Thematic fund : A thematic fund is a type of equity fund that invests in stocks of companies aligned with a specific theme or idea. Unlike traditional mutual funds categorized by market capitalization or investment style, thematic funds focus on a predetermined theme. These funds are more broad-based than sectoral funds, as they pick companies and sectors united by an idea eg. of themes could be manufacturing, infrastructure , transportation etc. Here we are going to discuss consumption funds as an investment proposition. What are consumption funds ? Consumption funds are a type of thematic mutual fund that focuses on companies benefiting from increased consumer spending. As the name suggests, these funds invest in businesses that cater to the growing needs and desires of consumers. So what would the consumption as theme entails as in sectors. The Nifty India Consumption Index is designed to reflect the behavior and performance of a diversified portfolio of companies representing the domestic consumption sector which includes sectors like Consumer Non-durables, Healthcare, Auto, Telecom Services, Pharmaceuticals, Hotels, Media & Entertainment, etc. All these sectors have products or services which are consumed by an individual This theme is driven by macroeconomic trends, structural shifts in consumer lifestyles and preferences. These funds typically invest in companies operating in sectors like: Fast-moving consumer goods (FMCG): Companies producing everyday essentials like food, beverages, personal care products, etc. Most people think that FMCG is the only sector which these funds would invest in but that is exactly not the case. Automobiles: Manufacturers and dealers of various vehicles. Telecom: The rise of mobile, mobile data, WIFI connections at home etc. Consumer durables: Producers of long-lasting consumer goods like electronics, appliances, furniture, etc. Retail: Companies involved in selling products directly to consumers. Restaurants and hotels: Businesses catering to consumer spending on food and lodging. The list is still not exhaustive, this is just a glimpse of sectors which the fund manager can look into. A consumption fund provides investor access to varied diversified sectors in the economy. Why Invest in Consumption Funds? India’s Growing Middle Class: India has a burgeoning middle class with increasing disposable income, driving consumption growth In recent years, more than 250 million citizens have transitioned out of poverty and joined the neo-middle class According to current projections, the middle class is expected to reach 41% of the country’s citizenry by 2031 As 140 million households move into the middle class and another 20 million move into the high-income bracket, they will spend 2-2.5x more on essential categories (food, beverages, apparel, personal care, gadgets, transport and housing) and 3-4x more on services (healthcare, education, entertainment and household care). Upper Middle-income and high-income entrants will drive a 15-20% increase in the ownership of durables (washing machines, refrigerators, TVs and personal vehicles) Urbanization: The shift towards urban living fuels demand for consumer goods and services. Rising aspiration of the youth Increased mobile data penetration has further increased the aspiration levels of the people. This aspiration is driving them to explore a variety of lifestyle products and experiences, including international travel, premium electronics, and luxury goods. Rising Income Levels: India’s young and growing population, with a median age of 28.6 years, is a major driver of consumption growth. Unlike many ageing nations in the West and East, India will remain a nation of the young with a median age of 31 in 2030, India is well-positioned to reap the benefits of its demographic dividend. This young population is also more likely to adopt new technologies and trends, fueling consumption growth further. According to research by the World Economic Forum, growth in income will transform India from a bottom-of- the-pyramid economy to a truly middle-class one, with consumer spending growing from $1.5 trillion to nearly $6 trillion by 2030. Digital Revolution: India has witnessed a significant digital revolution in recent years, with the proliferation of smartphones and affordable internet access. This has led to a surge in e-commerce and online services, further boosting consumption. Online shopping, digital entertainment, and various app-based services have become an integral part of the consumer experience. Risks Involved Economic Downturns: Economic slowdowns can impact consumer spending and, consequently, fund performance. A situation like COVID, recession hinders people from spending and companies which are consumer facing face a downfall. Inflation: High inflation can erode purchasing power, affecting consumer demand. This reduces consumers’ ability to buy as much with their money, dampening overall consumption. Additionally, high inflation creates uncertainty, leading people to save more and spend less, further impacting consumption. Competition: A recent flux into thematic funds have created a large amount of money into thematic funds. But it is important to understand which would make sense to you. Reach out to us so we could help you with the same. Last not least for any investment a person should follow his asset allocation guidelines https://wealthinn.in/asset-allocation-guideline-for-investment/ You can reach us to help you design the best fund portfolio , so that you get best results according to your need and assessment.( you can reach us : https://wa.me/message/LC5W5ZNTPSJ5L1)
Fund Details : Fund Name Year Of Inception Fund rating ( Crisil rated ) Portfolio Size ( In Cr ) Expense ratio PE ratios ICICI Pru blue chip fund 2008 5 54,904.23 1.49 19.18 Axis blue chip fund 2010 1 33,351.61 1.56 20.88 ICICI Pru blue chip fund : ICICI Pru blue chip fund is one of the large funds of the category , 5 star rated fund. The has expense ratio in line with the category and Low PE of 19.18. Axis blue chip fund : Fund made entry in 2010, is currently rated as 1 star. The fund has a very decent size , as it was also favoured by a lot of people. Low expense ratio of 1.56 . The fund PE 20.88 is very decent. Trailing Returns : 1 Year Trailing return ICICI large cap is beating the axis large by big margin 3 Year Trailing Return ICICI Pru large cap has a whooping margin lead on Axis blue chip fund . Axis blue chip gave a return of 10% but ICICI blue chip was 20% almost double. And this has been the rally years. 5 years trailing returns ICICI Pru large cap again has been 7% higher in 5 years trailing returns. 10 Years Trailing returns ICICI blue chip gave a returns of 15.37% Axis Blue chip gave return of 13.58 % Since the difference in terms of percentage is just 1.78 , we check the value of investment after 10 years of investment if we had invested Rs1,00,000/- ICICI blue chip gave a returns of Rs 4,17,762/- Axis Blue chip gave return of Rs 3,57,288/- Difference of Rs 60,474 approx 60% of the invested value. 13 Years Trailing returns ICICI blue chip gave a returns of 15.8% Axis Blue chip gave return of 14.38% Since the difference in terms of percentage is just 1.42% , we check the value of investment after 10 years of investment if we had invested Rs1,00,000/- ICICI blue chip gave a returns of Rs 6,73,304/- Axis Blue chip gave return of Rs 5,73,523/- Difference of Rs 99,781 approx 99.7% of the invested value. Rolling returns : We have considered rolling returns of 3 years since 2012 , as a large cap Any fund with 12% should be good enough. The recent run up has added to a little push in returns so 15 % is what we see in the first category of stability returns. >15% Rolling returns ICICI Pru BlueChip cap fund was able to deliver results in this category for 49.83% of times as compared to Axis Blue Chip fund 38.56 % of times. >12% Rolling returns ICICI Pru Bluechip fund was 71.77% times delivered results in 12% above whereas as Axis blue chip was able to deliver 65.62% <than 8% ICICI Pru Blue chip was 10.3% times less than 8% and even negative zone in period of 3 years rolling returns. The Axis Bluechip fund was 3.83% of time in this zone. VS benchmark : Fund Name 1-Yr Ret (%) Beat the benchmark 3-Yrs Ret (%) Beat the benchmark 5-Yrs Ret (%) Beat the benchmark 10-Yrs Ret (%) Beat the benchmark ICICI Pru blue chip fund 36.97 Yes 20.47 Yes 23.13 Yes 15.37 Yes Axis blue chip fund 28.24 No 10.74 No 14.99 No 13.48 No NIFTY 100 TRI 30.49 – 16.39 – 18.99 14.22 Axis blue has not been able to beat the index in trailing returns. Ratios: Fund Name Alpha 3 yr Alpha 5 yr Beta 3 yr Beta 5 yr Std deviation Sharpe Ratio Sortino Ratio ICICI Pru blue chip fund 4.26 1.97 0.87 0.94 11.54 1.27 2.8 Axis blue chip fund -5.01 -1.15 0.97 0.82 13.25 0.49 1.04 ICICI Pru blue chip fund : The fund has generated a decent Alpha, and risk adjust sharpe ratio as per category is decent. The fund has a beta of 0.87 which it has improved to 0.94 and std deviation of 11.54 , which shows the fund is very stable. Fund has a great downside protection ratio of 2.8. Axis blue chip fund : Fund is negative alpha for both 3 yr and 5 yr . Low risk adjusted returns. High volatility , high market correlation at beta 0.97 for 3 years and 0.82 at 5 years and std deviation at 12.82 . Sortino ratio is low. Fund managers Longevity : ICICI Pru blue chip fund : The fund is being managed by 3 fund managers ,Anish Twakely deputy CIO of the ICICI Pru amc and has been managing the fund for about 6 years now. Other managers are 3 and 2 years old in the fund. Axis Blue chip fund : The Axis Blue chip fund is being managed by 3 fund managers. Mr Shreyash Devalkar, the head of equity for Axis MF has been managing the fund for last 8 years. Along with the two fund managers. Portfolio : Fund Name Strategy Top Sectors Top Stock No of Stocks Portfolio Churn Caps Allocation ICICI Pru blue chip fund Growth Financial : 25.79 Energy : 12.59 Automobile : 12.02 Industrial : 11.17 ICICI Bank Ltd. : 7.85% Reliance Industries Ltd. : 6.96% Larsen & Toubro Ltd. : 5.12% HDFC Bank Ltd. : 5.12 64 27% Large Cap : 89.29% Mid Cap: 0.87% Small Cap : 0% Cash :9.73% Axis blue chip fund Growth & Quality Financial services- 30.58 Automobiles and components – 13.97 Technology – 10.50 Consumer defensive – 10.15 HDFC Bank Limited 8.71% ICICI bank ltd. 7.73% Reliance Industries Limited 6.31% Avenue Supermarts Limited 4.97% 55 39% Large Cap: 95.59 % Mid Cap: 0.0% Small cap: 0% Others : 4.41% As in line with the index the financial makes the highest contribution to the funds and HDFC makes a major chunk of that allocation. The allocation to consumer defensive and avenue supermart is leading, The portfolio from ICICI Pru makes much more sense and seems they are placing bets very according to the cycles as of now. HDFC highest allocation may
The Union Budget 2024 ushered in significant changes to the taxation of capital gains in India. These modifications have far-reaching implications for investors across various asset classes. Let’s delve into the key alterations: Harmonisation of Long-Term Capital Gains (LTCG) Tax Rate Uniform rate:The most prominent change is the introduction of a uniform LTCG tax rate of 12.5% for all asset classes, including property, gold, and equity. Previously, these assets had different tax rates No indexation benefit:The government has eliminated the indexation benefit, a provision that allowed taxpayers to adjust the purchase price of an asset for inflation. This means higher taxable gains. What were the major the major announcements Short term gains on certain financial assets shall henceforth attract a tax rate of 20 per cent, while that on all other financial assets and all non-financial assets shall continue to attract the applicable tax rate. Long term gains on all financial and non-financial assets, on the other hand, will attract a tax rate of 12.5 per cent. For the benefit of the lower and middle-income classes, I propose to increase the limit of exemption of capital gains on certain financial assets to ₹ 1.25 lakh per year. Listed financial assets held for more than a year will be classified as long term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term. Unlisted bonds and debentures, debt mutual funds and market linked debentures, irrespective of holding period, however, will attract tax on capital gains at applicable rates. ( Refer : https://www.indiabudget.gov.in/) Impact on Different Asset Classes Property: While the LTCG tax rate has reduced from 20% to 12.5%, the removal of indexation might offset this benefit, especially for older properties. Gold: Similar to property, the lower tax rate is counterbalanced by the absence of indexation. Equity: While the LTCG tax rate has increased from 10% to 12.5%, the exemption limit has been raised from Rs. 1 lakh to Rs. 1.25 lakh. Short-Term Capital Gains (STCG) Tax Higher rate: The STCG tax rate on equity-related investments has been increased from 15% to 20%. Asset Class Holding Period STCG LTCG Shares/ Equity (Listed) 12 months 20% 12.5% Equity MF 12 Months 20% 12.5% Bonds ( Listed ) 12 Months 20% 12.5% REITs/ InVITs 12 Months 20% 12.5% Silver/ Gold ETF 12 Months Slab 12.5% Gold Funds 24 Months Slab 12.5% Stock( Unlisted ) 24 Months Slab 12.5% Foreign Shares 24 Months Slab 12.5% Overseas Equity Fund 24 Months Slab 12.5% Gold 24 Months Slab 12.5% Real Estate 24 Months Slab 12.5% Debt MF/ MLD NA Slab Slab Debt ETF NA Slab Slab Bonds ( Unlisted) NA Slab Slab Key Takeaways Simplification: The new regime aims to simplify the tax structure for capital gains. Higher tax burden: For many investors, especially those with older assets, the overall tax burden might increase due to the removal of indexation. Strategic planning: Investors need to carefully evaluate the impact of these changes on their portfolios and investment strategies. Conclusion The changes in capital gains tax introduced in Budget 2024 mark a significant departure from the existing tax regime. While the intent might be to simplify the tax structure, the practical implications for investors are complex. It is crucial to consult with a tax professional to understand the full ramifications of these changes on your personal financial situation. You can reach us to help you design the bets fund portfolio , so that you get best results according to your need and assessment.( you can reach us : https://wa.me/message/LC5W5ZNTPSJ5L1) Do set you asset allocation and understand which fund would suit you the best
Large-cap funds are a type of mutual fund that invests in stocks of companies with the largest market capitalizations. These companies are typically well-established and have a long history of profitability. Large-cap funds are generally considered to be less risky than other types of equity funds, such as mid-cap and small-cap funds. This is because large-cap companies are more likely to be able to weather economic downturns. However, they also tend to offer lower potential returns than other types of equity funds. Here are some of the benefits of investing in large-cap funds: Lower risk: Large-cap stocks are generally less volatile than stocks of smaller companies. This means that the value of your investment is less likely to fluctuate significantly over time. Steady returns: Large-cap companies have a long history of paying dividends to shareholders. This can provide you with a steady stream of income from your investment. Diversification: Large-cap funds typically invest in a variety of different companies across different sectors of the economy. This can help to reduce the risk of your investment being affected by a downturn in any one sector. This category faces the biggest competition with the index funds with index fund companies always promoting their funds as if they do not carry risk, which is not the true case, the index has the same amount of risk as these funds. Fund Name Year Of Inception Fund rating ( Crisil rated ) Portfolio Size ( In Cr ) Expense ratio PE ratios ICICI Pru blue chip fund 2008 5 54,904.23 1.49 17.01 Nippon India large cap fund 2007 5 26,137.65 1.61 18.40 JM large cap fund 1995 5 144.17 2.41 15.36 HDFC top 100 fund 1996 4 33,170.08 1.62 14.53 Aditya birla Frontline equity 2002 3 27,192.15 1.66 17.70 Canara Robeco Bluechip Equity fund 2010 3 12,830.12 1.69 17.66 Kotak Blue chip fund 1998 3 8,027.99 1.76 20.44 SBI blue chip Fund 2013 2 45,410.51 1.53 24.12 Axis blue chip fund 2010 1 33,351.61 1.56 17.92 Mirae asset large cap fund 2008 1 37,631.07 1.53 19.98 Bank of india Bluechip cap fund 2021 – 144.86 2.46 18.65 Quant Large cap fund 2022 – 997.48 2.17 20.53 ICICI Pru blue chip fund : ICICI Pru blue chip fund is one of the large funds of the category , 5 star rated fund. The has expense ratio in line with the category and Low PE of 17. Nippon India large cap fund : The fund is a 5 star rated fund. The fund size is not that large. The fund expense ratio is a bit on the higher side because of the small size. Decent PE of 18. JM large cap fund : It is one of the oldest funds in the category with 5 star rating. The fund size is very small, just 144 cr. Since the size is small the expense ratio is 2.41 and PE very low at 15.36. HDFC top 100 fund : It’s another oldest fund of the category , and is rated 4 star. The fund has a decent fund size. The Expense ratio is in line with the category. The fund has the lowest PE in the category. Aditya birla Frontline equity : Once a darling of all the investment advisors , the fund now is rated 3. Fund size is decent and not too large. Expense ratio in line with category. PE of 17.70 is also decent. Canara Robeco Bluechip Equity fund: The fund was launched in 2010, so fairly new in the category is now rated 3 star. Fund size is not big. Expense ratio is a bit high . PE of 17.66 Is decent. Kotak Blue chip fund: Is another old fund, currently rated as 3. Not a big size fund. The expense ratio is a bit high at 1.76. The PE is also high of 20.44. SBI blue chip Fund : This is the second largest fund of the category as the name and distribution muscle of SBI can be seen. The fund is just 2 star rated. Size of above 45,000 cr. Very low expense ratio in the category. The PE of 24.2 seems in line with the index and a bit of concern. Axis blue chip fund : Fund made entry in 2010, is currently rated as 1 star. The fund has a very decent size , as it was also favoured by a lot of people. Low expense ratio of 1.56 . The fund PE 17.92 is very decent. Mirae asset large cap fund : Made its debut in 2008, the fund is rated as 1. The fund has a very decent size in the category and was also favoured by lot advisors. Fund has a low expense ratio. PE 19.98 is a bit high. Bank of India Bluechip cap fund : A very new entrant to the category in 2021 , launched during covid times, so the fund is still not rated. Very small size of just 144 cr. Of Course the expense ratio is very high. The PE is at 18.65 is decent. Quant Large cap fund : Launched in 2022, it’s the latest one in the category. Not rated yet. Small fund size of about 997.48. Expense ratio is high of 2.17. High PE of 20.53 Trailing Returns : 1 Year Trailing return First quartile,> 46% as always is taken by none other than Quant Large Cap fund 2nd quartile, 44-46% we have BOI Bluechip fund and JM Large Cap fund. 3rd quartile , 35-40%, ICICI Pru Bluechip fund and Nippon India Large cap fund 4th quartile, 30-35%, HDFC Top 100 fund, Kotak Bluechip fund, Aditya Birla SL Frontline Equity, Canara Robeco Bluechip Equity Fund. 5th quartile 25-30%, Axis bluechip fund , SBI blue Chip fund 6th quartile 20-24%, Mirae asset Large cap fund 3 Year Trailing Return 1st Quartile, >24% Nippon Large cap fund took lead in the last 3 years 2nd quartile 20% -24% , The lead was taken by JM large cap fund, ICICI Pru Bluechip
The category of Large and Mid cap fund has been long in existence but as the mid cap were under performer for long duration this category did loose its steam and was out of flavour for long period. The Last few years growth in mid cap fuelled its growth. But he category had few leaders like Mirae asset large & Midcap fund and Kotak Equity opportunities fund which were found to be in lots of portfolio even now. Fund Name Year Of Inception Fund rating ( Crisil rated ) Portfolio Size ( In Cr ) Expense ratio PE ratios Turn over Bandhan Core equity fund 2005 5 4,394.78 1.89 21.22 71% ICICI Pru large and midcap fund 1998 5 13,117.39 1.72 18.99 58% Quant large and midcap fund 2006 5 2,535.89 1.96 20.52 179% Motilal oswal large and Midcap equity fund 2019 4 4,036.22 1.86 36.02 69% HDFC large and midcap fund 1994 4 18,691.62 1.7 19.06 2% Kotak Equity opportunities fund 2004 3 21,495.8 1.62 21.52 16% SBI large and midcap fund 1993 3 22,689.5 1.65 22.99 52% Axis Growth Opportunities fund 2018 3 12,096.56 1.7 27.56 23% Canara Robeco emerging equities fund 2005 2 21,508.53 1.63 21.64 19% Mirae asset large & Midcap fund 2010 2 34,974.46 1.55 19.30 52% Bandhan Core equity fund : Bandhan core equity is a 5 star rated fund, it has kept a very high turnover ratio, fee is bit on higher side , it has decent PE as on date. ICICI Pru large and mid cap fund : ICICI Pru large and mid cap has a decent fund size, the expense ratio is also decent. Even the PE 18.99 shows the fund has wise stocks selection. Quant large and mid cap fund : Quant is the smallest fund in the list , so has the highest expense ratio, highest turnover which is normal for quant AMC. Decent PE of 20. Motilal oswal large and Midcap equity fund : Motilal Oswal large and midcap equity fund has small fund size , high expense ratio and turn over ratio , the fund seems the same as that of bandhan Core equity fund but the PE of 36.02 is very high. HDFC large and mid cap fund :One of the oldest funds, HDFC Large and Mid cap fund has decent fund size, The expense ratio is normal in line with the fund size. The fund has kept its turnover at just 2% and a great PE of 19%. Kotak Equity opportunities fund : Kotak Equity Opportunity fund is one of the biggest funds in the category. It used to be a favorite investment option a while back. Low expense ratio , low turnover and the PE seems in line with the category. But very low turnover in the stocks. The fund is 3 rated SBI large and mid cap fund : Another giant fund in the category with low expense ratio. The fund is Crisil rated 3 at the moment, Decent turnover ratio of 52% and low expense ratio.The PE of 23 is a bit on the high side. Axis Growth Opportunities fund : Axis Growth opportunity fund 3 star rated fund with decent fund size , expense ratio is also decent, high PE is seems quite dangerous. Low turnover ratio. Canara Robeco emerging equities fund : Another Giant fund in the category is the Canara Robeco emerging equities fund, it is a 2 star rated fund. Expense ratio is Low. PE seems in line with the fund category. Turnover is low. Mirae asset large & Midcap fund : The Mirae asset Large & mid cap fund has been the biggest fund now earning a rating of 2 star. Lowest Expense ratio. Low PE and turnover is decent. Trailing Returns : 1 year Trailing Return : Quant large and MidCap lead the category with 67.55% return, Second quartile with 54.86% of Bandhan Core Equity fund and Motilal Oswal large and Midcap fund 51.39%. Third quartile HDFC Large and mid cap fund , ICICI Pru Large & Mid Cap fund and Kotak Equity Opportunities fund Fourth quartile was the lowest star rated fund Canara Robeco Emerging Equities and Mirae Asset Large and Midcap fund. Last quartile for our discussion was taken by SBI large & MidCap fund and Axis growth Opportunities fund. 3 year Trailing Return : Quant Large & Midcap were the leader again in the category with 28% return. Second quartile range between 24-26% ICICI Pru Large & Midcap fund, Motilal Oswal Large & MidCap fund, HDFC Large & MidCap fund , Bandhan Core Equity fund Third Quartile was taken by SBI Large & Midcap fund and Kotak Equity Opportunities fund. Last in the category was the Axis growth Opportunities fund, Canara Robeco Emerging Equities and Mirae Asset Large & Midcap fund. 5 year Trailing Return : Quant Large & Midcap Was the leader in 5 years trailing return Next in Quartile for returns above to between 22-23% HDFC large & MidCap and ICICI Pru Large and Midcap 3rd quartile 21-22 % Kotak Equity Opportunities fund, Bandhan Core Equity fund, Axis growth Opportunities fund. 4th quartile of 20-21% SBI large & MidCap fund and Mirae Asset Large & Midcap fund Last were below 20% Canara Robeco Emerging Equities Motilal Oswal Large & MidCap fund was not launched 10 year Trailing Return : Top quartile is maintained by Quant Large & Midcap fund and Mirae Asset Large & Midcap fund. The 2nd quartile is Canara Robeco Emerging Equities and Kotak Equity Opportunities fund. 3rd quartile 15-17% SBI large & MidCap fund, Bandhan Core Equity fund, ICICI Pru Large & Mid Cap fund. 4th quartile HDFC Large & MidCap fund 14.46%. Motilal Oswal Large & MidCap fund and Axis growth Opportunities fund do not have that long history. General observation : This category has been very unique in the sense, if we look at the returns in the last 1 or 3 years, the returns are very divergent but the they tend converge in range
Equity-Linked Savings Scheme (ELSS) is an equity mutual fund investment that invests at least 80 per cent of its assets in equity and equity-related instruments. ELSS can be open-ended or close ended. Tax Deduction under Section 80C: This is the main tax benefit of ELSS. Up to ₹1.5 lakh of your investment in ELSS can be deducted from your taxable income under Section 80C of the Income Tax Act. Think of it as reducing your taxable income by the amount you invest in ELSS. This translates to a lower tax bill. Lock-in Period: There’s a catch – you can’t withdraw your ELSS investment for at least 3 years. This is called the lock-in period. It’s important to consider your investment horizon (how long you plan to invest) before choosing ELSS. It’s best suited for long-term financial goals. Potential for Higher Returns: ELSS invests in the stock market, which carries risk but also has the potential for higher returns compared to other tax-saving options like PPF or FDs. Fund Name Fund rating ( Crisil rated ) Portfolio Size ( In Cr ) Expense ratio PE ratios Turn over HDFC ELSS tax saver fund 5 14,474.85 1.73 19.86 22% SBI long term equity 5 23,411.67 1.62 20.09 15% Quant ELSS tax saver fund 4 9,360.89 1.76 17.73 130% Bank of India Tax saver fund 4 1,297.72 2.11 17.73 73% Motilal Oswal ELSS tax saver fund 4 3,402.11 1.85 35.02 74% Franklin India ELSS tax saver fund 4 6,383.38 1.81 21.59 20% Kotak ELSS tax saver fund 3 5,608.21 1.77 19.21 13% DSP ELSS tax saver fund 3 14,859.56 1.66 16.59 35% Mirae Asset ELSS tax saver fund 2 22,471.76 1.57 21.18 84% Canara Robeco ELSS Tax Saver Fund 2 7,760.97 1.76 23.08 24% Axis ELSS Tax saver fund 1 35,641.94 1.53 34.07 17% Trailing Returns : 1 Year Returns : Quant ELSS tax saver , Bank of India ELSS, SBI long term Equity fund and Motilal oswal ELSS tax saver had been the front runner in one year above 50% . HDFC ELSS tax saver, Franklin India Tax saver, Kotak ELSS tax saver and DSP ELSS tax saver were the next category to have returns in the range of 40%. Canara Robeco ELSS tax saver, Mirae Asset ELSS tax saver fund , Axis ELSS tax saver were the last range of 30% 3 Years Returns : SBI long term Equity Fund , Quant ELSS tax saver, HDFC ELSS tax saver returns were in range 26-27%. Next close were Motilal oswal ELSS tax saver and Bank of India ELSS fund which came close to 23-24% range Franklin India Tax saver fund , DSP ELSS tax saver fund and Kotak ELSS tax saver fund were returns 20-21% Mirae Asset ELSS tax saver fund, Canara Robeco ELSS tax saver fund gave return in 16% Axis ELSS tax saver fund were the last in the category 10% 5 Years Returns Quant ELSS tax saver was leader in 5 years return with 31.53% followed by not to close but at 25% Bank of India ELSS fund. SBI Long term equity and Motilal Oswal ELSS tax saver were in next category to give returns 20% DSP ELSS tax saver fund, Kotak ELSS tax saver fund and Mirae Asset ELSS tax saver fund gave 19% returns. Canara Robeco ELSS tax saver, HDFC ELSS tax saver, Franklin India Tax saver fund gave returns of 18% Axis ELSS tax saver fund gave return of 13.75% 10 Years Returns Quant ELSS tax saver in 10 years returns had the given the 24.79% Bank of India ElSS fund was next in the category 18.34% DSP ELSS tax saver and Kotak ELSS tax saver gave return of 17% SBI Long term equity fund ,Franklin India Tax Saver fund, Canara Robeco ELSS tax saver and Axis ELSS Tax saver fund around 15-16 % HDFC ELSS tax saver fund was around 14.09 Motilal Oswal ELSS tax saver , Mirae Asset ELSS tax saver fund did not have that much history. Rolling returns : We have considered rolling returns of 5 years as ELSS has a lock-in of 3 years . As an ELSS we generally consider returns above 15% to be a good return delivered by the fund, So any fund which have been able to generate rolling return for 5 years period of 15% and above, for maximum times should be considered a stable fund We see Quant ELSS Tax saver fund and Mirae Asset ELSS tax saver are in the first quartile, also the Negative side has been limited for both of these funds. Bank of India ELSS , Canara Robeco ELSS tax saver , DSP ELSS tax saver and Kotak ELSS managed to be above 50% of times in the above quartile. They also managed to be not negative in this period. Franklin India ELSS Tax saver ,Axis ELSS tax saver fund could keep this returns for almost close to 50% of times. Franklin did Deliver negative return but Axis managed to avoid the negative. SBI Long term equity, Motilal Oswal ELSS tax , HDFC ELSS fund saver fund have not been consistent in the category of 15% above. HDFC ELSS and SBI long term equity funds had delivered negative returns. The negative return percentage might be ignored since it was very low.So in this category we need to see which funds are maintaining the highest number in 0-12% . Motilal Oswal ELSS tax fund , HDFC ELSS Tax Saver fund, SBI Long term fund and Franklin India ELSS Tax Saver for close to 50%of times delivered returns in range of 0-12% . Which shows they have not been very consistent in return. Axis ELSS tax saver was for at least 30% of time in this range. Bank of India Tax saver fund , Kotak ELSS Tax saver fund , DSP ELSS tax saver were close to 25 % times in this range . Canara Robeco ELSS tax saver was almost 20% of the time in this range. Quant ELSS tax saver and Mirae Asset
In the aftermath of the COVID-19 pandemic’s economic disruptions, the Indian market has embarked on a remarkable recovery journey. This article delves into the nature of this resurgence, explores investor behavior, and examines the investment channels currently favored by Indian participants. A Post-Pandemic Bull Run The Indian market has witnessed a sustained uptrend since the second quarter of FY2022, marking a clear departure from the initial pandemic-induced downturn. This bull run, lasting for at least three years, signifies a robust recovery and renewed investor confidence. Investor Behavior: Responding to the Uptrend The market’s positive trajectory has influenced investor behavior. We’ve observed a surge in investor activity, with individuals actively seeking investment opportunities to capitalize on the growth potential. This shift reflects a growing risk appetite and a willingness to participate in the market’s upswing. Market Performance: Year Opening Closing %antage 2023-24 58,991.52 73,651.35 24.85 2022-23 58,568.51 58,991.52 0.72 2021-22 49,509.15 58,568.51 18.30 2021-22: This year marked a strong rebound for the Indian stock market after the initial shock of the COVID-19 pandemic. It delivered a return of 18.30%, indicating a significant bull run. 2022-23: The market performance in this year was more subdued compared to the previous year. It witnessed a flat return of around 0.7%, suggesting a period of consolidation or slight correction. 2023-24: The market regained momentum in this year, delivering a robust return of 24.85%. This signifies a continuation of the bull run that began in 2021-22. FY 2021-22 The year after covid, FY 2021-22 the following the gains were delivered by the market Index Opening Closing Return % Sensex 49,509.15 58,568.51 18.30 Nifty 50 14,690.70 17,102.55 16.42 Nifty Bank 33,303.90 36,373.60 9.22 Nifty Midcap 100 23,693.15 29,692.30 25.32 Nifty Small cap 100 8,113.15 10,436.25 28.63 Broader Market Performance It’s important to consider how the broader market performed beyond just the headline index. While you mentioned a point-to-point return, including specific details (e.g., percentage increase) would offer a more complete picture. Did all segments outperform the previous year, or were there any variations? Did smaller or mid-cap stocks outperform large-cap stocks, indicating broader market participation? Government Stimulus and Inflation Injections of money into the economy by governments worldwide likely played a significant role in the stock market’s initial rebound after the pandemic. However, such a stimulus can also contribute to inflation if not carefully managed. The observation about inflation not being felt in 2020-21 but rising in 2021-22 aligns with this notion. The effects of stimulus programs often take time to manifest, and the rising US inflation by year-end 2021 (at 8.5%) suggests a potential consequence of the earlier measures. The article above states how the US Fed reserve helped to create cash and help the country from going into recession (https://www.brookings.edu/articles/fed-response-to-covid19/). Which was invariably linked to high inflation in the countries. But there were many reasons why the inflation increased in the economy , As discussed the world over we are discussing a few reasons which caused the inflation All-in money printing totaled $13 trillion: $5.2 for COVID + $4.5 for quantitative easing + $3 for infrastructure. The money supply normally grows about 7% per year but quantitative easing (QE) of more than $4 trillion has increased money supply by 14% per year over the past decade. The $5 trillion in COVID relief increases the money supply by 27% and does so very quickly – the floodgates are open. Quantitative Easing did not bring inflation as measured by the Consumer Price Index (CPI), so that experiment has been declared a success, but the reality is that QE did inflate stock and bond prices, so there was inflation but not in the usual metric. By contrast, much of the COVID relief money will go directly into the hands of the consumer, so CPI will increase. Supply Side bans imposed on China by the US on manufacturing of Semiconductor , led to rising commodity prices, while at the same time caused a serious disruption of the world’s supply chain. There were the shipping snarls and bottleneck in global supply chain industry caused by Covid-19, worker shortages , the labor market tightened during 2021 and 2022, core inflation rose as the ratio of job vacancies to unemployment increased, The spikes in energy and food prices caused by the invasion of Ukraine Russia The multiple reasons stated above lead to inflation. Inflation started increasing after the first quarter of the financial year in the world. First of all it was thought to be transient in nature due to shipping bottlenecks which were created , towards the latter part of the year the other issues also caught up. Towards the end of this year the inflation has reached its highest levels and even the major conflict dented the sentiments which caused markets to close at level lower in the last few months. FII Equity inflow But we see that during the year the FII were net sellers throughout the year, and toward the end of the year the maximum outflow happened. The selling pressure further intensified as the oil prices increased towards the year end as war signals intensified. So even with the high selling from FII, the DII continued buying throughout. And the market was supported by the heavy DII and retail buying. So the question that we need to answer in context of Indian market for the year 2021-22 Why did FII were net sellers in the Indian Market ? One reason was tapering in the US market – It was only in the November 2021 meeting that the Fed took a decision and began reducing the monthly pace of its Treasury purchases by $10 billion and its MBS purchases by $5 billion in November and December. The Fed doubled the pace of tapering at its December 2021 meeting, and Fed Chair Jerome Powell confirmed in January 2022 that the plan is to end asset purchases in early March 2022. The Fed has made clear that tapering will precede any increase in its target for short-term interest
Fund Name Year Of inception Fund rating ( Crisil rated ) Portfolio Size ( In Cr ) Expense ratio PE ratios Exit Load ITI Mid Cap Fund Reg (G) 2021 5 1,085.02 2.13% 25.50 1% for redemption within 1 year Motilal Oswal Midcap Fund Reg 2014 5 14,445.55 1.66% 57.08 1% for redemption within 1 year HDFC Mid Cap Opportunities Fund 2007 4 75,382.3 1.39% 23.55 1% for redemption within 1 year Nippon India Growth Fund 1995 4 32,970.78 1.59% 30.36 1% for redemption within 30 days Edelweiss Mid Cap Fund 2007 4 6994.17 1.75 33.31 1% for redemption within 90 days SBI Magnum MidCap Fund Reg (G) 2005 3 21,127.45 1.66 40.57 1% for redemption within 1 year HSBC Midcap Fund Reg (G) 2004 3 11,882.09 1.72 37.31 For units in excess of 10% of the investment, 1% will be charged for redemption within 365 days Quant MidCap Fund 2008 3 9,282.92 1.73% 31.19 0.5% for redemption within 90 days Kotak Emerging Equity (G) 2007 3 50,601.84 1.42 30.57 For units in excess of 10% of the investment, 1% will be charged for redemption within 365 days Axis Mid cap fund(G) 2011 2 30,854.63 1.57 35.59 For units in excess of 10% of the investment, 1% will be charged for redemption within 365 days PGIM India Mid Cap Opp Fund Reg (G) 2013 1 11,216.06 1.7% 41.54 0.5% for redemption within 90 days ITI Mid Cap Fund Reg: The fund is currently 5 star rated , and has a very high expense ratio of 2.13% with low portfolio size 1,085 cr. The fund is a very recent entry in th category in 2021. Current PE of the fund is 25.50. MotilalOswal Mid cap fund: Crisil has rated this 2014 launched fund as 5 star. The fund has a decent size of 14,445 cr with an expense ratio of 1.66%. It has the highest PE among the funds considered. HDFC Mid Cap Opportunities Fund : The fund was launched in 2007, Currently rated as 4 star by CRISIL. This is the biggest fund in the category at 75,382 cr. The lowest expense ratio of 1.39%. The fund has PE 23.55 inline with the category. Nippon India Growth Fund : This is one of the oldest funds in the category 1995. Currently rated by CRISIL as 4 star. The fund is 3rd highest fund size in the category with 32,970 cr. The expense ratio is decent with 1.59%. PE is bit high with 30.36 Edelweiss Mid Cap Fund : The fund was launched in 2007. CRISIL has rated it as a 4 star fund. FUnd size small at 6994.17cr. So the expense ratio is high at 1.75%. The fund PE is 33.31 a bit high. SBI Magnum MidCap Fund: The fund was launched in 2005, Currently CRISIL rated 3. A decent fund size of about 21,127 cr. With expense ratio of 1.66. Fund PE of 40.57 is a bit high. HSBC Midcap Fund : The fund was launched in 2004, CRISIL rated as 3. Portfolio size of 11,882.09 cr with expense a bit high of 1.72%. PE is high on 37.31. Quant MidCap Fund: The fund was launched in 2008, it was run by escorts mutual fund under the name of escort opportunities fund. It was changed to quant AMC took over the business of escorts , in 2018. The fund size is small 9,282 cr. With a high expense ratio of 1.73%. Currently CRISIL is rated as 3 star. The fund has a bit high PE of 31.19 Kotak Emerging Equity : The fund was launched in 2007. Currency CRISIL rated as 3 star. The fund is Second largest fund size of Rs 50,601,84 cr. Low expense Ratio 1.42. Current PE of 30.57. Axis Mid cap fund Fund: The fund was launched in the year 2011. Currently CRISIL is rated as 2. This is the 4th largest fund size in the category with a size of 30,854.63. The Fund has a high PE of 35.59. PGIM Mid cap fund Fund: The fund was launched in the year 2013, CRISIL rated as 1, The fund size is low at 11,216 cr. High expense ratio 1.7%. High PE of 41.54 Trailing Returns : Scheme 1 month 3 months 6 months 1 year 3 years 5 years 7 years 10 years 15 years 20 years Axis Midcap Fund (G) 7.18 11 27.29 44.72 18.62 26.54 20.6 18.09 Edelweiss Mid Cap Fund Reg (G) 9.08 15.29 28.84 57.53 26.95 32.74 21.34 20.71 21.23 HDFC Mid Cap Opportunities Fund (G) 4.89 10.98 20.1 46.64 29.04 31.24 20.04 19.68 21.53 HSBC Midcap Fund Reg (G) 7.21 10.47 24.22 56.55 23.96 27.21 16.52 18.67 18.75 19.56 ITI Mid Cap Fund Reg (G) 5.55 7.88 24.81 62.87 24.46 Kotak Emerging Equity (G) 7.25 12.95 29.65 47.54 24.16 30.6 20.19 20.62 19.91 Motilal Oswal Midcap Fund Reg (G) 7.15 21.07 33.24 61.92 37.28 34.58 22.26 21.35 Nippon India Growth Fund (G) 5.93 12.25 25.84 51.06 27.46 32.12 21.29 19.57 17.6 21.44 PGIM India Mid Cap Opp Fund Reg (G) 6.4 12.5 20.71 33.35 16.2 32.56 19.51 17.26 Quant MidCap Fund (G) 2.34 0.52 13.91 51.46 29.7 37.15 24.75 20.2 16.31 14.24 SBI Magnum MidCap Fund Reg (G) 6.08 10.81 20.98 36.09 23.07 30.08 17.97 18.04 18.21 1 year trailing 1st quartile : 55.5- 63%: ITI Mid Cap Fund Reg (G), Edelweiss Mid Cap Fund Reg (G), HSBC Midcap Fund Reg (G), Motilal Oswal Midcap Fund Reg (G) 2rd quartile : 48- 55.5% : Nippon India Growth Fund (G), Quant MidCap Fund (G) 3rd quartile : 40.5- 48% : HDFC Mid Cap Opportunities Fund (G), Kotak Emerging Equity (G), Axis Midcap Fund (G) 4th quartile : 33- 40.5 % : PGIM India Mid Cap Opp Fund Reg (G), SBI Magnum MidCap Fund Reg (G) 3 years trailing return 1st quartile : 32.5-38 %: Motilal Oswal Midcap Fund Reg (G) 2rd quartile : 27%- 32.5%: HDFC Mid Cap Opportunities Fund , Nippon India Growth Fund (G),Quant MidCap Fund (G) 3rd
Expansion/ Recovery During expansion, the economy experiences relatively rapid growth, interest rates tend to be low, and production increases. The economic indicators associated with growth, such as employment and wages, corporate profits and output, aggregate demand, and the supply of goods and services, tend to show sustained uptrends through the expansionary stage. The flow of money through the economy remains healthy and the cost of money is cheap. However, the increase in the money supply may spur inflation during the economic growth phase. Peak/ Growth The peak of a cycle is when growth hits its maximum rate. Prices and economic indicators may stabilize for a short period before reversing to the downside. Peak growth typically creates some imbalances in the economy that need to be corrected. As a result, businesses may start to reevaluate their budgets and spending when they believe that the economic cycle has reached its peak. Contraction/ Recession A correction occurs when growth slows, employment falls, and prices stagnate. As demand decreases, businesses may not immediately adjust production levels, leading to oversaturated markets with surplus supply and a downward movement in prices. If the contraction continues, the recessionary environment may spiral into a depression. Trough / Slump The trough of the cycle is reached when the economy hits a low point, with supply and demand hitting bottom before recovery. The low point in the cycle represents a painful moment for the economy, with a widespread negative impact from stagnating spending and income. The low point provides an opportunity for individuals and businesses to reconfigure their finances in anticipation of a recovery. Different phases have different sectors or stocks that can give performance . Your portfolio can be aligned and understood with the same investment styles. ( https://wealthinn.in/investing-strategy-value-vs-growth/)
The concepts of value and growth were first introduced by Eugene Fama and Kenneth French in their 1992 Three-Factor Model 1 to help explain long-term investment returns in excess of the market. Growth Growth stocks as those that have low book-to-market-value ratios. The benefit of Growth stocks is the ability to potentially grow their cash flows over time and generate a higher return on assets in a way that’s less representative of the current book value of their assets.They are by nature have high P/E , RoE , P/S, Profit margins. Growth stocks often derive a bigger portion of their value from cash flows farther out in the future, so they may exhibit more sensitivity to changes in underlying interest rates, which affect the denominator in the discounted cash flow calculation. Value Value stocks as those equities that have high book-to-market-value ratios. The intuition is that Value stocks have low prices relative to their “intrinsic” value, i.e., their book value, but are characterized by high dividend yields and are therefore perceived to be undervalued, they have by nature low P/E , RoE , P/S Profit margins. Value stocks’ cash flows are typically more evenly spread out, and so are less sensitive to changes in interest rates. So , in Crux when capital is inexpensive, investors tend to invest in the future, i.e., Growth stocks, but if capital is expensive—which is normally the case when the inflation rate is high as central banks raise rates to fight it—investors generally prefer to focus on companies that have a shorter duration, i.eValue stocks. The post-pandemic environment of firmer inflation, higher yields and, until recently, above-potential growth has seen the resurgence of Value investing after 15 years of underperformance, prompting many commentators to herald the beginning of a long period of Value dominance. How Macros have affect Growth and Value ? We see that the value regime is favoured with high inflation , high growth and high bond yield . The growth is favoured with low inflation , low growth times and low bond yields. Historically Looking at Value and growth For a long time, value investing was the king of the investment game. The Slowdown and Growth’s Rise: The 2008 financial crisis brought on a period of sluggish economic growth. This slow growth environment favoured companies expected to grow quickly (growth stocks). Why Growth Became King: Low inflation and central bank actions like keeping interest rates super low made things even better for growth stocks: Basically, borrowing money was cheaper than inflation, making future earnings from these fast-growing companies more valuable. Since growth was hard to find, any company showing promise became super attractive. The Tables Turn: Value’s Comeback? With COVID vaccines and economies reopening, inflation spiked. This inflation, along with events like the war in Ukraine, forced central banks to raise interest rates again. Higher interest rates tend to help value stocks because they make those future earnings from growth stocks less valuable Economic Style Rotation model According to this model value and growth cycle have six phases in which they act early expansion, ( Recovery / Expansion phase ) mid expansion, ( Recovery / Expansion phase ) late expansion, ( Peak/ Growth ) early pause, ( Peak/ Growth )( Contraction/ Recession ) mid pause, (Contraction/ Recession ) late recession.(Trough / Slump) The phases are measured by the level of the PMI First 3 phase PMI increases Second 3 phases the PMI Falls During the “risk-on” phases (dark blue, phases 1 and 2), investors rotate to value stocks which may be or are about to generate above-average earnings growth. However, as the expansion ages and late cycle arrives (phase 3), fewer and fewer companies can deliver high rates of growth. During these periods, the market may narrow, M&A and IPO activity often heats up, and a smaller group of hot growth stocks (and other growth stocks) that “excite” investors may lead the market averages higher. Then, as the economy begins to slow and growth becomes scarce (phases 4 and 5), investors are more willing to pay up (higher price multiples) for growth stocks that continue to deliver. Finally, late during a recession or slow down (phase 6), value stocks may outperform as investors forecast the next recovery. Where is INDIA currently For years starting 2014 the Manufacturing PMI was in the range < 55 which was the risk off stage Second phase of the economy. So we had the Growth Stocks performing . and after stage 6 which was during the COVID value investment had started performing . Even if we look at the inflation data, the 2014 era was marked by the beginning of easing of inflation in the Indian economy , and thus favouring the growth investment period . The 10 year bond yield had remained stable at around 7-8% in the period of 204-2020, which was a period of easing of rate of interest market by low rates as per those times. The rates as on today in the range of 7-8% is quite high favouring a value outlook. Currently we are in a phase somewhere between early expansion to mid expansion phase, where we have high inflation rates and the government is trying to control the same with high rates of interest. Also the country is growing at a high rate of growth . The bond prices are a bit on higher side and money flow is good. So a lot of growth in the economy is available at cheap prices, no one is ready to pay price high valued assets and thus the cycle for Value investing is going good and thus sectors and stock which have been value orientation or early recovery stage are showing positive outlook.