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

The market at present seems to be stretched quite a bit since the lows it registered in the month of September 2022. Broader markets, nevertheless, seem to underperform the Large-Cap stocks. Therefore, it makes more sense to invest in a mutual fund that is large-cap biased but also carries some flavour of the Mid-Cap segment. Edelweiss Large and Mid-Cap fund launched in June 2007 by JP Morgan is the one that proves to be a worthy consideration.

In terms of returns, this fund performs better than its peers and benchmark in almost all the trailing periods. In terms of rolling return, the fund has always outperformed its benchmark in three year period. Even in one year period, it has beaten benchmark returns 76 per cent of the time.

In fact, if we look at its calendar year performance, then since the year 2018 this fund has consistently outperformed its category average. Even its calendar month mean returns for the last three years is better than its benchmark as well as category average. This fund outscores the benchmark as well as the category average in terms of risk measured by standard deviation and beta. Even in terms of risk-adjusted returns as measured by Sharpe and Sortino ratios, this fund has higher numbers than its peers. 

This large-cap-biased fund invests in 67 stocks and is well diversified with only 33.75 per cent of the portfolio contributed by top 10 holdings with not more than 7.5 per cent allocated to any single stock. Speaking about its portfolio, this fund is overweight on the banking and financial services sector and its top holdings include stocks like ICICI Bank, SBI, HDFC Bank, Axis Bank, Reliance Industries, Navin Fluorine, and so on. Having said that, this fund is more suitable for moderate to moderately aggressive risk-takers.