It’s time to take stock of all your investments and check if your hard earned money invested during 2006 actually gave back everything it promised. The big returns this year came from the arts, equity markets, mutual funds, gold and real estate. Alternative thinking was the way to go this year-at least for the smart investor.

 

Asset class	Returns
Art	104.08%
Gold	48.47%
Direct Equity
Sensex	42.3%
Nifty	33.9%
Equity Mutual Funds
Diversified
Best performer - Sundaram select midcaps	56.7%
ELSS
Best performer – Birla Tax Relief 96	40.7%
Balanced
Best performer – JM balanced fund	35.5%
Real estate: Premium Residential
Tier I & Tier II cities (Source: Narains Corp)	15-20%
Debt
Bank FDs – Best rate	8%
Post office savings	8%
Debt Mutual Funds
Long term debt
Best performer – Pru ICICI Gilt Investment	9.7%
MIP
Best performer – Reliance MIP	14.4%
Floating rate
Best performer – LIC MF floating rate fund	7%

Just because your grandfather stored his savings in fixed bank deposits doesn’t imply that you need to do the same (at least we hope not). Traditional avenues like bank fixed deposits and post office savings have lost complete ground as compared with the newer and riskier counterparts (but you already knew that). Gold, that was till a few years back, written off as a dead investment, bounced back and how!

 

The most stylish investment in the market today is that in art. Over a period of one year, art has returned over a 100% in returns, and that is according to the ET Art Index (in association with Osian’s auction house). Of course, the art index, just like the stock index, is based on the performance of select artists. Works of artists of lesser repute would have returned lower numbers. Nevertheless, this has been an asset class that has attracted a lot of interest this year. Moreover, several art funds were launched to allow non-collectors to participate in the boom.

(All returns, except property, are for the period 13th Dec 2005 till 13th Dec 2006. Property returns are over one year)

Should you have invested in the art market? Certified Financial Planner Gaurav Mashruwala suggests, “I would not really recommend art as an active part of your portfolio, the main reason being that there is no track record of performance. Having said that, if you still want to invest in art, I would suggest that do so only if you have enough surplus left after you fulfil all your current and future financial responsibilities. Valuations are an issue in case of art investments as the market is still immature.”

 

So invest in art after you have completed making all your other investments. Art today is an illiquid asset because it is not easy to find buyers. Of course over the years this will change, but till then, exercise caution.

 

The traditional Indian favourite, gold, comes in second with a return of almost 50%. Till a few years ago, gold was written off as a dead asset, giving returns of 3-4% per annum. However, the tide began to turn in 2002, when gold returned 15% in one year and continued to give returns over 10% thereafter. However, its not wise to go overboard on gold. Zankhana Shah, a financial planner says, “According to me, only 10-15% of your portfolio should be allocated to gold. If you already have that much, do not spend your money on gold anymore."

Check out the equity and real estate story on page 2...