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 

India is currently one of the fastest growing economies in the world. The reforms implemented by the government and the changing global supply chain dynamics will benefit companies across all the three market capitalisation segments. Multi-cap funds remain one of the best ways to play on these developments. Hence, our choice for this issue is Nippon India Multi-Cap Fund, which has demonstrated an impressive performance across various timeframes compared to its category average. Over the past three months, it has delivered a return of 17.48 per cent, outperforming the category average of 15.47 per cent. For a one-year period, the fund has recorded an impressive return of 53.98 per cent, compared to the category average of 48.55 per cent. Over three years, the fund’s return of 33.01 per cent is notably higher than the category average of 25.08 per cent. The fund’s portfolio is welldiversified across key sectors, with a significant allocation to the financial sector at 26.46 per cent. The services sector constitutes 16.96 per cent of the portfolio. Additionally, 15.87 per cent of the portfolio is invested in capital goods, indicating substantial investments in industries related to machinery, equipment and construction. This diversified sectoral allocation suggests a balanced approach to growth across various segments of the economy.

In terms of individual holdings, the fund’s top positions include HDFC Bank at 5.99 per cent while Linde India accounts for 4.46 per cent of the portfolio. Other significant holdings include ICICI Bank at 3.58 per cent, EIH at 3.32 per cent and Reliance Industries at 3.13 per cent. This showcases investments in financial institutions, hospitality and a diversified conglomerate, respectively. When comparing this fund to others in its category, it boasts a high alpha of 12.13 versus the category average of 2.91, indicating superior outperformance against its benchmark, making it a prudent choice for investors seeking growth with moderate risk. The fund’s overall strong performance metrics suggest that the fund is well suited for high-risk investors.