Investing in gold trumped most other asset classes in terms of compounded annualised returns over the long term, suggests a report by FundsIndia.
Flexicap fund performance depends heavily on the fund manager's decisions.
Investors encountering underperformance must be patient.
Balanced advantage funds (BAFs), which adjust between stocks and bonds depending on market conditions, have increased their equity holdings over the past year, with most schemes now predominantly invested in equities.
The majority of active largecap funds are set to outperform for the second year in a row in 2024, thanks to the strong performance of their midcap and smallcap allocations.
Novice investors must understand that volatility is an inherent part of equity markets and learn to navigate through such phases.
SBI Mutual Fund recently launched the SBI Quant Fund. Its new fund offer (NFO) opened on December 4, 2024, and will close on December 18, 2024. Currently, 11 fund houses manage quant funds with assets worth Rs 9,013.6 crore.
Passive funds tracking the National Stock Exchange Nifty Next 50 Index have seen their assets under management (AUM) more than double in the past year. The index's growing popularity can be attributed to its robust 50 per cent return over the same period. Currently, the AUM of funds tracking the Nifty Next 50 index stands at nearly Rs 30,000 crore.
'Asset allocation should change only if your goals, life situation, or risk profile have changed.'
'Arbitrage funds make the most sense for those in the 30 per cent tax bracket, are viable for those in the 20 per cent bracket, but less so for those in the 10 per cent bracket.'
'Allocate up to 20 per cent of your core equity portfolio to quality funds.'
Momentum funds can be 10 to 15 per cent more volatile than the Nifty 50.
Largecap, flexicap, and balanced advantage funds together recorded a net inflow of Rs 9,363 crore in August, representing a 70% increase from the previous month's total.
Data from Amfi shows that NAV of every one in two BAFs declined 1.5% or less on Monday compared to a 3.13% decline in Nifty 500.
Adopting overly aggressive strategies without considering risk could lead to significant losses during the next downturn.
Quant funds are a unique offering in the MF space as the investment decisions are driven by a blend of active and passive strategies.
To minimise risk, invest in a debt fund whose duration matches your investment timeframe.
Multi-asset allocation funds emerged as the most popular option for MFs as they provided the needed flexibility.
Mutual funds are looking to tap into the special opportunities theme ahead of the results of the general election results and the continued uncertainty on the geo-political and interest rate fronts. Two fund houses - WhiteOak Capital and Samco - are set to launch special opportunities funds next week. Kotak MF has also filed papers with the regulator to launch a scheme in the same category.
Post the change in debt fund taxation in March, a lesser-known hybrid fund has emerged as one of the alternatives for fixed-income investors. Equity savings schemes, the smallest hybrid fund category in terms of assets, have raked in around Rs 6,000 crore this financial year (FY24) so far compared to Rs 1,100-crore outflow in FY23. The inflows along with a strong performance led to a 50 per cent surge in assets under management (AUM) to Rs 24,100 crore during April-November, shows data from the Association of Mutual Funds in India (Amfi).
'No human bias is involved as happens in active funds.'
The change in debt fund taxation is seen as boosting the demand for hybrid funds. It is no surprise then that asset management companies (AMCs) have launched a raft of new products in the multi-asset category. However, they seem to be divided on the asset mix and approach. The multi-asset space, which provides fund houses ample scope to innovate, has seen five launches in as many months.
Over 87 per cent of active large-cap schemes failed to outperform the benchmark S&P BSE 100 (total return) in the 2022 calendar year (CY), significantly higher than the 2021 figure of 50 per cent, shows a report by S&P Dow Jones Indices. During the three-year period (CY 2020, '21, '22), the percentage of schemes underperforming the index was even higher at 97 per cent. While active large-cap schemes generally find it tough to outperform due to a rising efficiency in the market, 2022 proved to be even more challenging as mid-cap and small-cap stocks (where they have some allocation) performed poorly vis-a-vis the large-caps.
The impending merger between Housing Development Finance Corporation (HDFC) with HDFC Bank may create challenges for large-cap fund managers, most of whom are already grappling to match the returns generated by their benchmarks. The combined weight following the merger in the benchmark Sensex and Nifty 50 indices is likely to be much higher than permissible limits for active mutual fund (MF) schemes. This could have a bearing on the performance of large-cap funds if HDFC Bank shares outperform the markets, as the schemes will be forced to remain underweight on the stock to adhere to the single-stock cap.
Retail investors now own a bigger slice of small-cap companies than a couple of years earlier, attributable to their growing conviction in mutual fund (MF) schemes focused on this space. Data from Capitaline shows MFs' average holding in the National Stock Exchange Nifty Smallcap 250 rising to 8.67 per cent, from 7.67 per cent in the past two financial years, with the number of companies with over 20 per cent MF holdings, rising from 15 to 24. At the end of May, the top five small-cap firms with the highest MF holdings were Carborundum Universal, Blue Star, Cyient, Gujarat State Petronet, and Cholamandalam Finance.
Rebalance your portfolio in case it has become overweight on equities vis-a-vis your strategic asset allocation.
'Investing in a factor-based fund can be beneficial provided you have chosen the right factor.'
Balanced advantage funds have the potential to earn superior risk-adjusted returns for the investor and offer a smoother investment journey.
While equity savings funds could offer higher returns over three-five years, they would also be more volatile.
Driven by inflows into Systematic Investment Plans (SIPs), the mutual fund industry's total assets under management rose to Rs 39.88 lakh crore in September from Rs 36.73 lakh crore in the year-ago period. On a monthly basis, the Assets Under Management (AUM) increased marginally from Rs 39.33 lakh crore in August. According to the latest monthly data from the Association of Mutual Funds in India (Amfi) released on Monday, the industry wide net AUM stood at Rs 38.42 lakh crore in September.
'Continue with your SIPs to get the benefit of lower average prices in this challenging market environment.'
Many investors want to exit equities now and re-enter when they begin to rise. Such timing is difficult to pull off.
The SIP route suits the salaried class, by matching their income flows with investment frequency.
Many retail investors, who are experiencing their first bear market, are shocked at the erosion in the value of their mutual fund (MF) portfolios. The pain is especially acute for those who had taken excessive exposure to sector/thematic and small-cap funds. Even international diversification has failed to stanch the bleed in this downturn.
Multi-asset funds offer exposure to gold, which tends to do well in times of geopolitical tensions and inflationary pressures, suggests Sanjay Kumar Singh.
Consumption is among the most diversified and sought-after themes in Indian equities. Over the past five years, consumption theme funds have given an annualised category average return of 15.17 per cent, according to the data from Value Research. But this theme has been affected by the Covid-19 pandemic, which impacted jobs and livelihood.
Stocks offering attractive dividends contain downside better when the markets correct, advises Sarbajeet K Sen.
MMFs are a good option for the current environment, observes Sarbajeet K Sen.
Quant funds have a very short track record, and have underperformed so far, reveals Sarbajeet K Sen.
Small-cap funds have enjoyed a massive run-up over the past year. The category has turned in an average return of 109 per cent - the best-performing fund has yielded a humongous 201 per cent. Many investors, however, are concerned whether the category has turned risky after such a sharp rise.
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