These three equity funds have started their rating journey at the top of the charts
22-Feb-2019 •Sneha Suri
The remarkable growth of the mutual fund industry in the last few years has been accompanied by the launch of many new products. We decided to hunt for the most promising ones of these.
We began our search with the list of funds that got rated by Value Research for the first time in the last couple of months, and further narrowed it down to the ones that stand at the top of the ratings ladder. This led us to a list of three equity funds.
But before we talk about them, it's worthwhile to understand our ratings. Value Research Fund Rating is a quantitative measure based upon the risk-adjusted returns of a fund versus those of other funds of a similar kind. An equity fund must have at least three years of performance history to be rated. The ratings act as a good starting point in fund selection but investors must further evaluate a fund's suitability to their investment needs and time horizon before investing in it.
So here we present the debutants that have made a strong appearance on the mutual fund industry's red carpet!
|Fund||Category||Rating||3-yr return*||3-yr rank|
|Mirae Asset Tax Saver - Regular||Equity: ELSS||21.54%||1/33|
|Mirae Asset Tax Saver - Direct||Equity: ELSS||23.19%||1/33|
|HDFC Sensex ETF||Equity: Large Cap||16.28%||5/75|
|LIC MF ETF - Sensex||Equity: Large Cap||16.14%||7/75|
|As on February 20, 2019
Mirae Asset Tax Saver Fund
Launched in December 2015, this new comer has taken the category of tax-saving funds by storm. Its three-year annualised return of over 20 per cent puts it miles ahead of the category and the benchmark. To its credit, the fund has achieved this by consistently outperforming its peers in each of the last three calendar years, including the bear markets of 2018. The fund follows a 65-70 per cent large-cap allocation with the rest invested in mid caps.
Of course, these are initial days and the fund needs to sustain its strong beginning over many more market cycles to win the vote of investors' confidence. But as the saying goes, 'well begun is half done!'
LIC MF Exchange Traded Fund - Sensex
2018 has been a landmark year for passive funds as they gave their actively managed large-cap counterparts a hard run for their money. LIC MF Exchange Traded Fund - Sensex is one such passive fund which put up a strong show. As the name suggests, it invests in the BSE Sensex stocks in the same proportion as the index. So what you get here is a quality portfolio of India's blue-chip stocks at a negligible cost. But poor liquidity on stock exchanges can be a deterrent for many investors.
For small investors, buying and selling the units of an ETF on stock exchanges is the only viable option to transact. But if the trading volumes are thin, as they are in case of this fund, an investor can potentially find himself unable to liquidate his holding.
HDFC Sensex ETF
This is another passive which has benefited from the underperformance of the actively managed large-cap funds. Of course, there aren't any points for stock selection because this one also replicates the composition of the BSE Sensex index, but its wafer thin expense ratio of just 0.05 per cent has helped it edge past other index funds.
Though its transaction volumes have improved tremendously over the last year, when its units traded on almost every single day, the value of transactions is still erratic ranging from barely a few thousand rupees on a day to over a crore on another.