In the holiday-shortened week ended March 1, 2018, the S&P BSE Sensex, which was in recovery mode, came under pressure. The index remained directionless and closed lower by 0.28%. The CNX Nifty 50, fell by 0.31% over the same period. In comparison, the S&P BSE MidCap Index dropped 0.61%. The S&P BSE SmallCap Index managed to gain by 0.49%.
Given this performance of the stock market, all
equity mutual fund schemes were range bound. As some midcaps recovered sharply, midcap-oriented schemes were among the top performers of the week. Auto Realty and Energy stocks provided a boost to mutual funds investing in these sectors.
Such schemes investing in this space were among the top performing mutual funds for the week. Those mutual funds that have aggressively invested in PSU Banks and Pharma sectors would have suffered the most.
In terms of valuations, the price-to-earnings (P/E) multiple of the S&P BSE Sensex hovers around 23 times. The P/E of the S&P BSE MidCap is lingers near 40x and that of the S&P BSE SmallCap index remains above 100 times.
All the indices are trading over twice their long-term average P/E. Hence, could come under pressure with adverse news.
On shifting the focus on sectoral performances, shares of Auto, Realty and Energy sectors managed to recover and posted a gain. The Nifty Auto, Nifty Realty and Nifty Energy indices, reported gains of 2.11%, 1.35% and 1.27% respectively. Mutual funds investing in these sectors would have benefitted.
Among the sectoral indices that declined, the most were the Nifty PSU Bank, Nifty Pharma and Nifty Metal index. Shares of these sectors fell 3.5%, 1.5% and 0.86% respectively. Banks came under pressure once again, as Punjab National Bank disclosed that the fraud amount could rise further to Rs 12,700 crore. Mutual funds investing heavily in these sectors would have suffered.
Going ahead, the pace of earnings will set the tone and direction of the market.
Among equity diversified mutual funds, Aditya Birla SL India Opportunities Fund, Taurus Discovery Fund, Baroda Pioneer Mid-cap Fund, MOSt Focused Midcap 30 Fund, and DHFL Pramerica Midcap Opp Fund topped the list with returns of 3.57%, 2.99%, 2.82%, 2.67%, and 2.62% respectively.
Top Mutual Funds of The Week
Data as on February 23, 2018. Returns are absolute
(Source: ACE MF, PersonalFN Research)
*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.
Category-wise Top Performing Equity Mutual Funds of the week
On taking a look at the category wise performance –
BOI AXA Equity Fund,
UTI Equity Fund,
Invesco India Growth Fund,
IDFC Focused Equity Fund, and
Escorts Growth were the
top large cap funds with a return of 2.48%, 2.34%, 2.01%, 1.96%, and 1.96%.
Taurus Discovery Fund, Baroda Pioneer Mid-cap Fund, MOSt Focused Midcap 30 Fund, DHFL Pramerica Midcap Opp Fund, DSP BlackRock Small & Mid Cap Fund were the top mid cap funds & small cap funds with a return of 2.99%, 2.82%, 2.67%, 2.62%, 2.32% respectively.
Among multicap funds, Aditya Birla SL India Opportunities Fund, UTI Bluechip Flexicap FundTaurus Star Share Fund, Taurus Ethical Fund and UTI India LifeStyle Fund were the top multicap funds with returns 3.57%, 2.38%, 2.12%, 2.05%, and 2.00% respectively.
Top Performing ELSSs of the week
In the
ELSS category,
BOI AXA Tax Advantage Fund,
Axis Long Term Equity Fund,
Taurus Tax Shield Fund,
Indiabulls Tax Savings Fund, and
DHFL Pramerica Tax Plan were the
top ELSS funds, generating a return of 3.00%, 2.11%, 2.02%, 1.92%, and 1.91% respectively.
Top Performing Balanced Funds of the week
Balanced funds were able to deliver decent returns. Some were able to stem the losses better than the others. The top balanced funds for the week BOI AXA Mid Cap Equity & Debt Fund, UTI CCP Advantage Fund, Axis Children's Gift Fund, Tata Retirement Saving Fund - Moderate Plan, Reliance Regular Savings Fund-Balanced Option. These schemes delivered a return 3.09%, 1.51%, 1.40%, 1.31% and 1.26% respectively.
How to invest in the best mutual fund schemes?
PersonalFN suggests that you must take a closer look at the performance of your mutual funds. Staying invested in funds with a proven track-record of consistent performance may pay off in the long run.
While we acknowledge that, even the best systems and processes cannot predict the top mutual funds of the future, as an investor, you need to pick the right and suitable funds to meet your financial goals.
Hence, a process that combines both quantitative and qualitative factors has a good chance of picking funds that can deliver decent market-beating returns. The quantitative factors will cover the fund’s performance across multiple periods and market cycles, as well as the fund’s ability to manage risk among other factors.
The qualitative factors will take into account the fund manager’s experience, the performance of the fund house across multiple schemes, as well as the quality of assets in the portfolio, to name a few. Thus, when analysing a fund across both quantitative and qualitative parameters, you will be able to pick a fund that has a promising future.
PersonalFN adopts such a process to shortlist the potentially best mutual funds for its subscribers.
Thus, in the interest of your long-term financial wellbeing, it is best that you wisely structure and review your mutual fund portfolio. If you are unsure where to invest fresh investible surplus currently, to strike the correct risk-return tradeoff we recommend adopt a ‘core and satellite approach’ to investing.
In times of volatility, a Systematic Investment Plan (SIP) would undoubtedly be a prudent route as compared to investing your corpus as a lumpsum. When investing in equity, it is important to keep a long-term investment horizon of five to seven years or more, even if you are investing via a SIP.
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