Size of a fund definitely has a role to play, but not when it comes to deciding which one to buy or sell. If we look at size in the context of equity funds, smaller funds have the capability of being more agile. This is especially true for mid- and small-cap funds. These funds can exit and enter stocks of a smaller market cap without affecting the price of the stock too much. But, if we look at the performance of large mid-cap offerings such as Reliance Growth and Sundaram BNP Paribas Select Midcap, this theory is disproved.
In the case of index funds, size may be an asset. Any inflow can be easily invested without giving rise to significant tracking error. In the case of a small index fund, the same inflow may look substantial and it may not be easy to allocate it without causing a tracking error.
Where debt funds are concerned, size is critical because it has a direct impact on the expense ratio. Larger funds can distribute fixed expenses over a number of investors and bring down the expense ratio. They can also negotiate better rates with issuers of debt paper.
On a closing note, there will be exceptions to all the above observations. Though theoretically there are specific kinds of funds which are better off either as large or small funds, there is no clear-cut trend to prove that a larger fund will perform better than a smaller fund or vice versa.
(by valueresearch)
Mutual Fund News update from Nishit Doshi (9824021680) a leading MF Advisor based in Ahmedabad. Gujarat.
Tuesday, January 1, 2008
Magnum Multiplier Plus - Risky Proposition
Like wine, it has matured with age. Magnum Multiplier Plus has had superb as well as dismal performances in the past. However, the fund has matured & will interest investors who can take a few risks
Magnum Multiplier Plus was amongst the most criticised in the 2000-2001 meltdown. After delivering an astounding 218.91 per cent in 1999, the fund lost (-) 50.31 per cent in 2000 and followed it up with another disastrous (-) 41.58 per cent loss in 2001. The culprit for this abysmal performance was lack of ample diversification and highly concentrated bets taken in the IT space. But the fund managed to pull out of this trench.
A look at the most recent bearish quarters' ending June 2006 (April-June) and March 2007 (January-March) shows that the fund has learnt to manage the downside better than before, and has lost only as much as the category average. This has been done by reverting to the time tested strategy of diversifying holdings. As a result, the fund has managed to progressively deliver a much better risk- adjusted return compared to the average peer. With assets evenly divided between large and mid caps and a small exposure to small caps, the fund steers clear of a capitalisation bias.
But old habits die hard. It had a rather high 26 per cent allocation to the basic-engineering and another 9.67 per cent in the construction space (as on July 31). Now construction is 17.36 per cent and basic-engineering 16.34 per cent (September 30). Its IT sector exposure went down to 2.05 per cent (July 31) to rise to 8.05 per cent (September 30). The fund will sit well with investors who are willing to take on slightly higher risk than the category average.
(by valueresearch)
Magnum Multiplier Plus was amongst the most criticised in the 2000-2001 meltdown. After delivering an astounding 218.91 per cent in 1999, the fund lost (-) 50.31 per cent in 2000 and followed it up with another disastrous (-) 41.58 per cent loss in 2001. The culprit for this abysmal performance was lack of ample diversification and highly concentrated bets taken in the IT space. But the fund managed to pull out of this trench.
A look at the most recent bearish quarters' ending June 2006 (April-June) and March 2007 (January-March) shows that the fund has learnt to manage the downside better than before, and has lost only as much as the category average. This has been done by reverting to the time tested strategy of diversifying holdings. As a result, the fund has managed to progressively deliver a much better risk- adjusted return compared to the average peer. With assets evenly divided between large and mid caps and a small exposure to small caps, the fund steers clear of a capitalisation bias.
But old habits die hard. It had a rather high 26 per cent allocation to the basic-engineering and another 9.67 per cent in the construction space (as on July 31). Now construction is 17.36 per cent and basic-engineering 16.34 per cent (September 30). Its IT sector exposure went down to 2.05 per cent (July 31) to rise to 8.05 per cent (September 30). The fund will sit well with investors who are willing to take on slightly higher risk than the category average.
(by valueresearch)
Birla Sun Life Tops The Charts
The Value Research Fund Rating for the month of December saw as many as six funds gain entry into the Value Research Five Star Funds family. These esteemed funds were Birla Income Plus, Principal Child Benefit, Principal MIP, ICICI Prudential Income Multiplier Reg, Grindlays GSF PF Inst and ING Domestic Opportunities.
ING Domestic Opportunities finally earned the five star tag after a three month wait. This is the fund's first ever five-star holding.
It was also a first time entry into the five star family for Principal MIP Plan, after a rating life of four years. Another significant improvement has been made by Birla Floating Rate LT. After fluctuating between the two and three star ratings, Birla Floating Rate LT has moved up two steps to become a 4 star fund thanks to its improved returns and reduced risk.
Things were however not so good for ICICI Prudential Dynamic. After enjoying the four star rating for six successive months, the fund fell back to the two star category in the month of November, but now it is trying to regain its position and scored a three star rating for the month of December.
HSBC Equity has made a smart recovery as far as the ratings are concerned. After languishing in the three star fund family for eleven months, the fund has again gained entry into the four star category. This fund started its rating life with a four star tag but at the beginning of this year it had slipped down to 3 stars.
This month, while six funds earned the five star rating, the same number of funds lost their 5-star tag. Taurus Libra Bond slipped to become a 1-star fund after enjoying the 3-star tag for the past twelve months.
As far as the fund families are concerned, the top position is jointly shared by Birla Sun Life AMC and ICICI Prudential AMC with six of its funds finding a place in the top-rated category. Closely following it is SBI Mutual; lagging behind by just one step with five 5-star rated funds.
However, when we combine the number of four and five star funds: Birla Sun Life AMC tops the chart with 16 four star rated funds and 6 five star rated funds. ICICI Prudential AMC comes at the second position with ten 4-star rated funds and six 5-star rated funds.
On the whole, of the total 463 rated funds, 35 funds have been upgraded and almost as many 36 funds, downgraded. 392 funds have maintained a status quo.
ING Domestic Opportunities finally earned the five star tag after a three month wait. This is the fund's first ever five-star holding.
It was also a first time entry into the five star family for Principal MIP Plan, after a rating life of four years. Another significant improvement has been made by Birla Floating Rate LT. After fluctuating between the two and three star ratings, Birla Floating Rate LT has moved up two steps to become a 4 star fund thanks to its improved returns and reduced risk.
Things were however not so good for ICICI Prudential Dynamic. After enjoying the four star rating for six successive months, the fund fell back to the two star category in the month of November, but now it is trying to regain its position and scored a three star rating for the month of December.
HSBC Equity has made a smart recovery as far as the ratings are concerned. After languishing in the three star fund family for eleven months, the fund has again gained entry into the four star category. This fund started its rating life with a four star tag but at the beginning of this year it had slipped down to 3 stars.
This month, while six funds earned the five star rating, the same number of funds lost their 5-star tag. Taurus Libra Bond slipped to become a 1-star fund after enjoying the 3-star tag for the past twelve months.
As far as the fund families are concerned, the top position is jointly shared by Birla Sun Life AMC and ICICI Prudential AMC with six of its funds finding a place in the top-rated category. Closely following it is SBI Mutual; lagging behind by just one step with five 5-star rated funds.
However, when we combine the number of four and five star funds: Birla Sun Life AMC tops the chart with 16 four star rated funds and 6 five star rated funds. ICICI Prudential AMC comes at the second position with ten 4-star rated funds and six 5-star rated funds.
On the whole, of the total 463 rated funds, 35 funds have been upgraded and almost as many 36 funds, downgraded. 392 funds have maintained a status quo.
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(by valueresearch)
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