New instruments find place and sometimes a re-ordering takes place at these stages.
When does one recognize the growth of the pie?
What size of the pie warrants a re-ordering of investments or revision of portfolio?
The financial Planning experts say when a major life event takes place one needs to re-balance the portfolio of investments.
The portfolio managers say when major economic events throw such opportunities.
Lifestyles Funds, though diversified equity funds, may not be suitable for the uninitiated. But HNIs having exhausted other investment opportunities may look in as an add on.
Between 2005 and 2010, Indian market has seen both years of down and up movements. Three lifestyle funds came in so far:
1. Birla S L India GenNext (July 2005)
2. Kotak Lifestyle Fund(Feb 2006)
3. UTI India lifestyle fund( July 2007)
The first two are opened end where as the latter came as closed end and then became opened end by July 2010.
The one year performance as at July 19, 2010 has been impressive for all of them turning more than 30% rate of return. This compare well with the sensex(18%), Nifty(27.5%) and BSE Mid Cap(41.6%).
In the three year period Kotak showed -1.2% (CAGR ) where as the GenNext put up 7.7%. during the same period the above indices gave 4.9%, 6.1% and 2.8% respectively.
The five year period was impressive with genNext turning in 18.1% as against the indices 19.5%, 19.3% and 15% respectively.
Lifestyles can fall faster than the Indices or stand against the indices but more or less follows the general market trend in any period. Fund Managers use their dicretion to be defensive or aggressive in the adverse times creates the kind of returns put up. The Standard Deviation of the Rtae of return is 31.23, 29 and 17 in the case of GenNext, Kotak and UTI funds respectively.
This is the knowledge that should guide you when you look at the Lifestyle Funds.
