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. 

Reason for recommendation 

In a volatile market, flexi-cap funds provide the perfect blend of stability and growth by offering the adaptability to invest across market capitalisations—Large-Caps, Mid-Caps and Small-Caps. Hence, our choice of MF Select this time is Parag Parikh Flexi-Cap Fund, which also holds US’ listed technology companies. The fund has outperformed its category average across all timeframes, highlighting its resilience and superior fund management. 

Over the last three months, while the category average slumped by -14.15 per cent, this fund fell only by -4.92 per cent. Over a one-year period, the fund delivered a solid 10.37 per cent return, significantly surpassing the 1.08 per cent category average. Its long-term performance is equally impressive with 18.56 per cent over three years, 24.8 per cent over five years, and 19.65 per cent over seven years, consistently outperforming the category benchmarks. 

The fund’s portfolio is well-diversified across key sectors, ensuring risk mitigation and stable growth. The financial sector holds the largest allocation at 28.58 per cent, followed by services (12.6 per cent), automobile (8.64 per cent), technology (8.49 per cent), and energy (7.11 per cent). The fund stands out in terms of risk-adjusted returns. It has the lowest standard deviation (10.68), indicating lower volatility compared to its peers. 

With a beta of 0.68, it is less sensitive to market fluctuations, making it a safer bet. The fund’s top holdings showcase a mix of blue-chip and high-growth companies. HDFC Bank Ltd. (8.11 per cent) leads the portfolio, followed by Bajaj Holdings and Investment Ltd. (6.85 per cent) and Power Grid Corporation of India Ltd. (6.24 per cent), which add diversification. The fund emerges as a top performer with strong risk-adjusted returns, sector diversification, and well-managed downside protection, and hence is suitable for moderate risk investors.