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 equity indices are at an all-time high and every segment is showing equal strength. Be it Large-Cap, Mid-Cap or Small-Cap category, all are in momentum and this scenario is likely to continue for a while. Hence, one of the best ways to play this market is to go for multi-cap funds that allocate 75 per cent of the fund assets to equities, with at least 25 per cent in each of the large, medium and small capitalisation stocks. Hence, our recommendation is from this category with Nippon India Multi-Cap as our pick for this issue. The fund has outperformed its category average in an all-time period, except for 10-year trailing return. In the one-month, three-month, six-month and one-year periods, the fund’s returns were 5.19 per cent, 17.19 per cent, 23.2 per cent and 30.32 per cent, respectively, compared to the category average returns of 3.62 per cent, 13.87 per cent, 17.47 per cent and 21.13 per cent. The fund’s three-year and five-year returns of 39.2 per cent and 17.25 per cent, respectively, were also significantly higher than the category average returns of 31.3 per cent and 16.62 per cent. The fund’s sectoral holding is heavily weighted towards financials with 29.21 per cent of the portfolio allocated to this sector. The services sector commands the second-largest sector allocation with 18.73 per cent of the portfolio.

Capital goods, healthcare and energy are the other three sectors with significant allocations, each accounting for more than 4 per cent of the portfolio. The fund’s portfolio is well-diversified with 97 stocks and the top 10 stocks account for 33.44 per cent of the portfolio. The top five stocks and the top three stocks account for 19.28 per cent and 12.66 per cent of the portfolio, respectively. Overall, the fund has a strong track record of performance relative to its category average. It has a diversified portfolio with a significant allocation to financials. Investors with higher risk appetite may want to consider investing in this fund which has a high outperformance record.