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
The Indian equity market is currently trading at valuations that are higher than the long-term average. In such a situation, it is better to invest in value stocks or themes, which offer a better margin of safety. Hence, our choice of a mutual fund is from this theme – the JM Value Fund. When evaluating the performance of this mutual fund, it’s clear that it has consistently outperformed its category average across all the time periods.
In a six-month period, the fund has achieved a remarkable return of 21.57 per cent, outpacing the category average of 16.34 per cent. Over the last year, the fund’s performance was outstanding, with a return of 59.75 per cent against the category average of 47.46 per cent. Looking at the longer term, the fund has shown consistent superiority with five-year returns of 29.91 per cent as compared to 25.86 per cent. The fund’s sectoral allocation is well-diversified, with a strong emphasis on financials, which constitute 18.68 per cent of the portfolio. Capital goods and energy also form significant portions of the portfolio, at 10.95 per cent and 10.31 per cent, respectively. The fund’s top holdings reflect a balanced mix of Large-Cap stocks across various sectors. HDFC Bank is the largest individual holding at 3.21 per cent, followed by Infosys holding at 2.83 per cent. This represents the fund’s exposure to the technology sector.
Suzlon Energy Ltd. (2.6 per cent) and NTPC Ltd. (2.53 per cent) highlight the fund’s commitment to the energy sector. When comparing this fund to the others in its category, it stands out due to its higher alpha of 12.56 versus the category’s 8.96. Additionally, the fund has a lower beta of 0.87 compared to the category’s 1.41, suggesting that it is less sensitive to market volatility. This combination of high alpha and low beta makes the fund an attractive option for investors seeking strong returns with lower risk exposure.
