ARTICLE-ZONE

WHICH IS THE BEST MUTUAL FUND?

This is the most common question that every investor finds answer for before investing in a mutual fund. And the most common benchmark to research and find answer is evaluating the past performance and looking for those funds and sectors that have outperformed the equity market.

Since Jan 08, BSE sensex has plummeted more than 50%, but, many debt funds have generated the return  of 20%. Great! So it’s the best investment option. Right? …..Wrong. It is the worse, indeed.

The best method to predict future of mutual funds is not only to analyse past trends but also to research and find out what lies ahead in different sectors and then choose the one that has best future prospects.

Reality sector has been hit hard in the past one year with stock prices flumping as much as 95%. Obviously, then, infrastructure-specific mutual funds have also delivered negative returns. As on 27^th Feb, 09, NAVs of major infrastructure MFs are only 35-55% of what they were on 1^st jan,08

Take example of BIRLA Sun Life Infrastructure fund. Its NAV has come down to Rs.6.90 from Rs.21.39 underperforming the stock market. Now, if market improves from here onwards, which is more likely than not, its NAV might easily go to Rs.11-12 i.e. more than 50% growth which is very good even if one gets it 2 years timeframe.  So, it could pay well to choose the worst.

But what is the future of reality sector? Well, things can only get better from here onwards. JP Associates Ltd. has got big projects in hand including the prestigious 1040 km long Ganga expressway which will be the big revenue generator in the future for the company.

GVK Power and Infrastructure Ltd. has Mumbai airport  project ,while GMR Infrastructure Ltd. has control over Delhi and Hyderabad airport operations which are fetching good revenue and will continue to do so in the future as well.

So, the infrastructure industry has already went through pitfalls and smooth expressway that will take growth in the full throttle is just months away. Enter the industry now and enjoy the smooth ride.

Author: Rishi Kapoor

rishikapoor@live.in

(All points mentioned in the article are endorsed by author and not by MoneyVriksh.com. There is no guarantee that stock prices and mutual fund’s NAV will rise in future.

Mutual funds are subjected to market risk. Please read the offer document carefully before investing.)

Stock Prices (In Rs.)

Company

01/01/2008

27/02/2009

Absolute Return

JP Associates Ltd.

426.65

66.00

-84.53%

Unitech Ltd.

507.30

28.25

-94.43%

DLF Ltd.

1071.25

152.00

-85.81%

Ansal Infra Ltd.

425.00

24.10

-94.32%

GMR Infra Ltd.

250.25

78.95

-68.45%

Mutual Fund NAV (In Rs.)

Fund

01/01/2008

27/02/2009

Absolute Return

ICICI Pru Infra (G)

35.74

16.19

-54.70%

BIRLA SL Infrastructure

21.39

6.90

-67.74%

UTI Infrastructure

30.57

12.41

-59.30%

SBI Infrastructure (D)

15.15

5.20

-65.70%

Religare Infrastructure

11.61

4.60

-60.37%