Mutual Funds: The New-Age Investment Mantra

The mutual fund industry in India has seen a remarkable surge in acceptance among retail investors, as evidenced by the exponential growth in Systematic Investment Plans (SIPs). Starting at a modest ₹3,100 crore at the beginning of FY17, monthly SIP contributions have now crossed the ₹23,000 crore mark every month, reaching ₹23,332 crore in July 2024. This eightfold increase highlights the growing confidence of individual investors in mutual funds as a reliable investment avenue. [EasyDNNnews:PaidContentStart]

Mutual funds offer a versatile tool for all financial needs, from short-term savings to long-term wealth creation, including building intergenerational wealth. They provide access to a diversified portfolio of assets managed by professional fund managers, making them an attractive option for investors with varying levels of expertise. The disciplined approach encouraged by SIPs, coupled with the power of compounding, has made mutual funds a preferred choice for systematic wealth accumulation 

Moreover, increased financial literacy and awareness campaigns have played a crucial role in demystifying mutual funds for the average investor. The convenience of SIPs, which allows investors to contribute small, regular amounts, has further democratized access to market-linked returns, enabling a broader segment of the population to participate in wealth creation. The accessibility of mutual funds through digital platforms has also played a crucial role, making investing in mutual funds seamless and convenient. As mutual funds continue to evolve and innovate, they are likely to remain a cornerstone of retail investment strategies, catering to the diverse financial goals of India's growing investor base. 

Methodology 

This section discusses the process we used to pick the award winners in each category, the best equity fund manager, and the best AMC in equity, debt and hybrid. 

Equity Mutual Funds —
We have awarded mutual funds from the below mentioned categories:
■ Large-Cap
■ Large and Mid-Cap
■ Mid-cap
■ Small-Cap
■ Flexi-cap
■ Equity Linked Saving Scheme (ELSS)
■ Value/Contra n Focused 

We have ranked the funds based on their performance regarding two major parameters:
 1) Returns — The weightage given to this parameter is 70 per cent. Here we measured the funds’ long-term, medium-term and short-term rolling returns and gave equal weightage to them. ■ Long-Term Returns — For measuring long-term returns, we calculated five-year rolling returns over 10 years. Then we calculated percentile rank for each rolling period. Finally, we calculated the median of all the percentile ranks.
■ Medium-Term Returns — For measuring medium-term returns, we calculated three-year rolling returns over 10 years. Then we calculated percentile rank for each rolling period. Finally, we calculated the median of all the percentile ranks.
■ Short-Term Returns — For measuring short-term returns, we calculated one-year rolling return over three years. Then we calculated the percentile rank for each rolling period. Finally, we calculated the median of all the percentile ranks. 

2) Risk — The weightage given to this parameter is 30 per cent. Here we measured the funds’ maximum drawdown, beta and downside deviation. For gauging this, we rolled each risk factor for every fund over three years for 10 years and then calculated its median.
■ Maximum Drawdown — The weightage given to this parameter is 40 per cent.
■ Standard Deviation — The weightage given to this parameter is 30 per cent.
■ Expected Shortfall —The weightage given to this parameter is 30 per cent. 

We then combined the final returns and the risk score to get the final ranking funds in each category. 

Fund Manager — Here we have ranked the equity fund managers on various AUM weighted return and risk parameters. Furthermore, we gave equal weights to all the parameters.
■ Returns — Here we measured the performance of all the equity fund managers based on AUM weighted one-year, three-year and five-year trailing returns.
■ Risk — Here we gauged how each equity fund manager performed in terms of risk-adjusted return parameters. To understand this, we calculated the AUM weighted Sharpe and Sortino ratios. 

Fund House — We came up with the best fund house in three major categories i.e. equity, debt and hybrid. Various risk and return parameters were calculated to come up with a winner in each category. We calculated three-month, six-month and one-year AUM weighted trailing returns and asset weighted standard deviation was used as the risk parameter. 

Note: All the calculations are as of July 2024. 

Click here to download list of Mutual Fund Awards 2024 
 

[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]

[EasyDNNnews:UnPaidContentEnd]