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00:00Hi, thanks so much for joining in. You are watching the Mutual Fund Show on NDTV Profit
00:11and my name is Alex Mathew. This show gets you answers to all of your mutual fund related
00:16questions and we give you insight that you can use. Now, I am sure that over the course
00:21of all of the time that you spent investing in mutual funds or even if you are new to
00:26investing in mutual funds, one of the first and the foremost questions that you have is
00:31which mutual funds are the best to invest in and usually this is a question related
00:37to the equity mutual funds that you would like to invest in. Now, we did a little bit
00:42of data crunching to try and get you some answers and my guest today, I asked him a
00:48very simple question. Let us talk about the top 10 mutual fund houses in terms of the
00:55assets under management in equity and let us talk about the top performing schemes in
01:01each of those 10. Let us see if there are any commonalities, whether the same type of
01:06scheme is outperforming in all of those mutual fund houses because then that will tell you
01:10that there is a category that is doing well or let us talk about whether small cap mutual
01:16funds as a whole are doing well or mid cap as a whole are doing well and there were some
01:20really interesting answers that came through. We looked at the top 3 performers of each of
01:26the fund houses in the top 10. My guest today is Mohit Gang, the co-founder and chief executive
01:32officer of Moneyfront. Mohit, thanks so much for taking the time and pleasure having you.
01:36Thank you so much Alex, always a pleasure to be on your show.
01:39And thank you for the data that you have shared with us. In fact, let us pull that up on the
01:43screen before we get into some of the details that 10 mutual fund houses will be fairly
01:48familiar to you. So, let us pull up the initial set of data to give you a sense of how things
01:55look. I am looking at the excel sheet that you have sent me right now and the top mutual
02:02fund house is State Bank of India. But actually before we get into this, there were some initial
02:07readings that you had in terms of which schemes rank at the top. What were they?
02:13So Alex, first of all, thank you very much for nudging me to get this data out because I haven't
02:18been looking at the data in this format. It is a very interesting thing that we have done for this
02:23show. So yes, when we categorize top fund houses by equity AUM and see which are the top performing
02:30schemes in these fund houses for last 5 years, the data is startling. 50 to 55 percent of the
02:37schemes are sectoral schemes which have actually outperformed across all the fund houses. So,
02:43every fund house will have either 1 or 2 or all the 3 top schemes are sectoral. Then around 20
02:50percent is mid cap and around 20 percent is small cap. So, out of our total universe of 30 stocks,
02:5630 funds which we were checking for 10 top fund houses, almost 15 were sectoral and 6 were small
03:03caps and 5 were mid caps. So, that is a very large portion. And one very interesting thing is that
03:10there was zero large cap. There was not a single large cap name. So, I was actually looking at the
03:15kind of returns because if you look at the annualized return over a 5 year period, in most
03:22situations you will get close to 30 or slightly above 30 in many many cases and I am looking at
03:29across the board, we are talking about 30 mutual fund schemes here. None of them have given less
03:34than 20 over a 5 year period which is absolutely phenomenal if you think about it. But what do you
03:41have to say with regard to the thematic schemes that you have identified? 14 of the top schemes
03:46are thematic schemes. There are also a lot of commonalities in those themes, Mohit. Absolutely,
03:52Alex. Like, so return wise I think we should just, there is no debate. The returns are like
03:57mind-blowing. These are fantastic and obviously these have been fuelled by whatever has happened
04:00in the market for last couple of years, right. The thematic schemes, I think bulk of them,
04:07barring let us say 2 or 3 names, everything is either directly infra or infra related themes,
04:14right. So, economic reforms, infrastructure, power, diversified infra, all those kind of
04:20schemes are the ones which have led the market. Honestly, there are couple of names which are
04:25from healthcare and may be one auto logistics kind of a theme but otherwise it's out and out
04:32infra. Okay, let's go step by step then and let's first talk about State Bank of India's mutual fund
04:40house, State Bank of India mutual fund and SBI mutual fund and let's talk about the top performer
04:46here which is the contra fund followed by the SBI long term advantage fund which is an ELSS and the
04:54third is a thematic fund, the healthcare opportunities fund which is one of the only
04:58healthcare funds that have actually done incredibly well. What is your reading of this
05:03and the fund house strategy as well as the fund manager's approach, has that come into play here?
05:09Look, I think very diversified set at this fund house especially if you come to see,
05:14otherwise all the fund houses have some commonality. Out in SBI we find 3 funds
05:19which are extremely different. Contra is a well known name in the market, extremely popular. They
05:24are quite famous for following a contrarian approach in terms of buying out sectors which
05:29are underperforming and then waiting a little patiently for them to outperform. However,
05:33I am not pretty sure as to how much of contra is actually contra or it is mainstream. That's a
05:38debatable question but yeah, but I think they have done tremendously well for their investors. So,
05:42no questions on that. Long term advantages in ELSS, it's a slightly mid cap heavy scheme and
05:46that's why it's actually outperformed, right? And healthcare opportunities as you rightly
05:51mentioned, it's the only of its kind in the top 30 scheme bracket which we have identified where a
05:58healthcare fund has come in. Obviously, no healthcare and pharma per se have picked up a
06:03lot of steam over last 1 year and that recent performance if you see, the last 1 year performance
06:08has actually weighed in on the last 3 year, 5 year performances and actually pulled up everything. So,
06:13I think that's where they have won the category. Okay. Now, would you have something specific to
06:21say if somebody is looking at the contra fund specifically, the other two are fairly obvious
06:26if you are talking about an ELSS, it's usually bought for tax purposes. It functions like a
06:30flexi cap. The thematic, you have said often thematic should be 10% of a single team should
06:38be less than 10% of your equity assets under management. I am guessing you are going to say
06:42that. I am trying to, I don't want to put words in your mouth but you have said this so many times.
06:46I have. I have and I still maintain that you can't over leverage yourself on a single team
06:51unless you have some extremely strong conviction or some insider info as in you are related to
06:56that sector per se or working in that sector and you completely understand the finer nuances of
07:01that sector. Okay. But contra fund, where does it sit? Okay. I'd rather not call it a thematic
07:07though it is kind of bordering a thematic fund but the EM is so large, the performance has been
07:11rock solid for so many years. I would rather put it more like a flexi multi kind of a team
07:18out there trying to play some bit of contrarian advantages and that is what is giving them that
07:23extra bit of edge in the market. I think contra is one of the flagship schemes of SBI as a fund
07:28house and that's where they put in a lot of energy and effort also. 45% gained over the last one year
07:34and that's tremendous. ICICI Prudential, the second largest fund house in terms of equity
07:39assets under management and all three of the top performing schemes are thematic schemes.
07:44The first one and the one that has gotten 32% return annualized over a period of five years
07:49is the ICICI approved Pharma Health Care Diagnostics Fund which is a thematic fund. It
07:55has I would think a larger approach than simply a pharma fund. You have the ICICI Prudential
08:01Infrastructure Fund and you have the ICICI Prudential Technology Fund all of which have
08:06done incredibly well but I actually find it interesting that a three-year annualized return
08:12for the technology fund has yielded quite low. So I would think that it has to do with an
08:18underperformance for a period of time which is the danger of a thematic fund. Absolutely, so look if
08:23if you were an investor in tech names couple of years back nothing has given you return right.
08:29It's just the rally in the tech has honestly just about begun I would say around eight nine
08:36months back or ten months back when it was absolutely certain that the Fed is going for
08:39a rate reversal and tech is a sector which is highly geared towards a rate cycle reversing.
08:45Honestly once the US rate cycle reverses and then India follows suit you might still continue to see
08:50some gains accruing from the tech space per se but that's the danger of being in a sector or
08:57thematic fund you never know when the cycle actually changes. Pharma and diagnostics for
09:01that matter Alex you are lucky if you have been in a diagnostic or a health care space from last
09:09one and a half two years back. Pharma is just about pick up. Pharma's rally has started almost
09:14like six months nine months back it was not a wholesale rally on the entire space but the funds
09:19which have done well are more widespread in nature catering to the health care services names and the
09:25diagnostic names which have actually rallied much before the pharma names are now starting
09:30to rally. But you have to be very careful I'll just give you a small example during Covid times
09:35in 2020 right the pharma actually rallied superlatively in the first half of the year that's
09:42when bulk of the investors got in by around July August and then pharma gave nothing for the second
09:47half of 2020. 2021 was absolutely flat and negative and again 2022 you got some returns from pharma
09:54but nothing to write home about absolutely right. So people who got in the timing wrong thinking
10:00about Covid scare and getting in into the rally at the fag end of 2020 they made nothing in pharma
10:05and now the pharma has again rallied back last whatever year old story. So you have to be
10:10extremely careful and you have to be very precisive in getting these cycles right. That's absolutely
10:15timing is incredibly important timing the entry and the exit both both for a thematic fund. HDFC
10:22mutual fund the three that have done well there is a mid cap fund that ranks at the top. You don't see
10:29this very often small cap has taken the cake more often than not. But in this case you have the HDFC
10:35mid cap opportunities fund that has gained close to 30 percent on an annualized basis over the last
10:41five years. There is also the HDFC small cap fund. Both of them have a substantial assets under
10:46management cumulatively more than a lakh crore being managed between these two schemes. And you also
10:52have a thematic fund which is the infrastructure fund. We've spoken about this team in the in the last few
10:57minutes. It's got an assets under management only of about 2500 odd crore rupees but it's done
11:03superlatively well. Comments about the mid cap and the small cap schemes. Oh I think across the fund houses I
11:10think the story is absolutely similar. They might not have rang in firstly but they will definitely be in the top
11:14five schemes anywhere and everywhere you pick up any mid cap and small cap fund. They have done exceedingly
11:20well. But kudos to the fund manager out here Chirag Stelwart. He's been a stalwart in on managing these two
11:26funds with that kind of an AEM. Honestly I think one thing one myth which completely shatters away Alex and I've
11:35been equally guilty of thinking that small AEM is always better. But to manage AEMs of that size in mid and small
11:42cap funds and then deliver that kind of a return. I think hats off to the fund manager there. And incidentally
11:47that plays out in the next mutual fund house as well. Nippon India. The largest small cap fund being managed in the
11:54Indian industry right now. It has assets under management of 61000 crore. And I looked at the statement this morning
12:03incidentally and I saw that they have 215 stocks. And this is a scheme that has gained 51 percent over the last
12:11year. And it has gained 36.6 percent on an annualized basis over five years. That there is myth busting. Absolutely.
12:21Absolutely. Look so quite a number of things have to go right for you to deliver that kind of return. And I would say it's a
12:28combination of both luck and skill. It's not just one factor alone at times. And so Nippon small cap. Thank you very much.
12:37But yeah I think that's that's the story Alex. So Nippon small cap with that kind of an AEM also have participated in the
12:45index completely. When I say this they have 215 220 odd stocks in the portfolio out of an index which represents 250 names.
12:54So it's virtually picking every single name in the index itself. The good part is that out of every three stocks on the small
13:02cap side one has doubled in last two years. And they've just been there in every name. So they have participated in the rally.
13:09Anyone who has tried to be a choosy and picky about not having some small cap names and trying and managing a portfolio of 50 70
13:16hundred odd stocks has lost the battle to be honest. Which is why despite the fact that we see so many mid cap and small cap funds
13:24ranking in the top performers. Absolutely. A lot of them have have not beaten the benchmark. Yeah I was just coming to that Alex.
13:32Strangely most of these funds barring one or two actually Nippon and HDFC are aberrations there also. They've beaten the benchmarks.
13:40But most of these guys are underperforming the benchmark which says that a broader market the broader mid and small cap indices have
13:47done phenomenally well over the last three years. Everything has risen and that's the rising tide has lifted all the boats basically.
13:55Kotak Mahindra Bank once again. So I say Kotak Mahindra Bank Kotak Mahindra mutual fund. And here too you have a similar combination
14:04right. Small cap right on top followed by a thematic which surprise surprise is infrastructure and economic reform fund which has
14:12returned 57.8 percent just over the last one year. And the third is the mid cap the emerging equity fund which is Kotak mutual
14:22funds emerging which is the mid cap fund done incredibly well. Comments about the approach that they have or is it simply the
14:30participation in this space that is done well. Look again as I said the participation across the board has been phenomenal on the
14:36mid and small cap side. So every fund house will have similar kind of returns or almost mirroring these kind of returns. So that's that's
14:42fair. But again kudos to Kotak credit due credit should be given where it's due. They've lost few fund fund managers from this table
14:51but they have been of good institutionalized set up able to follow their philosophy and stick to the guns fairly well and which reflects
15:01across different schemes of Kotak. So I think you have to give credit credit where it's due. Pankaj Tibrewal is who you're talking
15:07about. Absolutely. OK. UTI health care fund has done incredibly well. Mid cap fund is ranked second and the UTI transportation and
15:17logistics fund. Here's an interesting one. It is gained 57.4 percent over the last year and has an annualized gain of about 26 percent
15:26over the last five years. Comments about this one. Typical story of right timing right place. Look there wasn't anyone in this space but
15:35only UTI transport and logistics fund. When the entire pack picked up they were the only ones standing on the shelf and they've got the
15:41benefits out of it. And now you see the EV schemes and the auto schemes and all those kind of funds getting launched. But they were the
15:48only ones right. It happened with Tata when they were the only ones with Tata digital team. And the moment the tech boom picked up they
15:54were the only ones benefiting. And then people started launching I.T. funds and tech funds and so on and so forth. So it's it's a
16:00typical case of being on the shelf and right timing right positioning. And the market cycle was extremely favorable. Early mover advantage
16:07certainly helps. And time in the market because right you've you've been able to spend time. Axis small cap axis mid cap. Now it is a top
16:17ranking fund house in terms of assets under management. But unfortunately when you look at the performance it has lagged its peers. And
16:27here they have a small cap mid cap and the only large and mid cap that ranks at the top. Comments about this. Look it's come in because of
16:36the overall fund house performance on the mid and small cap side hasn't been at par with the other fund houses. Honestly I think
16:43Axis UTI and a couple of other fund houses have suffered a lost lot in last two three years of rally because of their overall
16:50philosophy of sticking to quality. Yes. Right. And quality as a pack hasn't picked up in the market. It is more value which has done
16:57exceedingly well and all momentum driven value. Right. So for the last three years if you see the market cycle it's been momentum
17:03value driven themes. My sense is quality is something which is just showing green shoots now. Yes. And I've seen that for last
17:09three four months of data. And I can safely say that these are few names which should now do well in next one or two years of
17:19cycle. It's an interesting point because should you hold a fund manager accountable for sticking to their guns when everything
17:27else is doing well. No absolutely not. You should not. Absolutely not. I think they have been true to label. They have been absolutely
17:33fair and justifying their underperformance and they've been absolutely fair saying we stick to our quality and will not change our
17:39core philosophy and our cycle will come. Cycle will come. All right. Three more to talk about. Aditya Birla Sun Life is the next one
17:47we're talking about. And there are all three thematic here once again. There's the Digital India fund. There is the infrastructure
17:52fund once again. Interesting one here. Dividend yield fund. What do you make of this one. Value theme. Out and out value theme has
17:59done well. But this is again a great fund. Extremely old fund. One of its first one of the first of its kind in the dividend yield as
18:06a segment. And again these are these are names which have deep intrinsic values and somehow the PSU pack and the other packs
18:14of the RECs and absolutely that's where they've benefited. Yeah. And these are incredible stocks that have gained over the last
18:21year and a half two years. Mirai Asset. There are two thematics and one mid cap and the mid cap has a sizable. I'm not very large in
18:30terms of what we've discussed in the past but 42 percent gain. Not too bad. Nothing to sneeze at. What do you make of this. No look
18:39Mirai like Motilal is an equity heavy fund house basically. They are predominantly known for their equity and again deep focus on
18:48quality. That's where they have also suffered or lack their peers in the industry to a large extent. My sense is health care.
18:55Again the health care cycle has been extremely favorable for last one one and a half years and that's where they picked up. But mid
19:00cap is no aberration. It stands out with the with the pack in the market. Now I'm curious about the last one. DSP is that is the
19:0710th. And I must say there are so many fund houses but we can't possibly take all which is why we chose 10. There are two
19:14thematics in one small cap. The DSP India Tiger Funds interesting for me because I think arguably the best performance over the last
19:24one year. I totally adore the fund and the fund manager Charanjit Singh. He is he is he is terrific in the way he has managed the
19:32fund and the scheme. Honestly I think grounds on men. If you talk to him you'll realize he had a real pulse of what is happening on
19:39the ground and the way he's managing the fund has been terrific. All kudos to him for this outperformance. Overall team obviously has
19:46done well. But again you require some smart management. How do you understand this team though. It's infrastructural growth and
19:52economic reform. So it's a broad based team. So they kind of cover everything not just in front not just ancillaries but anything
19:59which aids economic reforms also. Right. So so it's a fairly large thing. It's not a very narrow team. And that's where again they
20:06have I think they've benefited. Do you recall the size of the portfolio in terms of numbers stocks. Not at the top of my mind
20:13honestly but I can I can come back. We can talk about that at some point. But so a few more talking points from this right. Which is
20:21that you can judge future performance of course based on what we've seen. But certain aspects that we have been speaking about on an
20:30ongoing basis have come to the fore here. The broader market team has done incredibly well. Thematic funds account for half of the
20:38top performers at all of these top fund houses. This is I think a list that accounts for 70 percent plus of the market. Maybe more
20:47than that. Pretty much. Pretty much there. Yes. Yeah. Yes. So so we're talking about the mutual fund industry. This is a good benchmark
20:53for all of them. And you're largely seeing half of the top performers are thematic schemes. Absolutely. But what's the danger here.
21:00Dangerous people moving away from large and flexi caps by not finding those names in the list out here. Again as I said these are market
21:07cycles. They will repeat time in and time out again. You cannot get disappointed by not seeing your large cap name or the flexi cap name or
21:15the multi cap name out there in that list. They are the funds which will bounce back sooner than what all of us anticipate. My sense is
21:22people have to stick to the asset allocation and not get tempted to be drawn into those thematic themes because more often than not if
21:30you track the cycles of these thematic funds they are extremely volatile and and marred with cases of people getting stuck at the wrong
21:37end. Okay. My team has helped me out. Ninety three stocks as of the last count on the Tiger Fund. All right. We've got several queries that
21:45have come through. And by the way in case you've got questions for us let me pull that number on your screen right now so that you can send them to
21:52us. And if you write into us make sure you tell us your name as well as what your age is and preferably if you've got a specific goal that
22:00you're trying to achieve. The first question that I'm taking today is from Manish Prajapati. He says he's 37 years old and he's looking to
22:07invest one crore apiece a sizable corpus with a time horizon of 15 years. His goal is to reach five crore. And he's looking at an SIP as
22:16well to supplement that further of a lakh a month along with the lump sum when the opportunity arises. He's willing to take moderate
22:27risks. And what are suggestions here. Would you would you say an STP approach because a lot of people have said 15 weeks of an STP is a
22:34good idea but it's a very large corpus. I get you. So look a couple of things Alex. First things first one lakh SIP is a great amount to go
22:41for. He need not be worried about the corpus. My sense is he will accumulate just by SIPs. He will accumulate over around seven odd
22:48crores in 15 years. The time frame is good. Right. When it comes to lump sum and I read that interesting line there lump sum when the
22:55opportunity comes. Look honestly to me the best opportunity the best day to invest was yesterday and today is the second best day. I've
23:01always been a very firm believer of that. The more you wait the more the market will torture you. Right. And the cost of staying out of
23:08this market is exorbitant in these times. Right. And the famous saying more money is lost sitting on the sidelines. Absolutely.
23:15Absolutely. No two doubts about that. But yes one crore is a sizable chunk. If you really want to get in maybe do a six months to a nine
23:21month STP right now. I would not suggest a longish STP beyond a year at any point in time. Right. Because you have a lump sum chunk and
23:28you are an equity participant. You have a 15 year time frame. Right. Then there is no reason for you to wait beyond a year. Just just
23:35get in within a year. OK. Any suggestions that you would like to make in terms of the allocation that he can do. Look I'm not aware of
23:43his profile and his existing recommendations. But I can I can safely say that go with a nifty 50 index fund and an FNIF next nifty 50
23:53index fund. Those two are critical components of a portfolio. Yeah. One active midcap which could be an Edelweiss midcap or a factor
23:59based passive which could be a DSP midcap 150 quality 50 index. OK. And an active small cap which could be abundant small cap fund. I
24:07think that's that's good enough for an healthy portfolio. I noticed that you chose a quality factor and not momentum. Momentum is
24:14despite the fact that momentum by far and away has beaten active managers hands down. And that should tell you something about what
24:23Mohit is reading from the tea leaves that he is looking at. Sandeep has got the next question. He's 58 years old and he's asking what the
24:32best balanced advantage fund is to invest in over the next five years. I'm glad that Sandeep is asking this question. I'm glad that more
24:39investors are looking at this category. I think honestly it's good to be looking at debt as a category. Standalone also I think there
24:46are superlative returns to be made from long term debt funds. But as a balanced advantage it's a great category to win through
24:52ICICI balanced advantage. If you are a conservative investor they they always err on the side of caution. Very very conservative. I like
25:00S. Narain's philosophy on that. Extremely steady fund. Old hand. No no hanky panky stuff out there. Right. But if you want a slightly more
25:09tactical balanced advantage fund then I'll go with Edelweiss balanced advantage. They change the ratio of equity and debt composition basis
25:16some technical parameters and not just basis fundamental parameters. So I really like their approach as well. OK. So Rahul's got the next
25:23question. Rahul's 37 years old. He's got 20 lakh that he wants to deploy and he's looking for advice. He's got a time frame that he needs
25:30to navigate which is seven years. What is the advice that you would give. I'll actually go with the same one which we gave to the first
25:39viewer and answering you on that between momentum and quality. Look I'm I'm one of the most ardent fans of momentum as a factor as as as
25:47they come along your way. But yeah I think a shift to quality is right there knocking on our doors. I'm not pretty sure when will that
25:56happen. But momentum as a philosophy captures everything. It over encompasses quality value everything because wherever there is
26:02momentum whether it be on the quality stocks or on the growth stocks or on the value stocks momentum as a factor will capture that. So if
26:08you're an aggressive investor then you should also have a momentum factor in your portfolio. OK. But do remember of course allocation
26:16goes. Yes absolutely. Now this next question hopefully Joe's is paying attention when we've spoken about you know asset allocation and how
26:25to construct your portfolio. He's 53 years old and he wants to invest 70 lakh in a flexi cap fund and hopefully this is now a part of a larger
26:34portfolio. But having said that you've studied a variety of flexi cap funds. Which ones stand out to you.
26:41I'm first of all glad that he's asking a flexi cap and not a mid and small cap fund. Absolutely. So look there are multiple which are
26:50good. If you want some international diversification then obvious choice is Parag Parikh. Of late the performance has been a little
26:56dim. But it's also too huge a size of AUM now. I would rather go with a Bandhan flexi cap and a Franklin flexi cap. Honestly I think
27:07they are doing some great work slightly behind the limelight. And I really like the way the funds have been constructed. Both the
27:14funds again are old hands and very very steady and good performance not extremely large AUMs good manageable size and corpus and
27:23overall great portfolios. Mohit it's been an absolute pleasure. It's been an insightful conversation. Thank you so much for taking the
27:29time. Thank you. Pleasure always Alex. Thank you. All right. That brings us to the end of this particular edition of the Mutual Fund
27:34Show. Let us know what you think of that number on fact or in fact on any one of our social media platforms. Do stay tuned. Lots more
27:41coming up on NDTV Profit.