The last bull run ended in March 2000. The three-year bear market that followed was pushed by the tragedy of 9/11 and a recession. Finally, the market bottomed out in October 2002. From then on, it scaled impressive heights. Along the way, there have been some significant dips, followed by a continuation of upward pressure.
But in the end, companies with good fundamentals will weather the storms that sweep the market and the economy. The lesson here is straightforward.
Stocks are excellent long-term investments, but dangerous short-term bets.
*Figures provided by HDFC Mutual Fund in a note sent out by Prashant Jain
****************************
CONNECT
Know
Big is not always better. One look at the biggest funds (in terms of assets under
management) between January 2007 and September 2008, on a month-on-month basis, shows that there were only three instances in which two old funds — HDFC Equity and Reliance Growth — were the largest. Instead, it was the sector funds that dominated. Another disconcerting trend in the fund industry is that new fund offerings (NFOs) are marketed with aplomb while existing funds with a proven history are left in the cold. In first half of 2007, Rs15,000 crore went into NFOs; this dropped to Rs10,000 crore for the same time period this year. Of this entire amount, Reliance Natural Resources alone accounted for Rs5,600 crore.
Invest
Franklin India International, launched in December 2002, has scored on
diversification — geographical and currency. But it failed on the performance front, the one factor that ultimately matters. This open-ended income fund struggled to justify its presence at a time when the thirst for equity could not be quenched. The scheme invests in units of Franklin US Government Fund, an international mutual fund scheme from Franklin Templeton. This fund invests predominantly in securities issued or backed by the US government.
Buy
After entering the market in 1994, Morgan Stanley Mutual Fund has for the first time filed offer documents with the Securities and Exchange Board of India to launch debt schemes. If approved by the regulator they will be known as Morgan Stanley Active Bond Fund, Morgan Stanley Short Term Bond Fund and Morgan Stanley Ultra Short Term Bond Fund. All schemes will have two plans, regular plan and institutional plus plan. The minimum investment amount in the regular plan will be Rs5,000 and for institutional plus plan will be Rs50 lakh. The annual recurring expenses charged by the three schemes under the regular plan, it will be 2.25%. It will vary in the case of the institutional plus plan for all three schemes. Morgan Stanley Active Bond Fund will charge 2%, Short Term Bond Fund will charge 1.75% and Ultra Short Term Fund, 1.50%.
Do