Skip to main content

How did your Mutual Funds Perform?

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

 

Don't look only at a fund's performance during a bull run, but also find out how it performed when the market was bearish.

Investors should not only look at how their funds performed when markets were booming but also during the bear phases. Now that the market is on an up swing, mutual fund investors will be keen to make the most of the situation. More so, as they have endured a torrid time for the past five years when the stock market was mostly range-bound and the NAV of mutual funds remained static. Most expect their funds to capture the rally and outperform the broader market. And, many funds are delivering superior returns. But, here's a word of caution for our readers: You should never judge a fund on the basis of its performance only during a market upswing. Don't get swayed by the recent chart toppers alone. It is in times of such euphoria that there is more reason to be rooted to fundamentals.

While your fund should be adept at making the most of an upside, it should also be in a position to protect your money during downsides. Here, we will dissect the performance of different categories of equity diversified funds, both during upturns and downturns over a three and five-year period. This will give us a better idea of how various funds have performed during different market climates. While an upside capture of over 100% indicates that a fund has outperformed the benchmark or category average during periods of positive returns, a downside capture of below 100% indicates that it has got higher returns compared to its benchmark or category average. For large-cap funds, the index used for calculating the capture ratio is BSE-100 and for small and mid-cap funds the benchmark index is CNX Midcap.


Upside does matter...


When you invest in an actively-managed equity fund for a fee, you expect the manager to beat the broader market at the very least.


If he is unable to do so, you would be better off investing in an index fund, which mirrors the returns of the benchmark index for a much lower fee. But, is your fund outperforming the index by a healthy margin of, say, 2-3%? If the markets are on a roll, chances are that it is. Most funds, including laggards, typically do well when the markets are climbing. Some even rise to top the performance charts, delivering phenomenal returns within a short period. And, therefore, it is easy to get lured by them.


There are many funds with a high capture ratio--it quantifies how far the fund has been able to mimic the market's movements. For instance, when the market moves up by 20%, and the fund moves up by 25% during the same time, it captures 125% of the market's movement or a capture ratio of 125. One would be inclined to invest in such funds. But will it be in your best interests to depend only on that performance before investing?


...but so does the downside Unfortunately, not many funds can outperform when the market is on a decline. When y the tide ebbs, you will find several of them barely managing to keep their heads above the water. The aggressive stance that helps certain funds deliver better returns during a market rally, typically results in a decline when the market turns bearish. Thematic funds, such as infra funds, have a very high upside as well as down side capture ratio. Thus, when the theme works they do exceedingly well, but during the downturn they are badly hit.

 

Sample this: JM Core 11, which has a very attractive upside capture of 138%, witnesses an even higher downside capture of 161%. In other words, the fund has clocked big gains during a bull run, but suffered heavy losses during downturns. Therefore, you must not go over-board on a category of fund just because they seem to be doing well at this moment. Ensure you remain true to your risk profile and asset allocation at all times.

Investors should, therefore, do well to identify funds that can perform well under both circumstances. But, only a handful of funds can boast of the ability to deliver higher returns during a bull phase, while limiting its losses in a downturn. Morningstar India data says that funds with a low down capture ratio have clearly emerged winners. If you screen funds on their five-year returns, those which have minimised their downside returns and maintained their upside equal to the benchmark are the top performers.

Mirae Asset India Opportunities, a largecap equity fund, which had a decent upside capture of 109% and a low downside capture of 77% during the five-year period, delivered a superb 23.82% CAGR. Interestingly, a lot of smalland mid-cap funds feature as top performers in the five-year period. In this segment, Religare Invesco Midcap has done particularly well, limiting the down capture to 68%, while giving a healthy up capture of 101%, and delivering a cracking 27.88% CAGR. You should ideally hold on to such funds that beat the benchmark consistently. These performers are likely to deliver good long-term results.

 

METHODOLOGY

 

An upside capture ratio of over 100 indicates a fund outperformed the benchmark during bull phases. A downside capture ratio of less than 100 shows that a fund lost less than its benchmark during bear phases. The upside capture ratios for funds are calculated by taking the fund's monthly return during months when the benchmark had a positive return and dividing it by the benchmark return during that period. Similarly, the downside capture ratios are calculated by taking the fund's monthly return during the periods of negative benchmark performance and dividing it by the benchmark return.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund

2.Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

EPFO can pay 8.5% interest in 2009-10

THE Employees’ Provident Fund Organisation can comfortably offer 8.5% interest rate to its 4.41 crore depositors during 2009-10 and still record a surplus contrary to Rs 139-crore losses suffered by it for giving the same benefit during the current fiscal. The issue of return to the depositors would be discussed at a meeting of the ‘finance and investment committee’ (FIC) on Thursday, agenda for which lists that maintaining an 8.5% interest could still give the fund a surplus of Rs 6.4 crore on the investment made by the fund. If EPFO maintains the interest rate of 8.5% on PF deposits, there will be a surplus of Rs 6.4 crore at an estimated income of Rs 12,994 crore in 2009-10. In case the interest is raised to 8.75%, the fund would suffer a loss of Rs 366.77 crore and the deficit would be still higher at Rs 739.94 crore if the rate of interest is fixed at 9%. FIC gives recommendations on financial matters to the apex EPFO body Central Board of Trustees (CBT), which takes the final ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now