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Look Beyond The Numbers

Look Beyond The Numbers

It’s easy to just look at the numbers and get swayed.

For instance, when looking at the funds that fell the least yesterday (in terms of 1-year returns), it was interesting to see 3 dividend yield funds feature in the list (though they have been featuring here for quite a while).

ING Dividend Yield fell the least (-23.1%) amongst all equity funds. Close at its heels was Birla Sun Life Dividend Yield Plus (-24.1%) and UTI Dividend Yield (-26.8%).

On the face of it, the ING fund may appear to be a better bet than the UTI one since UTI Dividend has the lowest 1-year return from amongst the three. But that need not be the case.

When we look at the bad phase from October 1 – 17, 2008, when the Sensex fell from 13,055.67 to 9,975.35, it was ING Dividend that got hit the hardest (-17.74%), a far greater fall than the Birla one (-11.98%). UTI Dividend fared better at -13.87%.

Besides the objective of the funds, there is more common ground. There are 4 sectors that these funds bet most on – Energy, Financial Services, Consumer Durables and Chemicals. While Energy is the undisputed king, the allocations to the other sectors vary depending on the fund in question.

But look beyond these superficial similarities and the offer from ING is much more aggressive. It stands out from the other two in its bolder sector allocations. Check this out. Its top 2 sectors (Energy, Financial Services) corner 41.56% of the portfolio. The very same sectors are the topmost in UTI Dividend but account for just 30% of the portfolio.

ING Dividend is also the one most fully invested in equity right now (93.72%) with UTI Dividend being the least at 68.20% (the balance in cash and debt).And in terms of giving dividends to its investors, UTI Dividend definitely scores. 

Moral of the story? The performance numbers may give you a lead but don't base your final call solely on it.