Monday, September 28, 2015

September 2015

The mutual fund industry witnessed a drop of nearly 5% in assets under management (AUM) to Rs 12.55 lakh crore in August 2015, mainly on account of fall in inflow into such schemes. The assets base of the country's 44 fund houses declined from an all time high of Rs 13.17 lakh crore in July 2015 to Rs 12.55 lakh crore in August 2015, according to the latest data. The fall in asset base can be attributed to redemptions from investors during the month amid volatility in the stock market. Overall inflow in mutual fund schemes have fallen to Rs 1.58 lakh crore at the end of August 2015 from Rs 2.05 lakh crore at the end of July 2015. However, fund managers have purchased shares worth a staggering Rs 10,533 crore in August 2015 even though overseas investors sold stocks worth Rs 16,877 crore during the same period — its highest monthly selloff in more than seven years. They made intensive buying in the last week of August 2015 when the domestic market crashed due to the rout in Chinese equities. The sell-off by overseas investors in the Indian equity markets has meant an opportunity to mutual fund managers. The top five mutual fund houses — HDFC, ICICI Prudential, Reliance, Birla Sun Life, and UTI AMC, which together hold about 55% market share in the mutual fund industry — have bought stocks that have been beaten down and were trading at attractive levels in August 2015. HDFC Mutual Fund bought Tata Steel and Vedanta, while ICICI Prudential bought into NTPC and Ambuja Cements. Among midcap stocks, fund houses bought stocks such as Thomas Cook, Sun TV Network, and Exide Industries.

According to data from the Association of Mutual Funds in India (AMFI), investors withdrew a net amount of Rs 46,750 crore in mutual fund schemes in August 2015. Mutual funds saw an outflow in mutual fund schemes in August 2015 mainly on account of huge redemptions in liquid and money market funds. However, investors continued to maintain their bullish stance on the equity schemes. Liquid or money market fund category witnessed Rs 70,489 crore being pulled out in August 2015, while equity and equity linked schemes saw an inflow of Rs 9,156 crore. With the latest outflow, the net inflow in the schemes was at Rs 1.58 lakh crore in the April-August period of the current fiscal, 2015-16.

Piquant Parade

C V R Rajendran, former Chairman and Managing Director of Andhra Bank, has taken charge as the new CEO of AMFI on September 16, 2015. Rajendran’s tenure as CMD at Andhra Bank ended in April 2015. Prior to this, he was the Executive Director at Bank of Maharashtra. He has held key positions in many financial institutions like Asian Development Bank, Corporation Bank, and MCX Stock Exchange. He joined banking sector in 1978 as an Officer with Corporation Bank. Earlier, AMFI had invited applications from candidates having a minimum experience of 25 years in the financial markets with at least 5 years of experience in a role of a CEO or whole time director before June 1, 2015. 

AMFI is running advertisements, on television, which urge people to use mutual funds to diversify their investments. The advertisements went on air on August 22, which coincides with AMFI completing 20 years of operation. The campaign is being aired on general entertainment and news channels. AMFI is also planning to communicate this message through print media and FM channels. AMFI said that the pan-India campaign is being aired on TV in 13 languages. AMFI will roll out the print and digital campaign soon. AMFI had earlier run a TV campaign ‘Savings ka naya tareeka’ in September 2011 for five weeks. The budget for this campaign was estimated to be Rs. 8 crore. Apart from television commercials, AMFI had developed a 36 page booklet to explain the basics of mutual funds. Over 30,000 SMSes enquiries about mutual funds were generated within four weeks of running these ads on national television channels. The initiative is the brainchild of AMFI Financial Literacy Committee. 

Sahara Mutual Fund, which has been ordered by the Securities and Exchange Board of India (SEBI) to transfer its asset management business to a new fund house by December 2015, is unlikely to find a buyer as fears of litigation and regulatory issues keep fund houses away. The fund house has been scouting for a buyer through various investment bankers but existing entities are sceptical of acquiring it due to potential liabilities that may come along with the fund, which could impact the overseas fund-raising activities of the acquiring entity. The fund has limited AUM of around Rs.130 crore. 

Regulatory Rigmarole

In its report published to recommend measures for curbing mis-selling and rationalizing distribution incentives in financial products, the nine-member committee headed by Sumit Bose, former Union Finance Secretary has recommended that fund houses should not pay any upfront commission to distributors for selling mutual funds. Further, the committee has recommended that the commissions should only be paid on reducing AUM based trail. For instance, in case of lump sum investments, the trail will decline over the tenure of investment and become nil after a certain period of time. Besides, the committee has said that B15 distributors should not get higher commission. It said that AMCs themselves should tap such unexplored markets to increase their market share. SEBI has allowed AMCs to charge a higher TER for sourcing applications from B15 cities. Currently, distributors from B15 cities are exempted from the current 1% cap on upfront commission imposed by AMFI. The committee has also recommended that SEBI should lower the cost caps (within the TER) with the growth in AUM. Besides, it has also recommended that fungibility within the TER should be done away with. The committee has recommended measures in three areas – commissions, product structure, and disclosures. Recommendations related to product structure: Merge similar schemes to reduce confusion among investors. Benchmarks should be made more relevant and schemes should be periodically tested to see if the asset allocation is conforming to the benchmarks. Schemes should remain true to label. Promote ETFs among retail investors. Similar to insurance, introduce free look policy in mutual funds. Recommendations on disclosure: Penalize distributors pitching NFOs as cheap products on the basis of highlighting NAV “at par” value of Rs.10. Disclose past returns (along with benchmark returns) of schemes while selling products. Investors should be disclosed a range of past returns appropriate to the product tenure and should include returns of last 6 months and annualized returns since inception and 2 year returns thereafter. Disclose trail commission to investors at the time of sale. In addition to the disclosure of scheme performance subject to market risk, put additional disclosure stating that the fund’s performance is subject to fund house/manager’s competence. Inform all investors when fund manager of a scheme changes. The AUM rankings published by AMCs on their websites, information memorandum, etc. are presently combined for all products which give a misleading picture. For retail products, the AUM rankings should be shown only for the retail AUM. The committee has also recommended that there can be various regulators for the same product keeping in view the different functions of the product. For instance, it wants SEBI to regulate the investments made by Ulip funds, while IRDA to regulate the insurance part of the same fund. Currently, Ulips are regulated by the insurance regulator IRDA, while mutual funds are controlled by the markets regulator SEBI.

AMFI is planning to cut expense ratio by 30 basis points by October 2016. So, investors from smaller towns may have to pay less for investing in mutual funds. Besides, it is planning to do away with the current practice of disclosing overall AUM by fund houses and restrict it to only retail AUM. The development comes following the Sumit Bose Report. In the letter, AMFI has asked asset management companies to voluntarily bring down the expense ratio in centres outside the top 15 cities, called B-15 cities. The industry body has proposed to slash expense ratio by 10 basis points, effective October 1, 2015 followed by another 10 basis points reduction, effective April 1, 2016 and further 10 basis points, effective October 1, 2016. The removal of extra commission in B-15 centres will help in creating a level-playing field and maximize returns for investors. 

AMFI has said that AMCs should not pay any marketing support expense which would be surrogate for upfront commission. AMFI has issued a revised best practice circular on September 11, 2015 related to commission payouts. AMFI has clarified that meetings/training programs for sub-brokers/RMs of a distributor will not be considered as marketing support expense. However, these expenses should be incurred only for the event and should be executed by the AMC. AMCs are not supposed to make any payment to distributors for these events. In addition, gifts and advertisements on websites/publications of a distributor will be excluded from marketing support expense. AMFI has said that AMCs should not pay any marketing support expense which would be surrogate for upfront commission or advancing of trail. Also, it said that all expense incurred during marketing support should be backed with necessary documents/evidence. The total marketing support expense per distributor per scheme should be within the total surplus (distributable TER less upfront less trail of all transactions for the year). In order to calculate the expense incurred on distributors, the circular says that if expense is identified to a particular scheme, it should be divided by the gross mobilization of the distributor for that scheme. If not, it should be divided by the gross mobilization of the distributor across schemes (excluding liquid and ultra-short term bond category).  AMFI has also revised guidelines relating to upfront and trail commission. It has clarified that trail and upfront commission already paid by AMCs should not exceed the distributable TER. For instance, if upfront commission paid is 1% and assuming the trail commences from 5th month at 75 basis points, the total commission paid would be considered as 1.75% in the first year, which needs to be within distributable TER. Further, the trail commission in subsequent years cannot exceed 75 basis points. Further, the trail fee for subsequent years should be less than the distributable TER. Distributable TER is gross TER minus operating expense. AMFI has also issued clarification regarding operational implementation of commission payout in ELSS, RGESS, and retirement plans which qualify for tax deduction under section 80C and 80CCG of the Income Tax Act 1956. For instance, in ELSS, no trail commission will be paid for 36 months (if 1% advance upfront is paid for a period of 3 years). Also, for the 37th month, the trail fee can be up to distributable TER less upfront commission. On the B15 commission payouts, the revised clause says that the ‘additional’ payout for B15 locations at scheme level for any financial year should be within the B-15 expenses accrued to the scheme. SEBI has allowed AMCs to charge additional TER of up to 30 basis points on daily net assets of the scheme if the new inflows from beyond top 15 cities are at least (a) 30% of gross new inflows in the scheme or (b) 15% of the average assets under management (year to date) of the scheme, whichever is higher. Besides, IAP expense (two basis points) will now be a part of scheme operating expense. The Board of Directors of AMCs will have to confirm to AMFI on a yearly basis that they have adhered to these guidelines.

Market watchdog SEBI has advised fund houses to reassess their risk management policy related to fixed income schemes. In an email sent to AMC CEOs on September 11, the regulator advised fund houses to reduce concentration risk in their fixed income portfolios. SEBI has also asked fund houses not to rely only on external research/ratings and recommended them to do their own research before buying any instrument.

In its latest best practices circular, AMFI has asked AMCs to gather the missing KYC information from investors and ensure that all investors have undergone IPV (in-person verification). IPV means that information provided in the KYC form has to be verified in-person by distributors. Earlier, AMFI had asked distributors to collect missing KYC information from investors who had undergone KYC registration before January 1, 2012. The missing KYC details includes (for individual investors) name of father/spouse, marital status, nationality and gross annual income/latest net worth, etc. In addition, IPV was made mandatory from 2012. Apart from distributors, IPV can be done by employees of AMCs, R&Ts, and authorized officials of commercial banks (only in case of direct applications). So far, AMCs were accepting transactions even if IPV was not done by distributors. From January 2016, AMCs will not accept incomplete applications (where KYC is done and IPV is incomplete). For ease of doing IPV, SEBI has allowed distributors to perform IPV through web camera. SIP and STP mandates already registered till December 2015 are exempted from this requirement.   AMFI has urged distributors to make sustained efforts to obtain missing KYC information and complete IPV and updated the same in KYC Registration Agency (KRA) records till December 2015.  AMFI has directed AMCs to reject applications from November 2015 if KYC status is ‘deactivated’, ‘not available’, and ‘rejected’. If investors KYC status is ‘on hold’ then AMCs and RTAs need to intimate investors and get it rectified. From November 1, 2015, AMCs will reject all purchase and switch transactions if the missing information is not complete. From January 01, 2016, AMCs will reject all purchases and switch transactions if the missing KYC information is not provided and IPV is not completed. Distributors have to make sure that they have performed IPV till December 31st and update missing KYC information by 31st October 2015.

Paving way for active fund management in National Pension System (NPS), PFRDA has allowed pension fund managers (PFMs) to invest NPS corpus in mutual funds. PFMs can now invest pension corpus in large cap equity funds, ETFs that track index, gilt funds, income funds, and liquid funds. NPS is a voluntary pension scheme launched by PFRDA which aims to provide pension to people in both the organized and unorganized sectors. Currently, there are three schemes under NPS – gilt, fixed income, and equity. NPS can deploy up to 50% corpus in equities depending on the type of scheme or age of subscribers. In its investment guidelines, PFRDA has allowed PFMs to invest in mutual funds having at least 65% exposure to large cap stocks. The pension fund regulator has also allowed PFMs to take equity exposure through low cost index ETFs and CPSE ETFs. However, PFMs can also deploy NPS corpus in shares having a minimum market capitalisation of Rs.5,000 crore on their own. In addition, PFMs are allowed to invest in income funds, gilt funds, and liquid funds to take exposure to debt instruments. The move will help the mutual fund industry to position itself as a long term investment vehicle, besides helping to increase the AUM of the mutual fund industry.

According to a recent Cafemutual report called ‘Mutual Funds in India Being Future Ready’ an analysis of RBI and AMFI data shows that the AUM of mutual fund industry is likely to reach Rs.20 lakh crore in the next three years. This translates to a growth of 19% i.e. from Rs. 12 lakh crore in 2015 to Rs.20 lakh crore in 2018. Factors like increasing awareness among investors about mutual funds, government’s initiative on financial inclusion and growing population of young investors will help mutual fund industry achieve this growth. The Indian mutual fund industry is in a sweet spot with all the enabling ingredients in place. While a sound macroeconomic environment and favourable demographics ensure availability of long-term capital inflow, a proactive and conductive regulatory regime facilitates the industry’s growth. Surprisingly, the report has found that Indian mutual fund industry has outpaced global mutual funds in terms of AUM growth. AUM of the Indian mutual fund industry has grown at a CAGR of 17% compared to the global average of only 9% since 2008. Strong fundamentals of the Indian economy helped cushion the Indian financial markets against the global financial crisis. B15 centers will be the key growth driver for the mutual fund industry. Fuelled by robust farm growth, rising rural wages and increased government spending, the B15 centers have shown commendable growth and are likely to maintain this pace.

Monday, September 21, 2015

September 2015

The NFO deluge …

With rising demand from retail investors for mutual fund schemes, the draft papers by fund houses filed with capital markets regulator SEBI for launching NFOs have gone as high as 100 since January 2015. UTI MF, Axis MF, ICICI Prudential MF, Birla Sunlife MF, and SBI MF are among the fund houses that are offering NFOs to investors. A large number of these schemes are aimed at investment in equity and equity-related securities. Besides, the schemes are focused on debt fund, hybrid fund, and Fixed Maturity Plan. Manufacturing, economic recovery, resurgence of the business cycle, e-commerce and retirement, are some of the themes that are attracting mutual fund houses. The NFO market has picked up as the investors' confidence about equity markets is back and participation from retail investors is also on the upswing. But fund investors should give NFOs a wide berth and invest only in funds with a good track record. 

Kotak Capital Protection Oriented Fund Series 1

Opens: September 7, 2015
Closes: September 21, 2015

Kotak Capital Protection Oriented Scheme Series 1 offers an investment solution that seeks capital protection by investing a large portion of the portfolio in highest rated debt securities and money market instruments while the balance is invested in equity to provide capital appreciation. It is a close ended scheme with a maturity of 1101 days, which is 3.02 years. The fund has been designed for conservative investors who look for capital appreciation associated with equity investments but have low risk appetite on the capital. To hedge against market volatility, this fund will pick growth oriented stocks available at reasonable valuations, which are now available in plenty after market correction while putting the greater share in higher rated debt instruments. With a two pronged investment strategy, the fund will invest in debt and money market securities as well as equity. The fund is benchmarked against CRISIL Composite Bond Fund Index (80pc) and CNX Nifty (20pc). The fund managers are Abhishek Bisen (debt) and Deepak Gupta (equity).

DSPBR Dual Advantage Fund – Series 39

Opens: September 7, 2015
Closes: September 21, 2015

DSP BlackRock Mutual Fund has launched a new fund named as DSP BlackRock Dual Advantage Fund - Series 39, a closed ended income fund. The primary investment objective of the fund is to generate returns and seek capital appreciation by investing in a portfolio of debt and money market securities. The fund also seeks to invest a portion of the portfolio in equity and equity related securities to achieve capital appreciation. As far as investments in debt and money market securities are concerned, the fund will invest only in securities which mature on or before the date of maturity of the fund. The fund shall invest 50-95% in debt securities, up to 15% in money market securities with low to medium risk profile and 5-35% in equity and equity related securities with high risk profile. Benchmark Index for the fund will be CRISIL MIP Blended Index. The fund will be managed by Dhawal Dalal (debt portion) and Vinit Sambre (equity portion).

SBI Dual Advantage Fund – Series XI

Opens: September 8, 2015
Closes: September 22, 2015

SBI Mutual Fund has unveiled a new fund named as SBI Dual Advantage Fund - Series XI, a close ended hybrid fund. The tenure of the fund is 1111 days from the date of allotment. The primary investment objective of the fund is to generate income by investing in a portfolio of fixed income securities maturing on or before the maturity of the fund. The secondary objective is to generate capital appreciation by investing a portion of the fund corpus in equity and equity related instruments. The fund will invest 55%-95% of assets in debt and debt related instruments, invest up to 10% of assets in money market instruments with low to medium risk profile and invest 5%-35% of assets in equity and equity related instruments including derivatives with high risk profile. Benchmark Index for the fund is CRISIL MIP Blended Fund Index. Rajeev Radhakrishnan shall manage debt portion and Richard D'souza shall manage investments in equity & equity related instruments of the fund. 

ICICI Prudential Business Cycle Fund – Series 1

Opens: September 18, 2015
Closes: September 30, 2015

ICICI Prudential Mutual Fund has launched the ICICI Prudential Business Cycle Fund-Series 1, a close ended growth fund. The investment objective of the fund is to provide capital appreciation by predominantly investing in equity and equity related securities with focus on riding business cycles through dynamic allocation between various sectors and stocks. The fund’s performance will be benchmarked against S&P BSE 500 Index and its fund managers are Mrinal Singh, Pushpinder Singh, and Shalya Shah.

Birla Sunlife Focused Equity Fund – Series 6

Opens: September 7, 2015
Closes: October 1, 2015

Birla Sun Life Mutual Fund has launched a new fund as Birla Sun Life Focused Equity Fund – Series 6, a close ended equity fund investing in eligible securities as per Rajiv Gandhi Equity Savings Scheme, 2013. The investment objective of the fund is to generate capital appreciation, from a portfolio of equity securities specified as eligible securities for Rajiv Gandhi Equity Savings Scheme, 2013 (RGESS). The scheme shall invest 95-100% in equity securities specified as eligible securities for RGESS with medium to high risk profile and invest up to 5% of assets in cash and cash equivalents and money market instruments with low risk profile. The fund shall invest in money market instruments as defined under SEBI (MF) regulations with residual maturity of less than or equal to 91 days. The benchmark Index for the fund will be CNX 100. The fund manager will be Anil Shah.

Kotak India Growth Fund Series II

Opens: September 22, 2015
Closes: October 6, 2015

Kotak Mutual Fund has launched a new fund as Kotak India Growth Fund Series - II, a 3 year close ended equity fund. The investment objective of the fund is to generate capital appreciation from a diversified portfolio of equity and equity related instruments across market capitalization and sectors. The tenure of the fund is 3 years after the date of allotment. The fund would invest 80-100% in equity and equity related securities with medium to high risk profile and invest up to 20% of assets in debt and money market securities with low risk profile. The fund is benchmarked against CNX 200. The fund manager will be Harish Krishnan.

HSBC Global Estate Equity Fund, BOI AXA Hybrid Midcap Fund, HDFC Equity Opportunities Fund, Indiabulls Relative Value Fund, Union KBC Focused Largecap Fund, Axis Active Equity Allocation Fund, UTI Sensex ETF, UTI Nifty ETF, Kotak Arbitrage Plus Fund, Pramerica Focused Equity Fund, Canara Robeco Retirement & Pension Solution, Axis Focused Bluechip Fund, HDFC Nifty ETF, IIFL Equity Income Fund, HDFC Focused 25 Fund, Sundaram Equity Savings Fund, IDBI Prudence Fund, Pramerica Dynamic Gilt Fund, Mirae Asset Tax Saver Fund, L & T Index Fund, JP Morgan India Focus Fund, JP Morgan India Value Fund, IDBI Nifty ETF, HDFC Banking ETF, Kotak Dynamic Equity Fund, LIC Nomura MF ETF – CNX Nifty, LIC Nomura MF ETF - Sensex, LIC Nomura MF ETF – Nifty Junior, LIC Nomura MF ETF – Banking, Kotak Equity Advantage Fund, DSP BlackRock Cash Manager Fund, and Tata India Fund are expected to be launched in the coming months.

Monday, September 14, 2015


September 2015

If mutual funds are the best vehicle for small investors to invest in stocks, diversified equity funds are, by far, the most cost-efficient. A large-cap fund with a good track record should be part of every investor's core portfolio. If you want to be more aggressive, opt for a mid-cap fund, though these can be riskier than the large-cap ones. You could also go for multi-cap funds, which invest in a mix of small-, mid- and large-cap stocks. For those with a lower risk appetite, an index fund is a better option. Such funds invest in stocks of the index they track and, hence, their returns are not very different from those of the index. However, these are not as spectacular as those churned out by diversified equity funds. In the past five years, the average diversified equity fund has outperformed the broader market by 4-5%. But this is the average return, and some funds have also underperformed. This is why choosing a good equity fund is important. GEMGAZE aids you in this choice. All the five GEMs of the 2014 GEMGAZE have qualified yet again for the 2015 GEMGAZE.

HDFC Equity Fund Gem

The largest fund from the HDFC stable, with assets in excess of Rs 17,168 crore, the two decade old HDFC Equity topped the performance chart over the three- and five-year time frames. The one-year return of the fund is -4.24% as against the category average of 5.15%. The top three sectors of the fund are finance, technology, and automobile. The fund holds 59 stocks in its portfolio and is adequately diversified with 38.29% of assets in the top 5 stocks. The fund’s expense ratio of 2.17% is much lower than the average of other funds in the large cap category. The portfolio turnover of this predominantly large cap fund, with 75% of the assets in large caps, is a mere 39%. HDFC Equity Fund easily ranks among the best funds in the large-cap category in India. It benefits from the presence of Prashant Jain, who has demonstrated considerable skill in navigating the fund through varying market conditions over the years. Research is central to his investment style. A long-term orientation is intrinsic to the approach. Jain therefore invests in companies he believes are well positioned for long-term growth, even if that entails enduring short-term pain. His willingness to back his conviction with divergent bets versus the index and the norm is not without risk. Likewise, in a downturn, Jain’s policy of staying fully invested may lead to underperformance versus peers that get their cash calls right.  If you are looking for a predominantly large-cap fund with some mid-cap stocks thrown in, this is the fund for you as it has lower volatility. The fund remains a compelling choice for investors. 

Sundaram Select Midcap Fund Gem 

The dwindling asset base of Sundaram Select Midcap Fund was arrested with assets rising from Rs 1,963 crore in 2014 to Rs. 3212 crore in 2015. Krishna Kumar took over the reins of this fund after the former fund manager Satish Ramanathan’s exit in December 2012. Krishna Kumar is a proficient manager in the small- and mid-cap space. His investment style entails investing in fundamentally sound stocks with good growth prospects, good pricing power, and stable cash flow. Krishna Kumar is valuation conscious while investing in stocks but is willing to stay invested in companies with higher valuations in which the longer-term growth prospects appear favourable. The investment style is essentially bottom-up with a buy and hold philosophy on high conviction names. Such an investment approach requires an in-depth understanding of companies. It is here that Krishna Kumar’s background in researching small- and mid-cap stocks helps. A seven-member research team supports Krishna Kumar in this endeavour. The fund has outperformed its benchmark, S&P BSE Mid-Cap Index consistently. It has delivered a return of 16.08% (BSE mid-cap - 13.43%) and 29.51% (BSE mid-cap - 21.94%) over one and three years. It currently has 64 stocks with financial services, engineering, and automobiles being the top three sector holdings. These three sectors constitute 47.7% of the portfolio. The top five stocks constitute 22.72% of the portfolio. The expense ratio of the fund is on the higher side at 2.29% while the portfolio turnover is a measly 20%.

ICICI Prudential Dynamic Fund Gem

ICICI Prudential Dynamic Plan is suitable for investors looking for high capital appreciation over a long term, with limited downside potential in volatile markets. The fund managed a good 27% annual return since its launch in October 2002, way ahead of the 14.4% return of its benchmark S&P Nifty. This outperformance is noteworthy as the fund, quite often, shifted a good chunk of its assets to debt when equity valuations seemed high. Although an equity fund, ICICI Prudential Dynamic’s mandate allows it to move even 100% of its assets into debt or cash or hedge the portfolio using derivatives. The fund takes this call based on market valuations. This is not a fund for return chasers. The manager’s philosophy is to ensure the fund performs better than peers when markets fall, even if the strategy hurts performance in rising markets, thereby ensuring a robust performance over a market cycle. Though the fund can invest across market capitalisations, it puts 70-75% of its portfolio into large-cap stocks. In its debt portfolio, the fund has usually invested in fixed deposits, other short-term debt instruments or held cash. But, during 2014, the fund latched onto sovereign debt, given their sharp rally, putting around 10-15% of the portfolio into G-secs. The fund’s approach both shields it during market slides and allows gains in bull runs. In the one, three, and five-year time frames, the fund’s return of 20.1%, 23.6%, and 14.5% are better than the Nifty by four to five percentage points. The one year return of the fund is -4.22% as against the category average of 5.15%. The top three sectors are finance, energy, and technology. There are 62 stocks in the portfolio with 33.55% of the assets in the top five stocks. While the expense ratio of the fund is 2.26%, the portfolio turnover ratio is 124%.

DSP Blackrock Equity Fund Gem

The Rs 2425 crore DSP Blackrock Equity Fund, which has been in existence for more than 18 years, has outperformed its benchmark, the CNX 500, over one-, three- and five-year timeframes. Over the last three years, it has delivered compounded annual returns of 18.48%, which is better than several peers in the category. The fund has given good returns in market rallies and also limited the downsides during market declines. Over long periods, the blend of large- and mid-caps tends to deliver category-beating returns. It has delivered compounded annual returns of nearly 17% over the past 10 years, which is among the best in its category. DSPBR Equity invests predominantly in large-cap stocks while mid-cap exposure is to the tune of nearly 36% of its portfolio. While the focus on large-cap stocks protects the fund in volatile markets, the mid-cap portion ensures a fair degree of outperformance for it. It seeks to reduce the risk profile significantly by taking low exposure to individual stocks, to the tune of only around 5% of its portfolio. The portfolio consists of 49 stocks with the top five stocks constituting 26.29% of the portfolio, ensuring adequate diversification. The fund’s key exposures have been to the banking, automobile, and software sectors across timelines. While the expense ratio of the fund is 2.33%, the portfolio turnover ratio is 51%. Few managers are adept at investing in stocks across market segments but Apoorva Shah easily makes the cut. He uses his skills to good effect by running a multi-cap strategy that works across market cycles and over the long haul. The fund ranks among the best in its peer group and it can hold long-term investors in good stead.

Birla Sunlife Frontline Equity Fund Gem

With the market showing signs of edginess, a large-cap fund with a solid track record of delivering across market cycles may just be what the doctor ordered. Birla Sunlife Frontline Equity Fund, an old warhorse, fits the bill well. The fund’s annualised return since its inception in 2002 is an enviable 25%. It has beaten its benchmark, the BSE 200, convincingly by 5-9 percentage points over various time periods. It has been ahead of the BSE 200 about 97% of the time over the last five years. Birla Sunlife Frontline Equity Fund has been adept at containing downsides too, losing less than the benchmark during periods of market decline in 2009, 2011, and 2013. But in raging bull markets, its performance does not keep up with multi-cap funds and some peers such as DSP BR Equity Fund due to their lesser large-cap exposure. Birla Sunlife Frontline Equity Fund has been quick on its feet, increasing exposure to cyclical sectors such as banks and autos since August 2013, when the bull-run had just started; this has held the fund in good stead. The fund has remained mostly fully invested in equity and takes cash calls to the tune of about 5% during volatile periods. But it has also been nimble enough to shore up equity exposure in quick time when the tide turns. The Rs 9495 crore Birla Sun Life Frontline Equity Fund is one fund which will not only cushion your portfolio during turbulent times but also deliver healthy returns over a three- to five-year timeframe. The one, three, and five-year returns of the fund are 6.08%, 20.81%, and 11.39% as against the category average of 5.87%, 18.5%, and 9.34% respectively. It has not only outperformed the BSE 200 Index during bull phases but has also been successful in containing downsides during corrective phases. 85% of the assets are invested in large cap stocks. Finance, technology, and automobile constitute the top three sectors. The fund currently holds 75 stocks in its portfolio; this reduces concentration risk. The top five stocks constitute 21.84% of the portfolio. The fund’s expense ratio of 2.21% is much lower than that of its peer funds. The portfolio turnover of 22% can be justified since swift sector moves during volatile times helped the fund stay ahead of competition.