Widely read:
Legendary investor Warren Buffett once said, "Our favourite holding period is forever". This philosophy is evident in his long-term investments like Coca-Cola and American Express , which he has held for more than three decades. At Value Research, too, we echo his wisdom of long-term investing.
But what about Indian mutual funds ? Are there any funds that have stayed committed to a stock for years and years? Let's find out.
Criteria for selection
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We hunt for funds that have been going rock-solid with a stock for at least 15 years.
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The mutual fund-stock relationship should have been going steady at all times. There should have been no break-up in between.
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The mutual fund is still going out with the stock.
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There is significant allocation in the mutual fund portfolio (average of 2 per cent or more)
- Only diversified equity-oriented funds are considered, including hybrid funds like aggressive hybrid and dynamic asset allocation funds.
Our findings
The revelation is intriguing: We found just 18 stocks and 28 mutual funds that stood the test of time, both in sickness and in health.
Let's talk performance
One might assume that the warm embrace of mutual funds might have paid off handsomely. It has, indeed, but there's more to the story.
Digging into the numbers, we compared the performance of these stocks against their respective benchmarks (BSE Sensex TRI for investments that predate the benchmark).
The findings reveal that 35 of the 39 outperformers have outperformed by more than 1 per cent, and 14 out of 15 underperformers have lagged by more than 1 per cent.
The most rewarding long-term holdings
| Company | Held by | Held for | Average allocation in the fund (%) | Returns (%) | Benchmark returns (%) |
|---|---|---|---|---|---|
| Larsen & Toubro | Aditya Birla Sun Life Focused | 18 years 1 month | 3.1 | 116.3 | 13.7 |
| Reliance Industries | Aditya Birla Sun Life Focused | 18 years 1 month | 4.8 | 35.6 | 15.1 |
| Reliance Industries | Bandhan Large Cap | 17 years 3 months | 7.1 | 29.4 | 15 |
| Infosys | Franklin India Flexi Cap | 27 years 8 months | 6.3 | 17.1 | 7.8 |
| HDFC Bank | HSBC Large Cap | 17 years 7 months | 6.6 | 25.8 | 14.1 |
| Note: Returns and benchmark returns are Value Research estimates based on monthly portfolio disclosures up to October 31, 2023. | |||||
The most painful long-term holdings
| Company | Held by | Held for | Average allocation in the fund (%) | Returns (%) | Benchmark returns (%) |
|---|---|---|---|---|---|
| State Bank of India | HDFC Top 100 | 22 years 5 month | 5.9 | 9 | 13.5 |
| ITC | ICICI Prudential Bluechip | 15 years 5 month | 4.2 | 8.7 | 14.7 |
| Infosys | Sundaram Focused | 18 years | 5.1 | 12.4 | 16.6 |
| State Bank of India | Nippon India Multi Cap | 18 years 8 months | 4.7 | 13 | 16.2 |
| ITC | SBI Bluechip | 17 years 8 months | 3.3 | 9.6 | 14.2 |
| Note: Returns and benchmark returns are Value Research estimates based on monthly portfolio disclosures up to October 31, 2023. | |||||
Notable mentions
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Mutual funds have continuously held only three stocks with a meaningful allocation for over 20 years.
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The four showstopper stocks are:
Infosys
(held by eight schemes),
HDFC Bank
(seven schemes),
Reliance
(seven schemes) and
ICICI Bank
(six schemes).
- Three mid-cap stocks - Ipca Labs , Sundaram Fasteners (held by HDFC Mid-cap opportunities) and Trent (Sundaram Mid Cap) - also make the list.
The funds referenced herein should not be construed as investment recommendations. For a curated list of funds, visit our ' Analysts' Choice ' section. Select a fund aligning with your goals and start investing.
Also read: What is 'long' in long-term investing
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