Fund of Fortnight

This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.[EasyDNNnews:PaidContentStart]
 

Nippon India Multi-Cap Fund Direct Growth
 

Reason for recommendation

Over the past few months the equity market overall has generated good returns. However, it is the broader market stocks that stole the show and are likely to continue doing so. Hence, our pick for this issue is from the multi-cap segment that invests across various market capitalisations with at least 50 per cent in the broader market stocks. Nippon India Multi Cap is one such fund from this category. The fund has outperformed its category average in the trailing one-year, three-year and five-year periods. The fund’s alpha of 8.64 is significantly higher than the category average of 1.72.

This means that the fund has outperformed the market by a significant margin. The fund’s beta of 1.05 is slightly above the market average of 0.46. This means that the fund is slightly more volatile than the market. Nevertheless, it is compensated by the fund’s Sharpe ratio of 1.76, which is higher than the category average of 0.77. This means that the fund generates more return per unit of risk. The fund’s Sortino ratio of 3.95 is much higher than the category average of 1.51. This means that the fund is much less sensitive to downside risk. 

The fund’s portfolio is concentrated with the top 10 stocks accounting for 33 per cent of the portfolio. The top five stocks account for 18 per cent of the portfolio and the top three stocks account for 12 per cent of the portfolio. The fund’s top five holdings are tilted towards the financial and energy sectors. Overall, the fund is a good choice for investors who are looking for a multi-cap fund with a history of outperformance. However, investors should have an investment horizon of at least three years with capacity for moderate risk.

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