Fund of Fortnight
Ninad RamdasiCategories: DSIJ_Magazine_Web, DSIJMagazine_App, Fund of Fortnight, MF - DSIJ Recommendation, Mutual Fund
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.
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
Broader market indices like Mid-Caps and Small-Caps are outperforming the Large-Caps from the past seven months. Moreover, at the current price-to-earnings of the small-cap index represented by Nifty Small-Cap 100 being at 25.48 times, it is trading below its historical median PE of 34.55 times. Therefore, it is available at lot more attractive valuations. Given this scenario, we are recommending Nippon India Small-Cap Fund which has outperformed its peers and benchmark on a consistent basis. Examining its trailing returns, the fund outshines the category average across various periods.
Over the past six months, the fund has delivered an impressive 26.88 per cent return, surpassing the category average of 24.54 per cent. The trend continues over longer durations with a 36.47 per cent return in the last 12 months compared to the category average of 30.16 per cent. Looking at a three-year horizon, the fund’s 44.05 per cent return stands out against the category average of 37.70 per cent. In terms of rolling returns, the fund consistently outperforms the category average median. In any one year, the fund has given returns of 22.1 per cent compared to the category median of 14.3 per cent.
Further, it has given 25.5 per cent in any three years compared to the category median of 16.2 per cent and 20.5 per cent in any five years against the category median of 17.7 per cent. Delving into the portfolio, the fund maintains a well-diversified stance with 200 stocks. The top 10 stocks constitute 15.12 per cent of the portfolio, providing ample diversification. The fund focuses on the top five and top three stocks at 8.89 per cent and 6.07 per cent, respectively. Investors looking for a small-cap fund with a history of consistent growth, robust portfolio management and superior risk-adjusted returns should consider the Nippon India Small-Cap Fund.
