Though the festive season began on a low note on the Dalal Street, the markets seem to be turning positive as we near Diwali. After trading below the 5,000 mark since the beginning of the month, Nifty finally closed at 5067 on 13 October. Inflation data showed some moderation as it fell to 9.72% in September from 9.78% in August. Wealth Maximiser
However, it is still above the comfort level and there is pressure on the central bank to control it further. So, the monetary policy review due on 25 October will be important to the market.
FUTURE SPEAK;What to expect from the Mutual Fund industry
On the global front, the US and European markets seem to be optimistic for the time being. The Asian stocks, too, look strong. However, concerns of a double-dip still persist.
While the markets remain unpredictable, disciplined investment has helped Lifestage Portfolios control losses.
Stable Growth and Income Generator have given an absolute return of 1.1% and 6.5%, respectively, since inception in May 2010, while Wealth Maximiser and Money Builder have limited their negative returns to 2.9% and 3.8%. Similar investments in Nifty would have given a -12.14% absolute return. In that sense, we can say, our portfolios have been performing decently. Here is a review of the last three months.
This portfolio with 80.53% of the corpus invested in equity has highest equity holdings (17.31%) in the financial sector. Kotak Institutional Equities expects the margins to remain stable for the quarter as banks have taken aggressive hikes in lending rates between May and August 2011 while deposit rates have not seen similar increases and wholesale lending rates remain stable.
The outlook, therefore, is positive. Sundaram S.M.I.L.E, being a mid-cap fund, has been the biggest loser (-12.1% return) in this volatile market. However, 55.8% of the equity corpus is in giant and large-cap stocks, lending it stability.Money Builder
This growth-oriented portfolio also has the highest equity allocation of 17.32% in the financial sector. With 12.66% of the equity fund, energy is second most important in this portfolio.
According to a report of Nomura equity research, despite an improvement in regional refining margins, the second quarter results for the oil marketing companies (OMCs) are likely to show muted growth. They remain optimistic on gas companies while maintain a cautious stance on the OMCs. The IT holdings also lack lustre. IDFC Securities, expect a dull revenue growth for these companies in an otherwise strong quarter.Stable Growth
This portfolio largely consists of debt-oriented hybrid funds. It has been able to post a positive return. As our equity-heavy portfolios lose money, the high debt exposure (65%) of Stable Growth portfolio helped it protect loss of capital.
In terms of quality of debt papers, the portfolio is holding 70% high quality debt (P1+ and AAA) instruments. The average current yield on corporate bonds is over 9% while the government bonds and short-term treasury bills are trading at 8.1% and 8.5% respectively as on October 17, 2011.Income Generator
Like the Stable Growth portfolio, Income Generator is also a debt-oriented portfolio with 77% money invested in bonds and other fixed income securities. The portfolio generated an absolute return of 6.5% since its inception in May 2010 till October 14, 2011. This is the highest among all the four portfolios.
About 66% of the debt papers it has invested in are high quality (P1+ and AAA) instruments which offer highest degree of safety regarding the timely payment of the financial obligations. The portfolio has 7% holdings in government bonds, which are fetching 8.1% return at present.