Along with equity markets, equity mutual funds have delivered returns that have kept investors smiling in the year gone by. Here’s a look at five top-performing equity funds which can deliver better returns in the future also.
The year 2021 belonged to equity funds with markets bouncing sharply from the lows seen in 2020. Along with equity markets, equity mutual funds have delivered returns that have kept investors smiling.
Large-Cap funds have maintained solid performance. These funds helped investors avoid extreme volatility during uncertain times. Among Large Caps, the ICICI Prudential Bluechip Fund has performed better. Its one-year returns have been 13.17% vs a category average of 9.46%. Even in a five-year period, the fund has beaten the category returns. The recent performance of the fund is strong as it is shifting its focus on banks and financials. The sector is supposed to perform well at a time when the interest rates are about to go up. The fund has bought in banks and financials while selling in IT and Metals. The IT Largecap sector has seen a sharp correction recently while the NiftyMetal has stayed put for the last 8-9 months.
Midcaps, after a dismal performance in 2018-19, bounced back and delivered stellar returns. Among Large and Midcap funds, Mirae Asset Emerging Bluechip Fund has consistently maintained decent performance. In one year, the scheme has outperformed NIFTY 50 by a narrow margin. It has delivered 14% compared to NIFTY 50’s 13.33%. As mentioned earlier, consistency is key, and during the five-year period, this fund has delivered an 18% return compared to NIFTY 50’s 14.22%. Mirae Asset Emerging Bluechip Fund has beaten its peers by a considerable margin. The fund is outperforming due to its focus on growth-oriented business and in the growth of emerging companies that have the potential to be tomorrow’s bluechip companies. The fund has a history of limiting the inflows in the funds when the fund house believes it is in the interest of investors.
Midcap funds have hogged the limelight delivering phenomenal returns. Most of the funds have delivered returns ranging from 17% to 25%. However, PGIM Midcap Opportunities Fund stands out due to its extraordinary performance. In one-year period, the fund has delivered 30.08% returns compared to the category average returns of 19.23%. Even in a five-year period, it has beaten NIFTY 50 by a wide margin. PGIM Midcap Opportunities Fund has been performing well recently, especially after the March 2020 correction. The Midcap fund holds nearly 30% allocation in the Small-cap stocks and as the Smallcap index has outperformed the Nifty Midcap and Nifty50 in the Bull Run after March 2020, the fund has come up as a clear winner due to its higher investment in Smallcap stocks.
Multicap funds are known to pick the best stocks across market caps and deliver big gains. These funds provide the most elbow room to portfolio managers. Ideally suited for medium and high-risk investors, these funds have made investors happy. Quant Active and Small-cap Fund has not only beaten Benchmark but also delivered higher returns than its peers. The fund has delivered a 33.59% return in the one-year period compared to an 18.04% return for the category. Even in a five-year period, the fund has outsmarted the Benchmark and the category returns by a wide margin.
Quant mutual funds’ performance was quite strong in the recent past, especially after the COVID crisis in March 2020. Quant group bought Escorts Mutual Fund in 2018 and changed the investing strategy completely. The funds are now operating on VLRT – Valuation, Liquidity, Risk and Timing. The fund believes in taking opportunistic bets. The fund has a higher turnover ratio which means the portfolio churns more often. In recent times when the volatility was higher, the fund worked tremendously well. The Quant Small-cap fund not only outperformed in its category but outperformed almost the entire mutual funds’ industry in the last 2 years.
Smallcap funds, due to outperformance on every parameter, have drawn investors’ attention to active investment strategies. Performance-wise, Quant Small-cap Fund shines brightly among its peers. It has delivered 51.33% returns in one year compared to the category average of 32.95%. Its five-year performance is impressive too. It has clocked 20.21% gains while the category average hovers around 15%. The fund has 96.78% investment in Indian stocks of which 8.47% is in large-cap stocks, 7.15% is in mid-cap stocks, and 71.7% in small-cap stocks. As mentioned before, Quant Group has shifted its strategy from buy and hold to taking opportunistic bets which have resulted in higher returns.
(By Abhinav Angirish, Founder, Investonline.in)
Disclaimer: These are the personal views of the author. Readers are advised to consult their financial planner before making any investment.