If you ever wanted a a Nifty 50 like product covering US domiciled and listed Mega cap companies, your search ends here. Mirae Asset MF is launching two related products that will be based on the S&P 500 Top 50 index. One, Mirae Asset S&P 500 Top 50 ETF will be an open-ended scheme replicating/tracking S&P 500 Top 50 Total Return Index. Two, Mirae Asset S&P 500 Top 50 ETF Fund of Fund will be an open-ended fund of fund scheme predominantly investing in Mirae Asset S&P 500 Top 50 ETF. Let us find out more about them.
NFO period
Mirae Asset S&P 500 Top 50 ETF and Mirae Asset S&P 500 Top 50 ETF Fund of Fund will open for NFO subscription on September 1 and close on September 14/15. ETF listing on exchange will be within 5 working days from allotment.
What is mega cap
Mega cap is as per S&P method wherein S&P 500 stocks are considered as large cap and S&P 500 Top 50 stocks are considered as mega cap. The S&P 500 Top 50 index is a gateway to US mega cap companies.
The above index comprises top 50 mega cap companies which are perceived as sector leaders. It is considered that such a basket will lead to a relatively more stable portfolio of companies with lower risk and having advantage of scale. The companies on this list have strong brand reputation with products and services, thus creating economic moat.
S&P 500 Top 50 companies
In consumer staples, the index has Procter & Gamble, Coca-Cola, PepsiCo and Walmart.
In communication services, it has Walt Disney, Comcast, Facebook and Alphabet.
Amazon, Tesla and Nike are consumer discretionary plays.
Johnson & Johnson, Pfizer, Abbott Laboratories and Merck & Co are healthcare giants.
And in IT, you have Apple, Microsoft, Salesforce, Cisco and Oracle.
In fact, 20 companies forming part of S&P 500 Top 50 Index features among World’s Top Most 50 innovative companies across the world in 2021. Of these 13 companies are non-tech.
Index performance
Data shows that S&P 500 Top 50 Index has outperformed the Nifty 50 Index with lower correlation. Also, S&P 500 Top 50 Index has outperformed S&P 500 Index and Nifty 50 Index on an absolute and risk-adjusted basis in periods greater than 1 year.
In fact, S&P 500 Top 50 Index has outperformed S&P 500 Index and Nifty 50 Index in 7 out of 11 calendar years & 8 out of 11 calendar years respectively (including 2021 CYTD). What’s more interesting, the S&P 500 Top 50 Index has recorded a lower drawdown than the Nifty 50 Index in 8 out 11 calendar years.
Index USP
Apart from being a single-click portfolio, Mirae Asset S&P 500 Top 50 ETF and Mirae Asset S&P 500 Top 50 ETF Fund of Fund products provide exposure to all sectors forming part of top 50 space unlike tech focused US passive or active funds. This should address the concerns of investors cautious about tech valuations.
The index itself can be called sectorally agnostic, which would cause lower volatility and risk historically, compared to tech/sector focussed funds. Also, data shows, the index has delivered higher returns than the S & P 500 index with a high correlation.
The beauty of the S&P 500 Top 50 Index is that it represents sector leading mega cap companies which capture around 40% of MSCI World Index. The index portfolio evolves as the market evolves.
The index is reconstituted and reviewed for constituent changes annually in June.
The index aims to capture the ever-changing market trend and reflect the current market leaders from each sector.
Investing in international funds
The Indian Rupee (INR) has historically depreciated against USD and EUR over the long-term; adding to investors’ returns. When INR depreciates the value of foreign asset increases and vice versa.
Also, lower correlation can lead to diversification of country risk. There is some data to show a low correlation between India and the USA. In a nutshell, these products are an avenue to take low-cost exposure in the US market and also benefit from INR depreciation.
Over the last 12 months, stock markets have been on a roll. The Sensex is up 46 per cent. This has helped fund-houses launch a blitzkrieg of new fund offers (NFOs). About 50 equity NFOs have already raised money in 2021.
ICICI Prudential Flexicap new fund offer created history by mopping up about Rs 10,000 crore — the largest fund-raise ever. MF investors keep on investing in NFOs to ride the buoyant stock market. Here is a look at some of the NFO fund-raisings and, more importantly, how they have performed so far.
Few big NFOs
ICICI Prudential Flexicap happened in July, but NFO street has been buzzing for a long time. As per data, equity NFOs have raised over a whopping Rs 40,000 crore in last 12 months alone.
Some of the interestin NFOs that caught investor attention include Kotak Global Innovation FoF, Axis Quant, HDFC Banking & Financial Services, Axis Global Innovation FoF, ABSL Multi-Cap, Mirae Asset NYSE FANG+ ETF, ICICI Prudential Business Cycle, ABSL ESG, Axis Special Situations, HDFC Dividend Yield, UTI Smallcap, Kotak ESG Opportunities.
Thematic NFOs have been a big draw for MF investors. It is also partially true that since SEBI has made one-category one-fund rule, thematic funds are the only space AMCs can tap into regularly to raise fresh money.
Here is a table of equity NFO fund-raisings over the past few months.
Month
Equity NFO collections Rs Cr
Jul-2021
15446
Jun-2021
358
May-2021
5056
Apr-2021
87
Mar-2021
2515
Feb-2021
317
Jan-2021
4185
Dec-2020
8028
Nov-2020
169
Oct-2020
2764
Sep-2020
2343
Aug-2020
146
Includes equity, index ETFs and FoFs
NFO performance tracker
Though looking at equity funds with a less than 3 year timeframe is not ideal, for the sake of measuring NFO performance we divide funds into 3 buckets. About a dozen equity NFOs are still to operate for 3 months.
* The first bucket is 3 months. This is a short time period but it does give funds enough time to allocate the NFO money across stocks.
In the 14 equity NFOs with only 3 month track record, the best returns have been generated by Kotak IT ETF (29%), followed by Invesco India ESG Equity (17%), ABSL Multi-Cap (15.4%), and Nippon India Nifty 50 Value 20 (13%).
The lowest 3-month returns in this bucket were generated by Axis Healthcare ETF (7.7%), ICICI Pru Healthcare ETF (8.7%) and Kotak Nifty Next 50 (8.8%).
* In the second bucket, we take a look at NFOs with only 6-month return. There are 26 funds in this space.
Among the 26 equity NFOs here, the 5 best returns have been generated by SBI ETF IT (32%), Quant ESG (32%), Nippon India Nifty Smallcap 250 (27%), UTI Small Cap (26%) and HDFC Dividend Yield (20%).
The top laggards equity NFOs with only 6-month return are SBI ETF Nifty Private Bank (-4.8%), HDFC Banking ETF (-2.6%), UTI Bank ETF (-2.5%), Axis Banking Nifty (-2.3%) and Mirae Asset Banking & Financial Services (+2.7%). Notice how most of the poor performers are from the BFSI focussed fund space.
* There are just 2 funds in the last 1 year period. ICICI Pru IT ETF has generated a whopping 86% funds in this period vs. benchmark return of 86% only.
Also, HSBC Focussed Equity has generated 49% return in this period compared to its benchmark return of 50%.
The asset under management (AUM) of the systematic investment planning (SIP) accounts have touched a record Rs 5 lakh crore in July 2021. This is following a sustained inflow and buoyancy in the capital market.
With a record inflow of Rs 9,608 crore in July, the total SIP inflow has reached the magical figure of Rs 1 lakh crore in the past 12 months. The average portfolio value of SIP investors was about Rs 1.2 lakh in July, the highest since data was made available by AMFI.
The SIP AUM has grown by over 30 per cent annually in the past five years compared with around 16 per cent gain in the total industry AUM.
Says Kavitha Krishnan, Senior Analyst – Manager Research, Morningstar India, “While we have seen a steady increase in the SIP flows, a significant portion of the inflows are attributable to the NFOs that were launched over the past month. An improving investor sentiment, driven by a surge in the markets and a positive investor response towards NFO’s have contributed to the inflows over this period.”
Driven by the equity backed schemes, the total AUM for mutual funds has breached the mark of Rs 35 lakh crore for the first time, with retail AUM hitting a record Rs 16.3 lakh crore or 46 per cent of the total AUM.
The share of pure equity schemes in the total AUM rose by 600 basis points to 33 per cent in July 2021. This was 27 per cent in July 2020.
The SIP AUM has outperformed the pure equity fund AUM by a wide margin in the past 12 months due to robust inflows. Around 90-95 per cent of the SIP AUM is linked to the equity funds.
Also, in July, a record 23.8 lakh new SIP accounts were opened. This is quite high compared to the monthly run-rate of 10 lakh. The SIP inflow in the first seven months of 2021 stands at about Rs 61,000 crore.
Even a few months ago, some investors complained of a majority of largecap funds were failing to beat the benchmarks. The situation is improving with some largecap equity funds delivering alpha against their respective largecap benchmarks. While actively managed funds are supposed to generate alpha given their higher expenses, nevertheless it is important to see which funds are beating indices consistently. Here is a detailed look.
1-year period
As on August 6, 2021, there are 11 largecap equity funds that beat their respective benchmark indices. Do note that every largecap fund has their own stated benchmark. This is a better way of measuring alpha i.e. excess return over benchmark, than comparing each fund randomly with Sensex or Nifty. Also, comparing a fund’s returns with the total return index (TRI) variant gives the accurate picture because TRI returns (which include dividends) are a true yardstick compared to just the price return variant.
In the 1-year period, Franklin India Bluechip Fund is number 1 with 61.00 per cent returns compared to Nifty 100 TRI gains of 46.90 per cent. It is followed by Nippon India Large Cap that beat S&P BSE 100 TRI’s 48.28 per cent return with nearly 55 per cent gain. Ranked number 3 is Tata Large Cap with 51.45 per cent vs. S&P BSE Sensex TRI’s 44.29 per cent return. The other notable alpha generators in largecap fund family are Aditya Birla Sun Life Frontline Equity, SBI Bluechip, UTI Mastershare, Mahindra Manulife Large Cap Pragati Yojana and IDBI India Top 100 Equity. The rest are HDFC Top 100, Kotak Bluechip and ICICI Prudential Bluechip.
In total 11 funds i.e. 38 per cent largecap equity funds generated alpha in the 1-year period. Some might say one-year is a small period and hence it is important to see if these gains last for longer period.
3-year period
A 3-year period is a longer time zone to see the alpha generation capabilities of a portfolio. One of the main reasons why funds cant keep performing across time periods is the sector rotation that happens. It is difficult for fund managers to change portfolios and identify them at the right time.
There are about 28 funds with a 3-year history. Importantly, 4 funds in the 1-year period drop out of the list of alpha generators in 3-year history. That means only 7 funds provided alpha i.e. 25 per cent or roughly one out of four. The list of 3-year alpha generators is quite different than the 1-year alpha winners, but there are some common names which we will come to later.
Ranked number 1 is Canara Robeco Bluechip Equity that beat S&P BSE 100 TRI’s 13.80 per cent CAGR with 16.94 per cent CAGR. 2nd position goes to Axis Bluechip with 15.04 per cent 3 year CAGR vis a vis NIFTY 50 TRI’s 13.91 per cent CAGR. And, perched at number 3 is BNP Paribas Large Cap with 14.85 per cent CAGR vs. NIFTY 50 TRI’s 13.91 per cent CAGR.
The others in the alpha generators list is Kotak Bluechip (also in 1-year list), IDBI India Top 100 Equity (also in 1-year list), Mirae Asset Large Cap and UTI Mastershare (also in 1-year list).
Active Alpha: Largecap funds
Time period
Total
Beat index *
Alpha range %
Did not beat index
Negative alpha range %
1 year
29
11
1.15 to 14.10
18
1.1 to 12.2
3 year
28
7
0.20 to 3.13
21
0.24 to 4.77
5 year
27
3
0.80 to 1.76
24
0.85 to 5.79
respective index includes Nifty 100 TRI, Nifty 50 TRI, BSE 100 TRI and Sensex TRI as on Aug. 6, 2021
5-year period
A five-year period is a longer period than 1- and 3-year timeframes. There are 27 largecap equity funds with a 5 year track record. This is also a time period because out of the 27 funds, only 3 funds are able to generate alpha. That is just 11 per cent of largecap funds beat their benchmark over a 5 year period.
In the 5 year period, Axis Bluechip Fund gained 16.5 per cent CAGR versus Nifty 50 TRI’s 14.74 per cent. Canara Robeco Bluechip Equity rose 16.13 per cent CAGR vis a vis S&P BSE 100 TRI’s 14.69 per cent appreciation. Lastly, Mirae Asset Large Cap with a 15.36 per cent CAGR beat Nifty 100 TRI’s 14.56 per cent CAGR.
The rest 24 funds failed to generate any alpha in the 5 year period.
As you can see, there is not one largecap fund that has generated alpha across 1, 3 and 5 year periods. However, there are some funds that are either in the list in 1 and 3 year periods or 3 and 5 year periods. Given that longer period performance is seen as better, Mirae Asset Large Cap seems the best bet given its consistency in our analysis.
Conclusion
A majority of largecap equity funds have found it difficult to beat their benchmarks on two counts. One, the concentrated nature of rally has meant that unless largecap funds have large weights in a few stocks they cant outdo the benchmark. This is difficult for mutual funds to do because there are stock allocation norms for risk management. Two, the passive investing format of an index is pretty ruthless and keeps on adding winners while rejecting losers. This doesnt happen as fast as in many largecap funds due to certain inherent biases. Yet, there are a handful of largecap funds which have been consistent in beating the benchmarks over different long-term periods, which shows active asset management is not out of style yet.
Over a year after the shock freezing of six schemes of Franklin Templeton Mutual Fund, credit risk has become a bad word. Many say credit risk funds are shying away from taking credit risk, despite SEBI norms that allow them to invest at least 65% of their assets in debt paper rated below AA+. Let us take a status check on who is playing it safe in credit risk funds, who is taking more risk than others.
Credit risk funds primer
Debt mutual funds usually follow two kinds of strategies to make returns. One, they buy safe long-term bonds and pocket gains when interest rates fall. Two, they buy bonds with lower credit ratings (and high yields) hoping these will get upgraded, or pay interest and principal.
Credit risk funds rely on the second strategy. Hence, they are free to invest over 65 per cent of their portfolios in corporate bonds below the highest credit grade.
As such, credit risk funds will give their best performance when general markets are over-estimating the risk of defaults or downgrades.
Risk matrix
First, let us take a look at the average rating allocation in credit risk funds category.
AA/AA+/AA- allocation is roughly 50 per cent. A/A+/A- allocation is 9.5 per cent. Higher risk allocation such as B/B+/B- & BB/BB+/BB- & BBB/BBB+/BBB- & C/C+/C- & D put together have less than 0.5 per cent allocation. We are ignoring sovereign, AAA or similar allocation here, because credit risk funds don’t carry any risk if they keep money in highest rated debt papers.
A/A+/A-: Who is playing safe, who isn’t
If in future higher downgrades and defaults happen in corporate bonds, then below AA bonds are particularly at risk. Given that the credit risk fund category allocation to A/A+/A- is 9.5 per cent, any number below or more than average will have to be watched. Also, since below A allocation (B, C & D) is about 0.5 per cent, investors needs to focus on credit risk funds that are deviating from category average.
ICICI Pru Credit Risk Fund – Its allocation to A/A+/A- is 11.09 per cent, a little more than category average.
Nippon India Credit Risk Fund – Similarly, this scheme’s allocation to A/A+/A- is 10.34 per cent, higher than category average.
Similarly, there are certain funds that are playing safe with A/A+/A- allocation.
DSP Credit Risk Fund – This fund has no allocation to A/A+/A- bucket. In fact, 92 per cent of the scheme’s money lies in AA/AA+/AA- allocation (60.5 per cent) and Cash & Equivalent (32 per cent).
Invesco India Credit Risk Fund – Like DSP Credit Risk, this scheme has zero allocation to A/A+/A- segment.
L&T Credit Risk Fund – This scheme also has zero exposure to A/A+/A- rated instruments.
HDFC Credit Risk Fund – Compared to category average allocation of 9.5 per cent, this scheme has only 4.8 per cent exposure to A/A+/A- segment. This has been possible because the fund has 50 per cent in AA/AA+/AA-, nearly 24 per cent in AAA, 10.5 per cent in Cash & Equivalent and about 8 per cent in Sovereign.
IDFC Credit Risk Fund – Like HDFC Credit Risk, this scheme too has limited A/A+/A- allocation to just 5.17 per cent.
Points to note
Remember as credit risk increases, the expectation on return also should go up. If a specific debt fund generate very high returns, check the credit risk of the portfolio.
Do note that credit rating can change over a period of time. As an investor, the risk that you should be worried about is not the risk of default but the possible downgrade in credit rating of the debt paper.
Tax-saving equity funds, otherwise known as Equity Linked Savings Schemes (ELSS), are very popular for many reasons. They offer a tax deduction of up to Rs. 1.5 lakh (per financial year) from total income available under Section 80C of the Income Tax Act, 1961. The three-year lock-in period enables participation in the long-term growth potential of equity markets. Since every fund-house has its ELSS, it can be challenging to pick and choose the best funds from such a large universe. Instead of going for the best performer, investors should select the most consistent ELSS funds. We looked at various periods to find out the 6 most consistent ELSS schemes. Read on.
Consistency is key
Consistency of returns is an important driver of overall investment results. A fund that does well once in a blue moon is not a reliable vehicle for your hard-earned money.
During bull markets, every equity fund does well. Should you go for the fund that has delivered the highest returns? No. It is more important to see how the funds have been able to perform over longer periods.
We looked at point-to-point returns of all the ELSS funds over the long term, i.e. 3-, 5- and 10-year periods. We have taken the regular plan as the direct plans were introduced in 2013. This helped us understand which funds among this large category consistently performed well.
The following is the list of the 6 most consistent tax-savings funds.
Quant Tax Plan
IDFC Tax Advantage (ELSS) Fund
DSP Tax Saver Fund
JM Tax Gain Fund
Bank of India Tax Advantage Fund
Canara Robeco Equity Tax Saver Fund
Here is a table that illustrates the returns of these 6 most consistent funds. Notice how the 6 ELSS funds selected are always in the top 10 best ELSS funds in terms of returns across all the time periods, showing their consistency.
Fund Name
3 Yr Ret (%)
3 Yr Rank
5 Yr Ret (%)
5 Yr Rank
10 Yr Ret (%)
10 Yr Rank
Quant Tax Plan
33.59
1/34
20.45
1/32
19.72
1/26
IDFC Tax Advantage (ELSS) Fund
20.82
3/34
12.66
5/32
17.48
2/26
DSP Tax Saver Fund
18.46
7/34
12.35
6/32
17.14
4/26
JM Tax Gain Fund
17.97
8/34
12.09
7/32
16.29
5/26
Bank of India Tax Advantage Fund
23.77
2/34
13.90
4/32
16.04
7/26
Canara Robeco Equity Tax Saver Fund
20.18
4/34
14.61
2/32
15.41
9/26
Returns as on 22-Jul-2022
Be it a bull market, bear market, or flattish phase, the most consistent ELSS funds such as Quant Tax Plan, IDFC Tax Advantage, DSP Tax Saver, JM Tax Gain Fund, Bank of India Tax Advantage Fund, Canara Robeco Equity Tax Saver have been able to consistently generate high returns, which is above category average and also many peers.
Let us try to understand what has led to the performance of the top 5 ELSS mutual funds.
Quant Tax Plan:
Quant Tax Plan has given returns of 20.82% since its launch in 2013. As of 30th June 2022, the fund’s total assets stood at Rs. 1,370 crores.
From the past performance, we have seen that Quant Tax Plan is the best ELSS scheme as it has topped the charts in the 3-, 5- and 10-year returns.
Let us see the return consistency of the fund by comparing the rolling returns of the fund:
Scheme / Category Name
Less than 0%
0 – 8%
8 – 12%
12 – 15%
15 – 20%
Greater than 20%
Quant Tax Gr
2.92
9.94
10.04
9.61
20.73
46.76
Equity: ELSS
9.22
24.89
26.06
14.41
19.07
6.36
Start Date:- 01-01-2013,Time Period:- 3 Year
This table shows that Quant Tax Plan has given returns greater than 20% over 46% of the time.
Rolling returns are the annualised returns of the mutual fund scheme chosen for a given term, i.e. three years in this case on every day, week, or month up until the end of the duration.
Quant Tax Plan employs a flexible investing strategy concerning the sector and capitalisation exposures. The fund’s portfolio has seen a fair amount of changes due to its investment philosophy of VLRT, which stands for Value, Liquidity, Risk Appetite, and Time.
According to their approach, the market-cap and sector allocations have undergone considerable modifications over time. The fund has historically allocated a sizable portion of its assets to large caps.
The high performance of the fund can be attributed to its higher allocation to mid and small-cap stocks. According to Value Research, the percentage allocation to growing companies is around 38%, higher than the category average of 29%.
Moreover, considering the sectoral allocation, we can see that the fund has a higher allocation to services and lower allocation to financials than the category.
The expense ratio of the regular plan is the highest among its peers, with 2.62%, while the expense ratio of the direct plan of the fund is lower than the average at 0.57%.
IDFC Tax Advantage (ELSS) Fund
IDFC Tax Advantage (ELSS) Fund is another top ELSS fund to invest in and save on tax. The fund was launched on 1st Jan 2013 and has generated returns of 17.47% since its launch.
The fund also has a higher allocation to small-cap stocks at 16% than the category average of 6.5%.
Let us see the return consistency of the fund in terms of the rolling returns:
Scheme / Category Name
Less than 0%
0 – 8%
8 – 12%
12 – 15%
15 – 20%
Greater than 20%
IDFC Tax Advtg (ELSS) Reg Gr
7.6
10.21
14.66
17.48
29.97
20.09
Equity: ELSS
9.22
24.89
26.06
14.41
19.07
6.36
The rolling returns look attractive as the fund has delivered returns above 15% for more than 50% of the time.
However, it is important to note that the high returns have come from high volatility. The fund’s beta is the highest in the category at 1.15%.
DSP Tax Saver Fund
This tax-saving mutual fund has been a consistent performer over the long term. The fund has amassed a respectable long-term performance history with exposures across market cap sectors, solid stock-level diversity, a mix of growth and value flavours, long-term holdings, and short-term opportunistic plays.
Let us see the returns consistency of this fund that ranks as one of the top 10 ELSS funds:
Scheme / Category Name
Less than 0%
0 – 8%
8 – 12%
12 – 15%
15 – 20%
Greater than 20%
DSP Tax Saver Reg Gr
3.14
12.46
13.43
20.37
27.19
23.4
Equity: ELSS
9.22
24.89
26.06
14.41
19.07
6.36
We can see that the fund has given returns between 15-20% almost 30% of the time.
JM Tax Gain Fund
The fund’s investment style is growth-oriented with a tilt to larger caps. Currently, the fund doesn’t have any exposure to small-cap funds.
This ELSS scheme has given returns of 15.99% since its launch in Jan 2013.
Here’s how the fund has fared regarding rolling returns against the category.
Scheme / Category Name
Less than 0%
0 – 8%
8 – 12%
12 – 15%
15 – 20%
Greater than 20%
JM Tax Gain Fund Gr
3.37
8.04
16.85
25.33
29.57
16.85
Equity: ELSS
9.22
24.89
26.06
14.41
19.07
6.36
The fund has been able to generate consistent returns.
However, it is essential to consider that the fund size is smaller than the other ELSS schemes, with assets of Rs.61 crores in June 2022.
Moreover, the expense ratio of the direct plan of the fund is on the higher side at 1.61%
Bank of India Tax Advantage Fund
Bank of India Tax Advantage is another top 5 ELSS fund launched on 1st Jan 2013 and has given returns of 16.77% since its inception.
The fund’s expense ratio is 1.34% and manages an AUM of Rs. 551 crores.
The fund invests in stocks with a wide and narrow moat.
If we see the rolling returns, we can see that the fund has generated negative returns of just 0.11% since its inception in a three-year rolling period.
Scheme / Category Name
Less than 0%
0 – 8%
8 – 12%
12 – 15%
15 – 20%
Greater than 20%
BANK OF INDIA Tax Advtg Reg Gr
0.11
15.96
16.18
28.99
23.78
14.98
Equity: ELSS
9.22
24.89
26.06
14.41
19.07
6.36
Canara Robeco Equity Tax Saver Fund
Canara Robeco Equity Tax Saver Fund is another best ELSS fund. The fund launched on 2nd Jan 2013 and manages assets worth Rs. 3,518 crores as on 30th June 2022.
This fund invests around 75% in large cap stocks and the rest in midcap stocks. The fund is well diversified and invests in a mix of cyclical, sensitive and defensive stocks. It also invests in companies with a higher competitive advantage than the category average.
Around 28% of the time, the fund has given returns in the 8-12% range. However, if we see the lower end of the returns range, the fund’s negative returns are pretty on the lower side.
Scheme / Category Name
Less than 0%
0 – 8%
8 – 12%
12 – 15%
15 – 20%
Greater than 20%
Canara Robeco Equity TaxSaver Reg Gr
0.22
10.88
28.4
22.42
26.55
11.53
Equity: ELSS
9.22
24.89
26.06
14.41
19.07
6.36
Conclusion:
These were six of the top 10 ELSS Funds that have delivered consistent returns over the long run.
Do note that some popular ELSS funds like Axis Long Term Equity, Invesco India Tax Plan, BNP Paribas Long Term Equity, ICICI Pru Long Term Equity and HDFC Long Term Advantage do not figure in the most consistent list. The reasons for omission are likely to be the lack of the desired level of consistency in performance.
It is important to understand that past performance does not impact future performance. Please seek professional help before investing in mutual funds.
IDFC Mutual Fund has announced the launch of its first international fund IDFC US Equity Fund of Fund, an open-ended fund of fund scheme investing in units/shares of overseas Mutual Fund Scheme (/s) / Exchange Traded Fund (/s) investing in US Equity securities. The NFO opens for subscription July 29 and closes August 12. Let us find out more about the offering.
About the fund
IDFC US Equity Fund of Fund is designed to offer investors an opportunity to invest in a growth-oriented portfolio of US stocks, thereby benefiting from strong structural opportunities in a resilient US market.
J.P Morgan US Growth Fund, incepted in 2000 and has an AUM of USD1.8 billion as on June 30, 2021, is the actively managed underlying fund. The underlying fund is known for its robust investment framework, a tight-knit portfolio team and a consistent track record. The underlying fund is actively managed with a broad-based, growth-oriented portfolio. The portfolio has a lower concentration among top index constituents and higher portfolio earnings growth.
The New Fund Offer of IDFC US Equity Fund of Fund will open for subscription on Thursday, July 29, 2021 and close on Thursday, August 12, 2021.
Why US equities
The US economy started showing signs of economic revival, supported by the aggressive vaccination rollout, flattening curve of the Covid-19 cases, progression towards herd immunity, reopening of establishments, and fiscal stimulus by the government. These key factors have restored the confidence of investors.
The US market is at the forefront of new-age innovations across different sectors and investors can reap benefit of those unique businesses. Investors can add currency exposure to their portfolio to meet future expenses and participate in innovative themes, which are expected to advance the US economy further. Pent-up demand aided by low debt levels and high net worth is expected to drive GDP growth in the second half of 2021, which is expected to range between 6-7 per cent for CY21, the highest in almost 40 years.
Benefit of FoF
US equities can be an ideal complementary addition to the investor’s portfolio as it has a low correlation with Indian equities, facilitating effective diversification and exposure to USD, which is a key asset.
Higher US equity market performance can be attributed to the superior earnings growth making it a perfect destination for earning attractive returns with low risk.
Investors of IDFC US Equity Fund of Fund can derive value proposition from the growth-oriented underlying fund as it provides a broad exposure to the US equity markets and has been actively managed by a team of prudent fund managers with deep US Understanding and adopting a bottom-up approach to identify ESG compliant companies.
The underlying fund portfolio consists of 60-90 fundamentally strong stocks with 40 per cent of the revenue of the underlying stocks contributed by countries outside the US.
Fund-house speak
Highlighting the rationale behind launching the IDFC US Equity Funds of Fund and relevance of investing in US equities now, Vishal Kapoor, CEO, IDFC Asset Management Company Limited (AMC) said, “Including an international fund helps bring a geographical diversification to an investor’s portfolio. However, before selecting an international fund, an investor should check if the fund is complementary.”
IDFC US Equity Fund of Fund provides complementary addition to the investor’s portfolio as it has a low correlation with Indian equities, it offers investors the powerful opportunity of investing in US equities and participation in a significant global revenue pool, Kapoor added.
NFO ideal for whom
If you are an MF investor who wants broad exposure to US equity markets without a sector/market-cap bias, then this is a new fund to consider. The NFO offers a hassle-free investment process into US market; one can subscribe and redeem like a regular Indian mutual fund. Please note the investors’ principal may be at very high risk. This article is not an advice but is only for informational purposes.
Mirae Asset MF has launched a new passive investing product i.e. Mirae Asset Nifty Financial Services ETF. This is an open-ended exchange traded fund that will copy the movement of Nifty Financial Services Total Return Index, which has over the long term performed better than the broader market. Let us find out more.
Why invest
BFSI industry is a direct play on India’s growing GDP. The Financial Services sector may be one of the key growth engine as India seeks to double its GDP (Gross Domestic Product) to US$5 trillion.
The Financial Services sector is a fairly diversified one. It is undergoing rapid expansion due to digitalization and emergence of new products and services.
Given that key segments of the Financial Services sector right now have low market penetration, this provides an opportunity for growth. Why Nifty Financial Services Index
The index has outperformed with strong correlation. Unlike just the Nifty Bank index, which is more of a one-trick pony (banks), Nifty Financial Services is a more comprehensive offering and is suited for passive investments. There are 20 stocks in this basket. No single stock shall be more than 33 per cent weight and weight of top 3 stocks cumulatively shall not be more than 62 per cent of the total at the time of rebalancing.
Financial Services encompasses not only banks but other industries such as NBFC, Insurance, Capital Market etc. The index captures the same colour.
Also note that the Nifty Financial Services index has exhibited better return to risk profile along with lower drawdown vis-Ã -vis Nifty Bank Index.
Thus, Mirae Asset Nifty Financial Services ETF is a relatively low-cost option to participate in Banking & Financial Services sector. The index is re-balanced on semi-annual basis. ETF facts
Benchmark: Nifty Financial Services (TRI)
Authorised Participant: Mirae Asset Capital Markets (India) Pvt Ltd.
Listing: NSE and BSE
Fund manager: Ekta Gala NFO closes: July 29, 2021 Ideal for
Mirae Asset Nifty Financial Services ETF will be ideal for wealth generation with minimum tenure of 5 years and is suited to aggressive risk profile investors.
ICICI Prudential Mutual Fund has launched an NFO for the FMCG sector. The NFO opened on July 20, 2021, and will close on August 2, 2021. With rising income levels, urbanization, digitization, and changing consumer behavior, the FMCG industry remains a key sector for investors. ICICI Prudential FMCG ETF will allow the investors to gain exposure to a diversified portfolio of companies in the consumer goods sector at a fraction of cost with a minimum investment of as low as Rs 1000. Read on to know more.
Key highlights
ICICI Prudential FMCG ETF is an open-ended Index ETF tracking the Nifty FMCG Index, comprising 15 stocks from the FMCG sector listed on the NSE.
The new ETF provides investors with a choice to take exposure to multiple facets of the FMCG sector through this product.
It will provide exposure to leading companies forming part of the 4th largest sector in the Indian economy – FMCG.
The ETF or exchange traded fund route is suitable for investors looking to gain exposure from the growing FMCG sector.
The minimum investment during NFO required is Rs 1,000.
Why FMCG
FMCG is the 4th largest sector in the Indian Economy. India’s FMCG market was valued at USD 110 billion in 2020. In less than a decade, the market size of the sector had tripled. By 2025, the market is expected to grow to USD 220 billion (Source: www.ibef.org).
Sector fortunes
The FMCG sector witnessed a high growth quarter on the back of lower sales in the base quarter, which was marred by country wise strict lockdown. Though Q1FY22 also witnessed the adverse impact of a second Covid-19 wave & subsequent state wise lockdowns, the impact on supply chain was minimal with industry, government & trade channel’s preparedness. Similar to previous lockdowns, consumption of some discretionary & out of home categories were adversely impacted.
The NIFTY FMCG Index is designed to reflect the behaviour and performance of FMCGs (Fast Moving Consumer Goods) which are non-durable, mass consumption products and available off the shelf. The NIFTY FMCG Index comprises 15 stocks from the FMCG sector listed on the National Stock Exchange (NSE). This index has outperformed Nifty 50 index in 8 out of the last 11 calendar years. (Source: MFI Explorer, Data as of June 30, 2021).
Fund peers
There are at least 12 consumption oriented equity funds. The biggest among them is ABSL India GenNext, Mirae Asset Great Consumer, Sundaram Rural & Consumption, Tata India Consumer and BNP Paribas India Consumption. The only FMCG focussed product in thematic funds is ICICI Prudential FMCG Fund.
Fund-house speak
Nimesh Shah, MD & CEO, ICICI Prudential AMC said, “ICICI Prudential FMCG ETF provides exposure to a basket of securities in the FMCG sector. Higher inclination towards branded products, rising purchasing power owing to higher disposable income, increased digitization and growing demand from rural areas, are expected to fuel the FMCG sector growth in India. One can say that this sector approximately accounts for more than half of consumer spending.â€
Tata Mutual Fund announced the launch of Tata Business Cycle Fund. This would be an open-ended equity scheme following business cycles based investing theme. The New Fund Offer (NFO) opens on July 16, 2021 and will close on July 30, 2021. In this niche category, there are already ICICI Prudential Business Cycle Fund and L&T Business Cycles Fund. Let us find out more.
Business cycles
The economy goes through a series of stages as it expands and contracts, characterised by downward or upward fluctuations of GDP.
Periods of growth result in business activity rising, where businesses innovate, produce new products, create jobs and invest in further growth. At the peak of the expansion phase, businesses are using their full capacity, and soon continued innovation and investments have lower impact.
Periods of slowdown give businesses the opportunity to reorganise their operations and rebuild for future growth. Businesses cut down on products and capacity and follow a more focused approach in their day to day functioning. At the trough of the slowdown phase, these renewed business models give rise to increased capacity and innovation.
Investing through cycles
The returns investors achieve on their investments are driven in large part by changes in the business cycle. Each phase in the business cycle presents unique investment opportunities. So, incorporating business cycles theme into investments helps make the most of the current economic environment.
During a phase of recovery and expansion, investments that are more sensitive to faster economic growth and business activity are likely outperform. There are generally referred to as cyclical stocks. These include stocks of midsize and small companies, as well as emerging market equities and younger, growth-oriented firms and industries.
During a phase of slowdown and recession, defensive investments and those that are sensitive to falling interest rates have greater potential to outperform. There are generally referred to as defensive stocks. These include Stocks of larger and stable companies and Businesses that experience steady consumer demand even during economic slowdowns.
Why now
Business cycles are becoming shorter. With the duration of business cycles shortened, a fund that changes its approach in sync with change in cycle is key.
Sector allocations are having a large impact. Over the last few years, the impact of sector allocations has been greater on alpha generation versus stock level allocations.
How different from other funds
Compared to other diversified funds, the business cycles theme allows for greater sector concentration in terms of sector over/underweight.
The other portfolio parameters like portfolio churn, market cap allocation, number of stocks will depend on the stage of the economic cycle.
To get an understanding of how existing business cycle funds are positioned, let us look at these: For instance, L&T Business Cycle Fund’s biggest sector bets today are Construction, Financials, Engineering, Metals and Chemicals. The recently launched ICICI Prudential Business Cycle Fund’s top sector bets are Financials, Energy, Construction, Automobiles and Communications. While some sector bets are common, there is a perceptible difference.
Other NFO details
Fund Manager – Rahul Singh, Venkat Samala (Overseas Investment) and Murthy Nagarajan (Debt Portfolio)
Benchmark – Nifty 500 TRI
Minimum Investment – Rs 5,000
Exit Load – Redemption/Switch-out/SWP/STP by expiry of 365 days from allotment: If the withdrawal amount or switched out amount is not over 12% of the original cost of investment, exit load will be 0. If it is over 12% of the original cost of investment, exit load will be 1% of applicable NAV.
Fund house speak
Rahul Singh, CIO – Equities at Tata Asset Management said that, “The focus has shifted to Business cycles investing because of 2 reasons. Cycles which earlier lasted 4-5 years have now shortened to 1-2 years. Over the last few years, the impact of top-down sector allocations has been on alpha generation which has been very high. This fund would invest in businesses on a macro basis, with at least 80% of the portfolio invested as per Business Cycles theme.”
