How do India’s biggest equity funds fare against benchmarks
The biggest funds in flexi-cap, ELSS, large-cap, mid-cap, and small-cap categories have beaten benchmarkets in longer time frames.
Giant mutual funds are in a club of their own. When smaller but performing funds have to vie for investor attention, big funds draw a stream of investors seeking the comfort in ‘size’. Plus, most of the large funds have a track-record which makes it easier for distributors/advisors to sell them. But are India’s biggest equity funds really doing better? Let us have a close look.
We look at the biggest funds in prominent equity categories.
The over 11-year-old Kotak Flexicap Fund is the biggest flexi-cap fund in the category. It has assets under management (AUM) of over Rs 34,000 crore.
Kotak Flexicap Fund is lagging BSE 500 TRI in 1-, 3- and 5-yr time periods. The fund is doing well in the 7- and 10-year periods where it has given 16.87% CAGR and 14.74% CAGR against BSE 500 TRI’s 14.63% CAGR and 12.25% respectively.
How does the fund do against peers? Well, Kotak Flexicap Fund has under-performed flexi-cap category average in 1-year period, but has shown consistent out-performance in 3-, 5-, 7- and 10-year periods. In fact, in the 10-year time frame, the fund is among the best, burnishing its long-term performance credentials.
ELSS (tax-saving) Fund
Axis Long Term Equity Fund has stolen the show in the tax-saving fund category ever since its launch in Dec-2009. Except for a 1-year period, the Rs 27,800-crore ELSS fund has beaten the BSE 500 TRI across 3-, 5-, 7- and 10-year time periods. The same holds true for its performance vis-à-vis ELSS category average.
In fact, Axis Long Term Equity Fund is among the top 5 funds in 3-, 5-, 7- and 10-year periods. Its CAGR alpha over category average is about 200-500 bps, which is substantial.
The Rs 26,400-crore SBI Bluechip Fund is the largest among large-caps. About 15 years old, the fund like its large-cap peers has found it difficult to beat BSE 100 TRI recently. In the 1-, 3- and 5-year time periods, the fund has lagged BSE 100 TRI by 100-300 bps. It does well when we look at 7- and 10-year time periods.
Against large-cap category average, SBI Bluechip Fund loses edge in the 1- and 3-year time frame. But, the fund comes back to elements when you look at 5-, 7- and 10-year time frames. It remains among the best 3 funds in longer time periods, with nearly 13.8% CAGR in 10-year periods.
HDFC Mid-Cap Opportunities Fund is the biggest mid-cap scheme in its category. The Rs 26,000-crore fund, launched in June 2007, has lagged BSE 150 Midcap TRI for 1-, 3-, 5- and 7-year periods. It only beats the benchmark in the 10-year period with 17.34% CAGR against BSE 150 Midcap TRI’s 15.27% CAGR.
Against the mid-cap fund category average, HDFC Mid-Cap Opportunities Fund has mixed performance track-record. The fund has beaten the category in 1-, 5- and 10-year periods, but it doesn’t stay above them in 3-year and 7-year periods. This could be due to the mid-cap stock performance cycle which usually does well when the economy does well, and also has periods of under-performance when valuation gets overheated.
In the small-cap fund space, Nippon India Small Cap Fund with over Rs 12,000 crore AUM is the biggest. The over 10-year fund has been doing well among peers with top ranks across 1-, 3-, 5-, 7- and 10-year periods.
Except for the 1-year period, Nippon India Small Cap Fund has beaten the benchmark BSE 250 Smallcap TRI across 3-, 5-, 7- and 10-year time frames by 6-10 percentage points CAGR, which is a phenomenal record.
Given Nippon India Small Cap Fund’s performance against its peers, it also maintains its solid performance against category average over 1-, 3-, 5-, 7- and 10-year periods with elan.