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There are 14 diversified equity funds with assets (total money available for investment) over Rs 1,000 crore. In October, when the stock market turned volatile, Prudential ICICI [Get Quote] Infrastructure fared the worst, followed by Reliance [Get Quote] Growth and Reliance Equity Opportunities. On the other end of the spectrum, HDFC [Get Quote] Equity and Franklin India Prima fared the best. Where they invest A few similarities exist between these funds. All are diversified equity funds that will invest in the shares of companies of various sectors. Most of them have a large-cap dominated portfolio (total investments) with a very minor allocation to small-cap stocks. However, the actual portfolio differs greatly amongst these players. HDFC Premier Multi-Cap, for instance, maintains a highly concentrated portfolio (lots of money invested in few stocks). As per the September 2005 portfolio, the fund held just 21 stocks. The top three stocks accounted for more than 9% of the total portfolio. On the other hand, you have Fidelity Equity which has 103 stocks, with no single stock accounting for more than 4.94% of the assets. So while HDFC Premier Multi-Cap is more riskier than Fidelity Equity, the potential for returns is higher. In Fidelity Equity, even if a stock or two does really well, it will not make much of a difference since a small amount is invested in it. However, if a stock does well in HDFC Premier Multi-Cap, the chances of the fund delivering higher returns is greater since huge amounts would be invested in it. Also, the preference for sectors differs. Fidelity Equity has around 20% of its total investments in technology while HDFC Premier Multi-Cap, almost 26%. Franklin India Flexi Cap has only 12% it total investments in tech stocks but almost 19% in the financial sector. When you pick up a fund, go through the portfolio to ensure that it is different from a fund you already have invested in. If you invest in two funds, both of which have invested heavily in tech stocks, you will end up with a large exposure to tech stocks. Something you may not desire at all. A brief snapshot Here's a look at how the big boys in the mutual fund industry are faring. Assets Under Management: The amount of money being managed by the fund. This figure is as on September 25, 2005. Fidelity Equity is the richest fund with the highest amount of money being managed. The returns of each fund must be compared with the average returns of diversified equity funds. Fidelity Equity Magnum MultiCap Franklin Flexi Cap Franklin India Prima Reliance Equity Opportunities Franklin India Bluechip Reliance Growth UTI Mastershare HDFC Equity Prudential ICICI Infrastructure UTI Equity HSBC Equity HDFC Premier Multi-Cap HDFC Capital Builder
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