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New Vs Old Fund

How would you compare HSBC Equity Fund with Franklin India Bluechip Fund? In 2003, while HSBC Equity gave an excellent return of 160.25 per cent, Franklin India Bluechip returned 120.59 per cent.

How would you compare HSBC Equity Fund with Franklin India Bluechip Fund?
—Sanjiv Lal

When looking at mutual funds, past performance is no guarantee of future returns. Nonetheless age matters. A clearer idea can be had about the performance of a fund, which has gone through at least a full market cycle i.e. a rising market and a falling market. We thus rate only those equity funds, which have been around for at least three years.

HSBC Equity is a new fund and has found a place in the first quartile of its category in 2003—its first full calendar year. In fact returns of 160.25 per cent made it the second best diversified equity fund in 2003. As compared to this, Franklin India Bluechip returned 120.59 per cent figuring in the second quartile of its category. But then in its nine full calendar years of existence, Franklin India Bluechip has garnered a top quartile standing in six. In 2000, a horrendous year for equity funds, while the average fund lost 26.5 per cent Bluechip lost just 13.2 per cent making its way into the first quartile.

Its better than average performance was also replicated in 2001 with the fund losing 16.14 per cent against the category's 19.04 per cent loss. HSBC Equity is yet to witness a falling market and so no inference can be drawn about how it will behave in such times.

Franklin India Bluechip is a pure large-cap fund. HSBC Equity on the other hand focuses predominantly on large caps, but does take exposure to mid-caps. In the future, HSBC Equity may well turn out to be as good or even better than Bluechip but it is simply too early to tell right now.



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