22.60% 13.60%
Hong Kong (HSI) -14.33% -23.51% 5.30% 9.6 8.6 7.7 17.30% 11.70%
India (SENSEX) -1.34% -19.30% 17.40% 14.1 12.2 11.1 11.60% 15.90%
Indonesia (JCI) -7.62% -4.17% 46.10% 13.9 11.5 10.0 23.80% 20.10%
Malaysia (KLCI) -4.16% -8.68% 19.30% 13.4 12.2 11.2 10.00% 9.50%
Russia (RTSI$) -21.22% -24.24% 22.50% 5.1 5.2 4.7 31.20% -1.70%
Singapore (STI) -7.28% -16.73% 10.10% 12.4 11.5 10.1 6.60% 8.30%
South Korea (KOSPI) -5.88% -13.72% 21.90% 9.1 8.0 7.1 13.10% 13.80%
Taiwan (Taiwan Weighted) -6.67% -18.89% 9.60% 13.1 11.0 9.6 -7.50% 19.00%
Technology Heavy (NASDAQ 100) -4.54% -3.89% 19.20% 13.3 11.6 10.4 26.20% 14.10%
Thailand (SET Index) -14.38% -11.29% 40.60% 10.5 9.2 8.3 25.90% 14.10%
Source: Bloomberg, iFAST Compilations
All returns are in respective local currency terms and MSCI Index returns are in USD
4. Monthly Markets Update - India
October 2011
Global Market Performance
Group 7 Countries
Global Indices- G7 (MTD Returns)
0.00%
Germany (DAX)
USA (S&P 500)
UK (FTSE 100)
Italy (FTSE MIB)
Canada (S&P/TSX)
France (CAC-40)
-2.00% Japan (Nikkei 225)
-4.00%
-6.00%
-8.00%
-10.00%
Events
Factory orders in the US rose 2.4% m-o-m in Jul 11, after a better-than-expected 0.4% decline in
Jun 11
US Unemployment rate remained at 9.1% in Aug 11, unchanged from Jul 11
New home sales fell 2.3% m-o-m in Aug 11, after a better-than-expected 0.3% decline in Jul 11
Industrial production of Germany rose 4.0% m-o-m in Jul 11, after an upward-revised -1.0%
decline in Jun 11
Euro-zone retail sales contracted -0.2% y-o-y in Jul 11, after a downward-revised -0.7%
contraction in Jun 11
UK’s Industrial production fell by -0.2% on a m-o-m basis in Aug 11, after a 0% growth rate in Jul
11
Bank of Japan (BOJ) held its target rate unchanged at a range between 0% to 0.1% in Sep 11
The Industrial production of Japan dropped 3% y-o-y in Jul 11 following a decrease of 2.8% in Jun
11
Market Outlook
US markets continued to remain volatile in the month of September as well on account of Euro Zone
debt worries the mixed data of the US economy released, and the Fed’s weak assessment of the US
economy. We are expecting the Fed to further lower the economic growth forecasts for the US
economy, the Fed still expects 2.8% full year growth while our own forecast is 1.6% expansion for 2011.
A better idea of the extent of the impact of Euro zone’s woes on corporate profitability will be known
5. Monthly Markets Update - India
October 2011
only once the result season starts this month. We continue to be positive on US equities for the next
three years as the market re-rates to a higher multiple of earnings. On the other hand, the on-going
debt crisis is having a negative impact on the sentiments and confidence of countries like Germany and
the Euro Zone in general. Finally, as far as the Japanese economy is concerned, the impact of the
earthquake along with the problems in US and Europe are having a negative impact on their exports. We
continue to stick to our view that the Japanese economy will recover at a slower pace as compared to
other regions and countries.
6. Monthly Markets Update - India
October 2011
Asia Pacific (Ex Japan)
Global Indices- Asia Pacific (Ex Japan)
(MTD Returns)
0.00%
South Korea (KOSPI)
Indonesia (JCI)
Australia (S&P/ASX 200)
Hong Kong (HSI)
Thailand (SET Index)
Taiwan (Taiwan Weighted)
Singapore (STI)
Malaysia (KLCI)
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
-16.00%
Events
Singapore’s CPI for Aug 11 rose 5.7% y-o-y, after rising 5.4% y-o-y in Jul 11
Industrial production of Singapore for Aug 11 increased by 3.9% m-o-m, after an upward-revised
0.4% gain in Jul 11
CPI of Malaysia decelerated to 3.3% y-o-y in Aug 11
BNM maintained Overnight Policy Rate at 3.0% on 9 Sep 11
Bank Indonesia reference rate is unchanged for seventh months at 6.75%
Headline inflation of Indonesia in Aug rose to 4.8% y-o-y compared to 4.6% in Jul
The Bank of Korea (BOK) held its benchmark 7-day repo rate unchanged at 3.25% in Sep 11
Korea’s Consumer Price Index (CPI) grew at 5.3% y-o-y in Aug 11 compared to a 4.7% increase in
Jul 11
Market Outlook
The earnings estimate for Singapore has been downgraded on account of the gloomy conditions
prevailing in the international markets. However, we still believe that Singapore equities will deliver
more than 20% annualized returns by the end of 2013. Inflation has come down for countries like
Malaysia and Indonesia and is expected to be on a downward trend on account of the easing of
commodity prices. However, inflation continues to remain sticky for Thailand, as a result of which the
Central Bank hiked the interest rate in the month of August as well which was 9 times since the
borrowing cost increased since June 2010.
7. Monthly Markets Update - India
October 2011
BRIC (Ex India) Countries
Global Indices- BRIC (Ex-India)- (MTD
Returns)
0.00%
Brazil (IBOV)
China (HS Mainland 100)
-5.00%
Russia (RTSI$)
-10.00%
-15.00%
-20.00%
-25.00%
Events
IPCA Inflation rose to 7.2% y-o-y in Aug 11, up from 6.9% in Jul 11
Brazil’s Consumer confidence fell to 114.7 in Sep 11, 118.7 in Aug 11
Industrial production of Russia expanded 6.2% y-o-y in Aug 11, after a 5.2% y-o-y increase in Jul
11
Russia’s Consumer Prices gained 8.2% y-o-y in Aug 11, down from 9.0% in Jul 11
CPI of China rose 6.2% y-o-y in Aug 11 as compared with a 6.5% rise in Jul 11
China’s Industrial production grew by 13.5% y-o-y in Aug 11 as compared with a 14.0% y-o-y
increase in Jul 11
Market Outlook
The economic activity in the Brazilian economy decelerated on account of the uncertainties in the global
economies. Inflation continued to remain above the government’s estimate of 4.5% (Plus/minus 2%). In
spite of this, the Central Bank cut its benchmark Selic rate by 50 bps to reach 12% on the back of
deterioration in the global economy. Brazil’s index has been affected by the global panic, European debt
crisis, slowdown in the US economy and the volatility in commodity prices. As for the Russian markets, it
was affected due to global panic and equity market sell-off along with the fears that the European
demand for oil will come down. Finally, for the Chinese economy, inflation continues to remain a threat
and control in credit growth continues. We are of the view that China will loosen its monetary stance in
the second half of the year due to the ongoing crisis in Euro Zone. We believe that currently valuations
are attractive and we are positive on both Chinese A shares and Hong-Kong listed Chinese equities over
the next 3 years.
9. Monthly Markets Update - India
October 2011
India-Equity
India Indices (MTD Sectoral Indices (MTD
Returns) Returns)
0.00% 4.00%
Nifty Index
BSE MID CAP
BSE SMALL CAP
BSE Sensex
-0.50% 2.00%
-1.00% 0.00%
BSE IT
BSE-HC
BSE CD
BSE FMCG
BSE CG
BSE METAL
BSE Oil & Gas
BSE Realty
BSE Bankex
BSE AUTO
BSE Power
-1.50% -2.00%
-2.00% -4.00%
-2.50% -6.00%
-3.00% -8.00%
-3.50% -10.00%
-4.00% -12.00%
Events
India’s Manufacturing Purchasing Managers’ Index was at 52.6 in Aug 11 as compared to 53.6 in
Jul 11
Production at factories, utilities and mines rose 3.3% y-o-y in Jul 11, after an 8.8% gain in Jun 11
WPI inflation for Aug 11 was at 9.78% compared to 9.22% in Jul 11
RBI raised the Repo rate by 25 basis points on 16 September from 8% to 8.25%. In addition to
this, Reverse Repo rate was automatically adjusted to 7.25% and the marginal standing facility
rate to 9.25%
The earnings growth for 2011-12 and 2012-2013 are 8.28% and 16.07% which translate to a
forward P/E of 13.97X and 12.03X respectively
Market Outlook
The Indian markets ended in red by registering a negative return of 1.34% and 1.15% respectively. Some
of the macro-economic numbers that came out during the month along with the uncertainties in the
global markets contributed to the muted growth. Year-on-year growth in the index of Industrial
Production for July 2011 came in at 3.3% against the Bloomberg consensus expectation of 6.2%. As per
the use-based classification, the Capital Goods and Intermediate Goods sectors contracted by 15.2% and
1.1% respectively, while Basic Goods grew at 10.1%. On the other hand, the Consumer Durables and
Consumer non-durables grew at 8.6% and 4.1% respectively. We believe that the volatile IIP numbers
are a cause of concern for the policymakers, and the deceleration in this month can be attributed to the
continuous rate hikes that RBI has been undertaking along with the slowdown in the global economy.
On the other hand, the WPI Inflation rose to 9.78% in August as against the Bloomberg estimate of
9.64%. Inflation has been in the range of 9%-10% since March 2010, and as a result, the RBI has
10. Monthly Markets Update - India
October 2011
increased the major policy rates 12 times since then. We are of the view that inflation continues to be a
nightmare for policymakers and until this data falls within the comfort zone of the Central Bank, it will
continue with its hawkish monetary stance.
The month of October is the results season and we are expecting more earning downgrades. We believe
that the market will remain range bound on account of the negative short-term macro parameters and
the continuing gloomy atmosphere in the global environment.
12. Monthly Markets Update - India
October 2011
India-Debt
10 Year G-sec Curve
8.55
8.5
8.45
8.4
8.35
8.3
8.25
8.2
8.15
31-Aug-11
12-Sep-11
2-Sep-11
4-Sep-11
6-Sep-11
8-Sep-11
10-Sep-11
14-Sep-11
16-Sep-11
18-Sep-11
20-Sep-11
22-Sep-11
24-Sep-11
26-Sep-11
28-Sep-11
30-Sep-11
Yields
The 10-year G-Sec yield hardened during the month of September as it increased from 8.32% in the
beginning of the month and ended at 8.5% .This was on the back of the increase in the major policy
rates for the twelfth time since March 2010 in the Mid-Quarter Monetary Policy Review held on Sept 16.
RBI has made it very clear that the future course of action will depend upon inflationary tendencies and
global events. In short, we can expect some more rate hikes in the current fiscal itself before the central
bank presses the pause button on rates. In addition to this the Government also increased the
borrowings to Rs. 2.2 trillion in the second half of the year, which was much above the expectations.
Both these factors contributed to the increase in yields.
We continue to advise investors to stay in short-term papers like FMPs Short Term Funds and Ultra
Short Term Funds as they continue to give higher post-tax returns as compared to Savings Accounts and
Ultra Short-Term Funds. In this scenario, we advise:
Investors with a time horizon anywhere from 3 months to 24 months can lock-in their money in
FMPs (available with varying maturities) at the prevailing high rates
Investors with idle cash in the savings account should look at Ultra-Short Term Funds. The
Recommended Funds in this category includes DWS Ultra Short
Term Fund and Birla Sun-life Ultra short term Fund. The investment horizon that we suggest for
such instruments is 1 month-3 months.
13. Monthly Markets Update - India
October 2011
Investors with a time horizon between 6 - 9 months should consider Short-Term Funds. The
Recommended Funds in this category include Reliance Short Term Fund and Templeton India
Short Term Fund
15. Monthly Markets Update - India
October 2011
Mutual Fund Industry Asset Trends
India Fund Industry Assets (Amount in INR Top and Bottom Five AMCs - By Absolute Change in Assets (Q-o-Q), as
Crores) of July- September 2011
900,000 Q-o-Q Absolute Change % Change
800,000
700,000 in Assets (INR in Crores) in Assets
600,000 Deutsche Mutual Fund 1677.29 15.13%
500,000 JPMorgan Mutual Fund 1023.57 27.48%
400,000
300,000 IDFC Mutual Fund 778.83 2.73%
200,000 Peerless Mutual Fund 700.44 14.27%
100,000 JM Financial Mutual Fund 618.51 10.57%
-
Oct-09
Oct-Dec-10
Dec-09
Jan-10
Nov-09
Mar-10
May-10
Aug-10
Jul-10
Jan-Mar-11
Jun-10
Sep-09
Feb-10
Apr-10
Sep-10
July-Sept-11
Apr-June-11
Tata Mutual Fund -2372.39 -9.49%
Birla Sun Life Mutual Fund -3261.01 -4.83%
ICICI Prudential Mutual Fund -4570.15 -5.72%
UTI Mutual Fund -6525.23 -9.44%
Source: AMFI, iFAST Compilations Reliance Mutual Fund -9909.17 -9.71%
(Average Assets Under Management) Source: AMFI, iFAST Compilations
The Indian mutual fund industry saw a decrease in its assets (average assets under
management) by 4.06% or by Rs. 30,350 crores to Rs. 7, 17,129 crores in the third quarter (July –
September) of 2011 in comparison to the second quarter (April – June) of 2011.
In absolute terms, Deutsche Mutual Fund had maximum average assets this quarter; the fund
house assets increased by Rs. 1,677 crores. JP Morgan Mutual Fund became the second largest
fund house in terms of addition in average assets of Rs. 1,024 crores. Peerless Mutual Fund
which is a relatively new fund house also appeared among top 5 AMCs in terms of absolute
change in assets; it added about Rs. 700 crores this quarter.
Reliance Mutual Fund registered the largest drop in average assets; the fund house lost close to
Rs. 9,909 crores this quarter. This was followed by UTI Mutual Fund which lost around Rs. 6,525
crores. Both ICICI Prudential Mutual Fund and Birla Sunlife Mutual Fund after registering an
increase in assets for the first two quarters of 2011 witnessed a fall in the third quarter. While
ICICI Prudential Mutual Fund lost close to Rs. 4,570 crores, Birla Sunlife Mutual Fund registered
a drop of Rs.3, 261 crores in quarterly average assets.
16. Monthly Markets Update - India
October 2011
Fund Category Returns
Fund Category Returns (as of September 2011)
1 Month 1 Year
Equity: Large Cap -1.32% -16.11%
Equity: Multi Cap -1.12% -16.75%
Equity: Mid Cap -1.37% -15.48%
Equity: ELSS -1.21% -16.37%
Equity: Index -1.30% -18.23%
Equity: Global -7.36% -6.84%
Hybrid: Balanced -0.81% -10.23%
Hybrid: MIP 0.24% 2.58%
Debt: Income 0.43% 6.35%
Debt: Gilt Short Term 0.50% 5.91%
Debt: Gilt Long Term 0.09% 5.07%
Debt: Floating Rate 0.71% 8.15%
Debt: Ultra Short Term 0.69% 8.08%
Debt: Short Term 0.63% 7.67%
Liquid 0.68% 7.74%
Source: ACE MF, iFAST Compilations
(Excludes Institutional Plans)
A quick look at the fund category returns tells us that all the Equity oriented categories have
delivered negative returns while the debt focused categories are in the positive territory on
month-on-month basis. In the Hybrid funds segment, balanced funds delivered negative returns
while the Monthly Income Plans (i.e. MIPs) delivered positive returns. Global Funds category
was the worst performer; it delivered negative returns close to 7.36% this month.
The large cap funds category delivered negative returns close to 1.32% compared to the
benchmark index CNX Nifty which delivered negative return of 1.15%.
Global funds category was the worst performer; it delivered negative returns of around 7.36%
on month-on-month basis. This was mainly on the back of negative returns delivered by most
global markets in the month of September.
In the debt segment, all categories have delivered positive returns for the fifth consecutive
month. Floating Rate Funds followed by the Ultra Short Term funds have given the highest
returns close to 0.71% and 0.69% in the debt category.
17. Monthly Markets Update - India
October 2011
Top and Bottom Performing Equity Funds in September
Top Performing Equity funds on our Platform in September 2011
Sector 1 Month 1 Year
UTI Top 100 Fund Large Cap 0.15% -11.81%
Franklin India Bluechip Fund Large Cap 0.08% -11.30%
CNX Nifty Index (Benchmark) -1.15% -18.02%
IDFC India GDP Growth Fund Multi-Cap 2.69% -12.11%
HDFC Growth Fund Multi-Cap 0.60% -14.80%
CNX 500 Index (Benchmark) -1.49% -19.22%
Reliance Growth Fund Midcap & Small Cap 1.35% -19.72%
Magnum Sector Funds Umbrella- Emerging
Businesses Fund Midcap & Small Cap 0.26% -0.69%
CNX Midcap Index (Benchmark) -2.75% -22.59%
IDFC Tax Advantage (ELSS) Fund ELSS 1.56% -14.47%
Reliance Tax Saver (ELSS) Fund ELSS 0.61% -16.83%
CNX 500 Index (Benchmark) -1.49% -19.22%
Tata Growing Economies Infrastructure Fund-
Plan A Overseas -0.32% -7.21%
Birla Sun Life International Fund Equity Fund
Plan A Overseas -0.80% 2.22%
MSCI World Index (in INR) (Benchmark) -3.15% 1.96%
Source: ACF MF, iFAST Compilations
Large Cap Funds
Out of the 40 large cap funds analyzed, only the top two have managed to deliver positive returns in the
month of September. UTI Top 100 Fund and Franklin India Bluechip Fund are the top two large cap funds
delivering returns close to 0.15% and 0.08% respectively. Franklin India Bluechip Fund is our
recommended fund in the large cap category.
Multi Cap Funds
In the multi cap category, out of 44 multi cap funds analyzed, 91% of the funds have delivered negative
returns on month-on-month basis. IDFC India GDP Growth Fund was the top performer; the fund
18. Monthly Markets Update - India
October 2011
delivered close to 2.69% in this month. HDFC Growth Fund was the second best performer in this
category with returns close to 0.60%.
Mid Cap Funds
Both Reliance Growth Fund and Magnum Sector Funds Umbrella- Emerging Businesses Fund are the top
two performers in the midcap category with returns close to 1.35% and 0.26%, respectively. In this
category, out of 28 funds analyzed, 86% of the funds have delivered negative returns. Reliance Growth
Fund which was among the bottom two performers in the previous month is the top performer in the
month of September.
ELSS Funds
In the ELSS funds category, both the top two performing funds have managed to outperform the
benchmark CNX 500 which gave a negative return of 1.49%. IDFC Tax Advantage (ELSS) Fund was the top
performer during the month of September delivering a return of 1.56% followed by Reliance Tax Saver
(ELSS) Fund which gave a return of 0.61%. Reliance Tax Saver (ELSS) Fund which was the bottom
performing fund in the previous month is among the top performing funds in the month of September.
Global Funds
All the 25 global funds analyzed have delivered negative returns on month-on-month basis. Tata
Growing Economies Infrastructure Fund Plan A was the top performer during the month delivering
negative returns close to 0.32%.
19. Monthly Markets Update - India
October 2011
Bottom Performing Equity funds on our Platform in September 2011
Sector 1 Month 1 Year
Magnum Equity Fund Large Cap -2.24% -15.25%
Birla Sun Life Advantage Fund Large Cap -3.23% -21.23%
CNX Nifty Index (Benchmark) -1.15% -18.02%
Magnum Multicap Fund Multi-Cap -2.42% -23.74%
AIG India Equity Fund Multi-Cap -2.52% -7.01%
CNX 500 Index (Benchmark) -1.49% -19.22%
Sundaram Select Midcap Fund Midcap & Small Cap -3.38% -13.85%
Magnum Mid Cap Fund Midcap & Small Cap -3.56% -17.94%
CNX Midcap Index (Benchmark) -2.75% -22.59%
Edelweiss ELSS Fund ELSS -2.40% -13.89%
L&T Tax Saver Fund ELSS -2.64% -22.72%
CNX 500 Index (Benchmark) -1.49% -19.22%
Birla Sun Life Commodity Equities Fund-
Global Agri Plan Overseas -12.68% -11.52%
Mirae Asset China Advantage Fund Overseas -14.07% -18.68%
MSCI World Index (in INR) (Benchmark) -3.15% 1.96%
Source: ACF MF, iFAST Compilations
Large Cap Funds
In the large cap fund category, Birla Sun life Advantage Fund and Magnum Equity Fund were the bottom
two performing funds delivering negative returns of 3.23% and 2.24 % respectively. Both the funds have
underperformed the benchmark CNX Nifty which delivered a negative return of 1.15% this month.
Multi Cap Funds
Both the bottom performers i.e. AIG India Equity Fund and Magnum Multicap Fund have delivered
negative returns close to 2.52% and 2.42% respectively. Both the funds have underperformed the
benchmark CNX 500 which gave a negative return of around 1.49%. AIG India Equity Fund which was the
top performer in the previous month turned out to be the bottom performer in the month of
September.
Mid Cap Funds
In the mid cap space, Magnum Midcap Fund and Sundaram Select Midcap Fund appeared to be the two
bottom performing funds delivering a negative return of 3.56% and 3.38% respectively. Both the funds
underperformed the benchmark CNX Midcap which gave a negative return of 2.75%.
20. Monthly Markets Update - India
October 2011
ELSS Funds
L&T Tax Saver Fund was the bottom performer during the month of September delivering a negative
return of 2.64% followed by Edelweiss ELSS Fund which delivered negative returns close to 2.40%.
Global Funds
Both Mirae Asset China Advantage Fund and Birla Sun Life Commodity Equities Fund- Global Agri Plan
have delivered negative returns close to 14.07% and 12.68% respectively. Both the funds have
underperformed the benchmark i.e. MSCI World Index which delivered a negative return of 3.15%.
21. Monthly Markets Update - India
October 2011
Top and Bottom Performing Debt/Hybrid Funds in September
Top Performing Debt funds / Hybrid on our Platform in September 2011
Sector 1 Month 1 Year
Sundaram Balanced Fund Balanced 0.36% -13.99%
FT India Balanced Fund Balanced 0.36% -7.32%
Crisil Balanced Fund Index -0.58% -10.04%
DWS Twin Advantage Fund MIP 1.01% 4.33%
JM MIP Fund MIP 0.80% 2.31%
Crisil MIP Blended Index 0.13% 1.90%
Birla Sun Life Medium Term Plan Income 1.50% 8.75%
BNP Paribas Bond Fund Income 0.87% 7.66%
Crisil Composite Bond Fund Index 0.32% 5.58%
Baroda Pioneer Gilt Fund Gilt - Long Term 0.59% 8.43%
Mirae Asset Gilt Fund Investment Plan Gilt - Long Term 0.56% 3.60%
I-BEX (I-Sec Sovereign Bond Index) 0.63% 6.54%
BNP Paribas Short Term Income Fund Short Term 0.78% 8.04%
Peerless Short Term Fund Short Term 0.78% 12.16%
Crisil Short-Term Bond Fund Index 0.54% 6.81%
Source: ACF MF, iFAST Compilations
Balanced Funds
In this category, out of 18 funds analyzed, only the top two have delivered positive returns in
September. Both the top performing funds Sundaram Balanced Fund and FT India Balanced Fund
delivering positive returns of 0.36% outperformed the benchmark Crisil Balanced Fund Index which
delivered a negative return of 0.58% on a month-on-month basis.
Monthly Income Plans
Both the top performing Monthly Income Plans i.e. DWS Twin Advantage Fund & JM MIP Fund delivering
returns of 1.01% and 0.80% outperformed the benchmark Crisil MIP Blended Index which delivered
returns of 0.13% on a month-on-month basis.
Income Funds
22. Monthly Markets Update - India
October 2011
In the income space, Birla Sun Life Medium Term Plan which was the bottom performer in the previous
month was the top performer in the month of September. The fund delivered month-on-month returns
of around 1.50%. Out of the 45 income funds analyzed, 91% of the funds have delivered positive returns.
Gilt- Long term Funds
Both Baroda Pioneer Gilt Fund & Mirae Asset Gilt Fund Investment Plan were the top performers in the
month of September delivering returns close to 0.59% and 0.56% respectively. Baroda Pioneer Gilt Fund
was the top performer on 1 month as well as 1 year basis.
Short Term Funds
All the funds in this category have delivered positive returns on month-on-month basis. BNP Paribas
Short Term Income Fund and Peerless Short Term Fund are the top two performers delivering returns
close to 0.78%.
23. Monthly Markets Update - India
October 2011
Bottom Performing Debt / Hybrid funds on our Platform in September 2011
Sector 1 Month 1 Year
ICICI Prudential Balanced Fund Balanced -1.42% -2.59%
Canara Robeco Balance Balanced -1.57% -7.34%
-
Crisil Balanced Fund Index -0.58% 10.04%
Tata MIP Plus Fund MIP -0.51% 0.63%
Sundaram Monthly Income Plan Moderate
Plan MIP -0.72% -2.03%
Crisil MIP Blended Index 0.13% 1.90%
ICICI Prudential Income Opportunities Fund Income -0.13% 5.57%
Reliance Income Fund Income -0.19% 5.22%
Crisil Composite Bond Fund Index 0.32% 5.58%
DSP BlackRock Government Securities Fund Gilt - Long Term -0.13% 4.83%
Kotak Gilt-Investment Gilt - Long Term -0.17% 4.86%
I-BEX (I-Sec Sovereign Bond Index) 0.63% 6.54%
SBI Short Horizon Debt Fund-Short Term Short Term 0.49% 7.31%
Reliance Short Term Fund Short Term 0.42% 6.68%
Crisil Short-Term Bond Fund Index 0.54% 6.81%
Source: ACF MF, iFAST Compilations
Balanced Funds
Canara Robeco Balance and ICICI Prudential Balanced Fund were the bottom two performing funds
delivering negative returns close to 1.57% and 1.42% respectively.
Monthly Income Plans
In the MIP category, Sundaram Monthly Income Plan Moderate Plan and Tata MIP Plus Fund are the
bottom performers on month-on-month basis delivering negative returns close to 0.72% and 0.51%
respectively. Both the funds have underperformed their category average as well as the benchmark i.e.
Crisil MIP Blended Index which delivered positive returns of 0.24% and 0.13% respectively.
Income Funds
In the income funds segment, both the bottom performing funds i.e. Reliance Income Fund and ICICI
Prudential Income Opportunities Fund have underperformed the benchmark i.e. Crisil Composite Bond
24. Monthly Markets Update - India
October 2011
Fund Index. The funds delivered negative returns close to 0.13% and 0.19% respectively, whereas the
benchmark delivered returns of around 0.32% on a month-on-month basis.
Gilt- Long term Funds
Both the bottom performing Gilt long term funds underperformed the benchmark i.e. I-BEX (I-Sec
Sovereign Bond Index) on a month-on-month basis. Kotak Gilt-Investment which was the bottom
performer during the month delivered negative return close to 0.17% whereas the benchmark delivered
close to 0.63%.
Short Term Funds
Both the bottom performing funds Reliance Short Term Fund and SBI Short Horizon Debt Fund-Short
Term delivered returns close to 0.42% and 0.49% respectively.
26. Monthly Markets Update - India
October 2011
Recommended Portfolios Update
1. Conservative Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 90% into bond funds and 10%
into equity funds. The target allocation may change depending on our views on financial markets.
Currently, we hold a neutral position in equities and we target to have an exposure of 90% to bond
funds and 10% to equity funds.
Portfolio Absolute Return since inception:
Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 12.58%
Portfolio Value: INR 1,12,580 September 2011 Portfolio Return: 0.69%
Portfolio Commentary:
The Conservative portfolio gave a return of 0.69% in September. The debt funds accounted for around
86% of the total portfolio returns and the equity part of the portfolio accounted for 14% of the total
portfolio returns.
In the debt segment, Short term funds accounted for close to 37% of the total portfolio returns while
the Floating rate funds have accounted for close to 33% of the total portfolio returns. Among the debt
funds, Birla Sunlife Floating Rate Fund- Long term Plan accounted for the highest total portfolio returns.
In case of equity funds, the trend reversed this month with equity funds delivering positive returns.
Among the equity funds, UTI Dividend Yield Fund accounted for 8% of the total portfolio returns
followed by HDFC Top 200 Fund which accounted for 5% of the total portfolio returns.
2. Moderately Conservative Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 70% into bond funds and 30%
into equity funds. The target allocation may change depending upon our views on financial markets.
Currently, we hold a neutral position in equities and we target to have an exposure of 70% to bond
funds and 30% to equity funds.
Portfolio Absolute Return since inception:
Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 11.57%
Portfolio Value: September 2011 Portfolio Return:
INR 1,11,565 0.76%
27. Monthly Markets Update - India
October 2011
Portfolio Commentary:
The Moderately Conservative portfolio gave a return of 0.76% in September. The portfolio returned to
the positive territory after delivering negative returns in the previous month. The debt funds accounted
for around 58% of the total portfolio returns while equity funds contributed close to 42% of the total
portfolio returns.
In the debt category, floating rate funds accounted for 20% of the total portfolio returns and short term
funds accounted for around 23% of the total portfolio returns. Birla Sunlife Floating Rate Fund- Long
term Plan, Canara Robeco Floating Rate Fund and Templeton India Short Term Income Plan contributed
close to 10% each of the total portfolio returns.
In the Equity segment, all the three funds i.e. HDFC Top 200 Fund, ICICI Prudential Focused Bluechip
Equity Fund and UTI Dividend Yield Fund have delivered positive returns. The large cap funds which have
a weightage of 20% accounted for 27% of the total portfolio returns.
3. Balanced Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 50% into bond funds and 50%
into equity funds. The target allocation may change depending upon our views on financial markets.
Currently, we hold a neutral position in equities and we target to have an exposure of 50% to bond
funds and 50% to equity funds.
Portfolio Absolute Return since inception:
Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010)
11.31%
Portfolio Value: September 2011 Portfolio Return:
INR 1,11,308 0.62%
Portfolio Commentary:
The Balanced portfolio gave a return of 0.62% in September. The debt funds accounted for around 51%
of the total portfolio returns while the equity funds accounted for close to 49% of the total portfolio
returns.
In the debt portfolio, all the funds have delivered positive returns. Short Term Funds have accounted for
22% of the total portfolio returns, followed by Floating Rate funds which accounted for 19% of the total
portfolio returns.
28. Monthly Markets Update - India
October 2011
In the equity segment, the large cap funds which have a weightage of 30% accounted for 47% of the
total portfolio returns. On the contrary, the midcap funds attributed to negative 16% of the total
portfolio returns. Among the equity funds, ICICI Prudential Focused Bluechip Equity Fund accounted for
highest returns close to 21% of the total portfolio returns.
4. Moderately Aggressive Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 30% into bond funds and 70%
into equity funds. The target allocation may change depending upon our views on financial markets.
Currently, we hold a neutral position in equities and we target to have an exposure of 30% to bond
funds and 70% to equity funds.
Portfolio Absolute Return since inception:
Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 10.75%
Portfolio Value: September 2011 Portfolio Return:
INR 1,10,754 0.02%
Portfolio Commentary:
The Moderately Aggressive portfolio gave a return of 0.02% in September. The portfolio returned to the
positive territory after delivering negative returns in the previous month.
In the debt category, all the funds have delivered positive returns. Birla Sunlife Floating Rate Fund- Long
term Plan followed by BNP Paribas Money Plus Fund accounted for most of the debt portfolio returns.
In the equity segment, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small
and Midcap Fund together accounted for most negative equity portfolio returns. ICICI Prudential
Infrastructure Fund followed by HDFC Midcap Opportunities Fund lost the maximum during the month.
5. Aggressive Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 10% into bond funds and 90%
into equity funds. The target allocation may change depending upon our views on financial markets.
Currently, we hold a neutral position in equities we target to have an exposure of 10% to bond funds
and 90% to equity funds.
Portfolio Absolute Return since inception:
Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 12.23%
29. Monthly Markets Update - India
October 2011
Portfolio Value: September 2011 Portfolio Return: -0.15%
INR 1,12,229
Portfolio Commentary:
The Aggressive portfolio gave a negative return of 0.15% in September. The portfolio returns continue to
appear in the negative territory for second consecutive month.
In the debt segment, both Reliance Short Term Fund and ICICI Prudential Gilt Fund- Investment Plan
have delivered positive returns. Reliance Short Term Fund accounted for most of the debt portfolio
returns.
In the equity space, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small and
Mid cap Fund together accounted for most negative equity portfolio returns. ICICI Prudential
Infrastructure Fund followed by HDFC Midcap Opportunities Fund lost the maximum during the month.
6. Moderately Aggressive (Global) Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 30% into bond funds, 46% in
domestic equity funds and 25% in global equity funds. The target allocation may change depending
upon our views on financial markets. Currently, we hold a neutral position in equities and we target to
have an exposure of 30% to bond funds, 46% to domestic equity funds and 25% to global equity funds.
Portfolio Absolute Return since inception:
Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 8.61%
Portfolio Value: September 2011 Portfolio Return: -2.02%
INR 1,08,607
Portfolio Commentary:
The Moderately Aggressive (Global) portfolio gave a negative return of 2.02% in September.
In the debt category, all the funds have delivered positive returns. Birla Sunlife Floating Rate Fund- Long
term Plan followed by BNP Paribas Money Plus Fund accounted for most of the debt portfolio returns.
In the equity segment, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small
and Midcap Fund together accounted for most negative equity portfolio returns. HDFC Midcap
Opportunities Fund followed by DSP Black Rock Small and Mid cap Fund lost the maximum during the
month.
30. Monthly Markets Update - India
October 2011
In the global equity funds, both the global funds i.e. Mirae Asset China Advantage Fund and Principal
Global Opportunities Fund have given negative returns. However Mirae Asset China Advantage Fund
alone accounted for 70% of the negative global equity portfolio returns.
7. Aggressive (Global) Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 10% into bond funds, 59% into
domestic equity funds and 31% into global equity funds. The target allocation may change depending
upon our views on financial markets. Currently, we hold a neutral position in equities and we target to
have an exposure of 10% to bond funds, 60% to domestic equity funds and 30% to global equity funds.
Portfolio Absolute Return since inception:
Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 8.21%
Portfolio Value: September 2011 Portfolio Return: -2.57%
INR 1,08,213
Portfolio Commentary:
The Aggressive (Global) portfolio gave a negative return of 2.57% in September. The portfolio returns
continue to appear in the negative territory for second consecutive month.
In the debt segment, both Reliance Short Term Fund and ICICI Prudential Gilt Fund- Investment Plan
have delivered positive returns. Reliance Short Term Fund alone accounted for 85% of the debt portfolio
returns.
In the equity space, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small and
Midcap Fund together accounted for most negative equity portfolio returns. ICICI Prudential
Infrastructure Fund followed by HDFC Midcap Opportunities Fund lost the maximum during the month.
In the global equity funds, both the global funds i.e. Mirae Asset China Advantage Fund and Principal
Global Opportunities Fund have given negative returns. Both Mirae Asset China Advantage Fund and
Principal Global Opportunities Fund accounted for 62% and 38% of the negative global equity portfolio
returns respectively.