Best Equity Mutual Fund Managers

When it comes to mutual fund selection, a fund manager is one of the important aspects to look at before investing. A fund manager is as good as the captain of a ship. Although most of the fund houses have their own investment philosophy that guides stock selection, the fund manager plays an important role in applying his or her discretion in the stock selection process and building a robust portfolio. In this article, Henil Shah identifies some of the top equity mutual fund managers across categories

After nearly two heady years of relentless uptick, the stock market experienced the jitters in 2022. Globally, inflation ballooned to unprecedented levels after years of loose monetary conditions. The flaring up of the Russia-Ukraine conflict only added fuel to the fire. Global markets that had previously binged on abundant liquidity and low interest rates were jolted out of their trance as global central banks tamed the blaze with aggressive rate hikes. Amid this upheaval, the domestic market remained on tenterhooks, albeit exhibiting relative strength. Underlying preferences rapidly shifted away from the traditional growth stocks towards the much-ignored segment of value stocks. Sector rotation also played out faster than usual.
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Nifty 50 ended the volatile 2022 in the green zone with an upside of mid-single digit but below the return given by a bank fixed deposit (FD). When the Nifty hit a 52-week low of 15,293.5 in the peak of the 2022 summer, investor portfolios were naturally bleeding but when the index zoomed over 3,519 points to hit all-time record high of 18,812.5 in 2022 winter, the smile was once again missing from the street as the mood was not so jubilant in the broader market.

In the action-packed 2022, Nifty saw 200 points plus rallies 17 times with the largest single-day gain of 419.2 points on February 15, 2022. On the other hand, there have been another 20 instances when the index has crashed at least 200 points in a day. February 24, 2022 was one of the worst days for Nifty 50 when it crashed over 300 points after Russia invaded Ukraine. The gatekeepers at mass market equity funds have had to dig deep to manoeuvre their portfolios through these trying conditions. The growth-driven style tilt favoured by many of these seasoned practitioners faced the tempest of the market’s swing towards value. Even as conditions continued to be far from conducive, they have drawn on years of experience to hold their nerve. 

As can be seen in the table above, the sectoral funds did quite well in 2022 with automobile, banking & financial services and infrastructure funds leading the way. On the contrary, IT and pharmaceutical sector funds were the worst performers in 2022. However, if we exclude sectoral, thematic and index funds, then value funds did way better than others. That said, in this article we would be highlighting some of the best equity mutual fund managers. Our study looks at their performance based on one-year, three-year and five-year rolling returns, standard deviation and Sharpe ratio. Moreover, the minimum assets under management (AUM) of the fund should be ₹100 crore.

The fund managers insist that a growth-bias will deliver superior outcomes in a market like ours. While multiples for this basket have been pegged back amid recent market volatility, they are adamant that business models are not broken and remain on a strong footing to weather turbulences. Yet, even as many are comfortable sitting on the ‘growth’ side of the fence, they acknowledge the need to be responsive to changing market realities and have made subtle changes to give their funds an edge.
 

Methodology
 

Fund Universe — Our study covers open-ended equity mutual funds such as Large-Cap funds, Mid-Cap funds, large and mid-cap funds, Small-Cap funds and flexi-cap funds. Moreover, we have only included those funds having minimum AUM of Rs 100 crore. We have excluded sectoral funds, thematic funds and index funds from the evaluation.

Time Period — Our study spans from January 2013 to December 2022. Moreover, the fund manager has managed the fund at least for five years i.e. from January 2018 to December 2022. 

Risk — To calculate risk, we have taken standard deviation of the eligible funds along with their respective Sharpe ratio to understand their performance based on risk-adjusted returns. 

Returns — Here we have calculated one-year, three-year and five-year rolling returns of eligible funds. Rolling return is calculated for a particular period on a continuous basis or fixed frequency. Simply put, it is like calculating trailing returns on a daily basis. Let’s understand with an example. Suppose we want to see the five-year return of a fund over the 10-year period of 2010 to 2020. So, the rolling return would mean calculating the five-year return on each day during this period. You would calculate the five-year return as on January 1, 2010, January 2, 2010, and so on till December 31, 2020. It will show you a spread of returns had you invested on any day during this period (2010 to 2020) for a five-year period. 

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