Investopert

Over the past one year, mania around small cap and mid cap funds has been growing exponentially. Investors have been flocking to invest in these funds as they have provided exceptional returns in the past one year. Some of the schemes which provided exceptional returns in comparison to their large cap counterparts below :

Fund Name Last 1 year return ~%
Canara Robeco Mid Cap 40.30%
Canara Robeco Small Cap 39.61%
Canara Robeco Bluechip 25.01%

HDFC Small Cap 51.81%
HDFC Mid-Cap 54.88%
HDFC Top 100 33.04%

Nippon India Small Cap 54.44%
Nippon India Growth 52.54%
Nippon India Large Cap 36.19%

Quant Small Cap 66.47%
Quant Mid Cap 58.37%
Quant Large Cap 48.13%

In order to protect investors from the froth build up in this segment, SEBI has now approached the AMCs and directed them to take appropriate actions. As a consequence several AMCs have already announced restrictions on fresh lumpsum subscriptions starting from March.



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Mutual funds showing red flags to smallcap investors. Ignore at your risk! Sebi has directed mutual funds to protect smallcap investors in a frothy market. A few AMCs have already restricted investments and imposed caps in popular smallcap schemes and many of them are seen encouraging largecap funds. There are concerns about liquidity and corporate governance in smallcaps....

Sector in Focus : PSU – Banking

PSU banks have off late emerged as promising investment avenue, thanks to ongoing bull run around the PSU theme. The PSU banking sector has also undergone a significant transformation in terms of asset quality, governance and technology. The NSE PSU index has outperformed in the past year with a 1 year CAGR of ~ 70% outperforming Nifty 50 by more than 50% Lets look at some top performing PSU bank stocks.

% Return over past 1 year
>> I O B ~140.79
>> Punjab National Bank ~135.56
>> Central Bank ~120.81
>> Pun. & Sind Bank ~110.35
>> Bank of Maharashtra ~102.56
>> UCO Bank ~97.49
>> Union Bank of India ~95.45
>> Canara Bank ~91.69
>> Indian Bank ~76.93
>> Bank of India ~62.25
>> Bank of Baroda ~54.18
>> St Bk of India ~31.7

*** stocks are not recommendations. For information/educational purposes only.

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The shares of Paytm have plunged almost 40 per cent since January 31. Its shares are trading at a low of Rs 460. The sell-off started after the Reserve Bank of India (RBI) barred Paytm Payments Bank Ltd (PPBL) from accepting more deposits from February 29, owing to "persistent non-compliances".The order meant that the company will not be able to undertake any banking activity, including accepting deposits, credit transactions, wallet top-ups (incl FASTags) and bill payments. Several news reports also suggest that Paytm may face a potential probe by the Directorate of Enforcement (ED) after the central bank flagged concerns. Let us look at some MF schemes having more than 1% exposure to this stock as on Dec'23 /Jan '24 (other than ETFs / Index Funds)

UTI Innovation Fund - 4.80%
Quant Teck Fund - 3.26%
Quant Mid Cap Fund - 3.17%
Nippon India Innovation Fund ~3.32%
Mirae Asset Focused Fund ~2.90%
Motilal Oswal Equity Hybrid Fund ~1.98%
Helios Flexi Cap Fund ~1.95%
Motilal Oswal Focused Fund ~1.57%
Franklin India Technology Fund ~1.23%
Mahindra Manulife Flexi Cap Fund ~1.23%
Mahindra Manulife ELSS Tax Saver Fund ~1.22%
Mirae Asset Large Cap Fund ~1.13%

Dynamic Asset Allocation Funds (DAAF) also termed as Balanced advantage funds (BAF) are basically hybrid funds that invest in both equity and debt components. However, unlike other hybrid funds which are mandated to maintain a minimum and maximum allocations to Debt and Equity portions, DAAFs are highly flexible and allow the funds to invest upto 0-100% of their assets in Debt or Equity securities based on market conditions. Read our blog to know more about hos these funds are an effective way wealth creation & diversification tool. https://investopert.com/?p=1864

Investing in Equity Linked Savings Scheme is generally considered as a better alternative to other 80 C class of investments. ELSS has the potential to provide better returns with the same tax benefit. They also have a lower lock in period (3 Years) as compared to other government savings schemes. However, being an equity oriented scheme , it's returns are subject to market fluctuations. Hence selecting the right fund becomes extremely important. Get in touch with us to select the best in class ELSS schemes for your portfolio.

Recent rally in Gold prices has garnered a lot of interest within the investor community. It comes as no surprise that India is one of the largest consumers of Gold in the world. India has a long-standing and strong affinity towards Gold that stems from its culture and local traditions. Gold fulfils a twin motive: adornment and investment. As an investment product Gold provide protection against volatility & acts as a hedge against inflation. Lets understand what makes Gold a safe haven investment option & what drives its pricing.

Read our article :
https://www.linkedin.com/pulse/investing-yellow-metal-investopert-wealth-fwfuf

Multi Asset Funds, often known as Asset Allocation Funds, are a relatively new category of mutual funds in India. These funds typically invest in a combination of equity, debt, and one more asset class like gold, real estate, etc.

These funds differ from pure equity or debt funds and can help you diversify your investments, reduce volatility & provide optimal returns. Each asset class does well in different market scenarios and hence these funds help you achieve optimal returns. For example, equities and debt tend to outperform at different times, similarly, when the economy's outlook is bleak and in times of geo political uncertainty while all the other asset classes are underperforming, gold tends to outperform.

Multi Asset Allocation funds offers stability & counter-cyclicality in returns. Individuals are now opting to invest in these funds for diversification benefits as well as tax-efficient returns as a result of changes in the tax structure of Debt Funds w.e.f 1st April 2023 which eliminated the indexation benefit for funds with less than 35% allocation to domestic stocks.

As Multi-Asset Funds invest 65% in equities, and the remaining in debt and gold, investors are shifting their funds to such equity-heavy hybrid funds to take advantage of the tax benefits. Further, these funds have recorded healthy performance due to the mandate to invest at least 10% in gold, which has outperformed most traditional asset classes such as equity and debt so far this year.

If an investor holds these funds for less than three years, they will be subject to short-term capital gain tax as per their slab rate. For a holding period of more than 3 years they will be taxed at a rate of 20% along with indexation benefit which is now not available in case of pure debt funds.

Multi Asset Funds have delivered an average return of 16% - 19% across 1 – 5 year time horizon. Some Multi Asset Funds to look out for are ICICI Prudential Multi-Asset Fund & Quant Multi Asset Fund which have recorded healthy & consistent performance across all time horizons. While ICICI Prudential Multi Asset Fund has recorded a CAGR of ~ 17%, ~28% & ~16% in the 1 , 3 & 5 year time horizon, Quant Multi Asset fund has recorded a CAGR of ~9%, ~25% & ~21% for the same time horizon vis a vis Nifty TRI of ~9% to ~14% ( Source : Respective Fund Factsheets for October 2023 )

All in all Multi Asset Funds seems to be garnering a lot of interest within the investor community, thanks to healthy performance, efficient taxation & capital diversification approach.

Small Cap inflows continue to be stronger in comparison to Large Cap MF inflows. Considering the current sharp rise in valuations, investors to tread cautiously in the current scenario with appropriate asset allocation strategies. Interesting read in ET as well as on our linkedin post.

https://lnkd.in/dJWXnGDq

https://www.linkedin.com/feed/update/urn:li:activity:7110922998399795200

Investopert Advisory on LinkedIn: Mutual Fund Performance Update - Aug'23 Small Cap inflows continue to be stronger in comparison to Large Cap MF inflows. Considering the current sharp rise in valuations, investors to tread…