Fund of Fortnight

Reason for recommendation

After gaining around 20 per cent from June lows, the equity market is becoming nervous at the higher level. This uncertainty is caused on account of the strengthening of the US dollar index and higher bond yields. Nonetheless, the saving grace for the Indian market is that FIIs have remained net buyers on a month-till-date (MTD) basis. This has sustained the equity market at the higher level. In such a scenario, taking a safe bet makes more sense. So, flexi-cap funds would fit better in the current situation. In this category, PGIM India Flexi-Cap Fund seems to fit well. In terms of performance, the fund has been better than its category as well as its benchmark in the long term. In the last three-year and five-year periods it has given annualised return of 29.3 per cent and 17.06 per cent, respectively. In terms of risk, despite having higher standard deviation than the category, it has generated one of the best alphas. Moreover, in terms of risk-adjusted returns such as Sharpe and Sortino ratios, it is one of the top in the category. The fund has also done well in managing the concentration risk as it invests in 43 stocks while its top 10 holdings is restricted to 45 per cent and its top three sectors account for 60 per cent. Looking at its portfolio, the fund is overweight on financials, capital goods, automobile and chemicals.

It is underweight on technology, energy and consumer staples, which looks different from the category and appropriate looking at future economic growth. Among others, the fund holds such stocks as ICICI Bank, HDFC Bank, Axis Bank, and Mahindra and Mahindra in its top holdings. The fund is managed by Aniruddha Naha along with Puneet Pal and Anandha Padmanabhan Anjeneyan. Naha also manages the Mid-Cap fund from the fund house, which again is best in its category. This is a high-risk and high-reward fund and hence makes more sense for investors with moderately aggressive to aggressive risk profile.