GEMGAZE

October 2017

Many of us think that mutual funds can give just 12% annualized returns and stocks would give very high returns. While this is true to some extent, there are a set of mutual funds that can double or triple your money. These are the sector based mutual fund schemes in India. The October 2017 GEMGAZE would provide some of the best sector mutual funds which can fetch you phenomenal returns.

The consistent performance of all five funds in the October 2016 GEMGAZE is reflected in all the funds holding on to their esteemed position of GEM in the October 2017 GEMGAZE.

Canara Robeco Infrastructure Fund Gem

The Budget boost

Canara Robeco Infrastructure Fund is a thematic fund focused on identifying growth-oriented companies within the infrastructure space. The fund, with an AUM of Rs 154 crore, aims at having concentrated holdings with 80.26% of the assets in the top three sectors and a bias towards large market capitalization stocks at 52.21%. With a well-diversified portfolio of stocks in the energy, construction, and services sectors, it employs fundamental analysis with a focus on factors such as the industry structure, the quality of management, sensitivity to economic factors, the financial strength of the company, and the key earnings drivers. In the Union Budget 2017, the government proposed to assign infrastructure status to affordable housing projects and facilitate higher investments and better credit facilities, with an aim to provide Housing for All by FY 2022. The National Housing Bank will refinance individual housing loans of about Rs 20,000 crore in 2017-18. The Finance Minister proposed to complete 1 crore houses by 2019. All these developments are expected to boost cement demand. The fund benchmarks the performance of its portfolio against the S & P BSE 100 Index. Canara Robeco Infrastructure has been among the better performers in its category. The fund’s one-year return is 13.97% as against the category average return of 19.78%. The expense ratio of the fund is high at 2.73% while the portfolio turnover ratio is 42%. The fund has been managed by Mr. Yogesh Patil since December 2011.

SBI Magnum FMCG Fund Gem

The best bet

In the past one year, the Rs 344 crore, Magnum FMCG Fund is perched at the top with 54.6% of the assets in large caps. The expense ratio is high at 2.52% and the portfolio turnover ratio is a mere 16%. Braving all odds, the one-year return of the fund is 20.56% as against the category average of 18.89%. Over the three and five year periods, the fund posted 14.65% and 17.34% of CAGR, respectively as against the category average of 14.61% and 16.12% respectively. Magnum FMCG Fund is benchmarked against the S & P BSE FMCG Index. Most stocks that operate in this space have already moved up because revenue and profit growth for these companies were still better than firms in beleaguered sectors. Despite high valuations, companies in the consumption space still hold strong growth potential, thanks to lack of viable alternatives in the market. FMCG funds are, therefore a good bet.  Saurabh Pant has been managing the fund since June 2011.

ICICI Prudential Banking & Financial Services Fund Gem

An evergreen fund

ICICI Prudential Banking & Financial Services Fund invests predominantly in large and midcap financial companies. 71.04% of the portfolio consists of large caps. This fund adopts a 'bottom-up' strategy, to identify and pick its investments across market capitalizations. The fund has not only outperformed its benchmark, the S&P BSE Bankex but has also outperformed other banking sector funds. The current AUM of the fund is Rs 2,519 crores and the one-year return is 26.36% as against the category average return of 19.94%. The expense ratio is 2.37% and the portfolio turnover ratio is 149%. The fund is managed by Vinay Sharma since February 2015.

SBI Pharma Fund Gem

Consistent healthy prospects

SBI Pharma Fund sports an AUM of Rs. 981 crores. The number of stocks held by the fund in the last few months has hovered around 22. The concentration analysis reveals that the fund has around 41.92% assets allocated towards the top 5 stocks while the top 10 stocks make up around 63.44%.  The one-year return of the fund is -14.44% as against the category average of -11.71%. The three-year and five-year returns of the fund are 3.64% and 17.55% as against the category average of 2.71% and 15.48% respectively. SBI Pharma Fund tops the list of pharma funds across time periods. The outperformance of the fund has been quite consistent. For instance, in the last five years, the scheme’s annual returns have been better than its benchmark almost 84% of the time. The expense ratio of the fund is 2.26% while the portfolio turnover ratio is 70%. An average large-cap slant of about 30.2% should hold the fund in good stead even during volatile times. The fund has been managed by Tanmaya Desai since June 2011.

ICICI Prudential Technology Fund Gem

Driven by growth of new technologies

Consumers’ appetite for new technologies has been driving growth in the technology sector for years. This is providing good opportunities for technology companies. ICICI Prudential Technology Fund is a Rs 248 crore technology fund, which invests in large technology oriented companies. It invests in companies listed in the BSE Teck. Its portfolio has 74.3% exposure to large cap companies. The fund seeks to invest in knowledge sectors like IT and IT Enabled Services, Media, Telecommunications, and others. The one-year return of the fund is 4.27% as against the category average of 4.05%. The three-year and five-year returns of the fund are 1.23% and 15.96% as against the category average of 2.07% and 14.52% respectively. The fund is benchmarked against the S& P BSE IT Index. The expense ratio of the fund is 2.68% while the portfolio turnover ratio is 28%. The fund is managed by Ashwin Jain since October 2016 and Sankaran Naren since July 2017.