Top 10 Consistent Mutual Fund Performers: Equity Funds Part 2

In our previous article, Consistent Performers: Top 10 consistent performers in equity funds Part 1, we had discussed about the top 10 consistent performers among equity funds, as per the recent CRISIL ranking of mutual funds. In this article, we will discuss some important performance related factors that makes these funds, the top 10 consistent performers. But first let us do a quick recap of the top 10 fund.

• SBI Emerging Business Fund:

  This small and mid-cap fund was launched in September 2004. It has an asset base of Rs 1199 crores and an expense ratio of 2.33%. In terms of last one year trailing returns, it is lagging behind the small and midcap funds category. But the fund has given excellent 3 and 5 years trailing returns. In terms of volatility or risk, the fund performed better than the category. The 3 year annualized standard deviation of its monthly return is 16.6% versus 19% for the category. From a portfolio perspective, the fund biased towards BFSI sector with substantial sector allocations to FMCG, Pharmaceuticals, Automobiles and Conglomerates. The top 5 sectors account for about 50% of the portfolio. In terms of company concentration, the fund is fairly well diversified, with the top 5 holdings, HDFC Bank, Divis Labs, Goodyear, 3M India and P&G, accounting for less than 35% of the portfolio value.



• Reliance Equity Opportunities Fund:

  This diversified equity fund was launched in March 2005. It has an asset base of over Rs 5000 crores and an expense ratio of 2.12%. The fund outperformed the diversified equity fund category in terms of 1 year, 3 years and 5 years annualized returns. In terms of volatility or risk, the fund’s 3 year annualized standard deviation of monthly return of 17.3% was lower than the category. The fund has a large cap bias, with a high growth focus. From a portfolio perspective, the fund is balanced between cyclical sectors like Banking, Engineering, Real Estate etc. and also defensive sectors like IT and Pharmaceuticals. The top 5 sectors account for about 72% of the portfolio. In terms of company concentration, the fund is fairly well diversified, with the top 5 holdings, Divis Labs, ICICI Bank, Trent, Sanofi India and Infosys accounting for less than 25% of the portfolio value.



• Birla Sun Life MNC Fund:

  This small and mid cap fund is a winner of the recent Morningstar fund awards. The fund was launched in December 1999. It has an asset base of Rs 435 crores and an expense ratio of 2.65%, which is slightly on the higher side. The fund has performed well relative to its category across 1 year, 3 years and 5 years, both in terms of returns and risk. The fund’s 3 year annualized standard deviation of monthly return was only 16%. The fund has an MNC focus and has allocations to Automotive, FMCG, Pharmaceuticals, Chemicals and BFSI sectors. The top 5 sectors account for about 59% of the portfolio. In terms of company concentration, the top 5 holdings, ICRA, ING Vyasya Bank, Bayer CropScience, Honeywell Automation and Hindustan Unilever, account for about 38% of the portfolio holdings.



• IDFC Premier Equity Fund:

  This small and mid-cap fund was launched September 2005. It has an asset base of over Rs 3500 crores and a low expense ratio of 1.88%. The fund has performed well relative to its category across 1 year, 3 years and 5 years, both in terms of returns and risk. The fund’s 3 year annualized standard deviation of monthly return was only 16.1%. From a portfolio perspective, the fund has substantial allocations to Engineering, Services, Manufacturing and FMCG sectors. The top 5 sectors account for about 47% of the portfolio value. In terms of company concentration, the fund is fairly well diversified, with the top 5 holdings, Kaveri Seed, Page Industries, Bata India, Blue Dart and MRF, accounting for only 27% of the portfolio value.



• UTI MNC Fund:

  This diversified equity fund was launched in May 1998. It has an asset base of over Rs 286 crores and an expense ratio of 2.57%. The fund outperformed the diversified equity fund category in terms of 1 year, 3 years and 5 years annualized returns. In terms of volatility or risk, the fund’s 3 year annualized standard deviation of monthly return of 14.3% was much lower than the category. This fund has given excellent risk adjusted returns. The fund has an MNC focus and has allocations to Automotive, FMCG, Engineering, Food & Beverage and Pharmaceuticals sectors. The top 5 sectors account for about 65% of the portfolio value. In terms of company concentration, the fund is fairly well diversified, with the top 5 holdings, Maruti Suzuki, Bosch, Eicher Motors, Hindustan Unilever and Ambuja Cements, accounting for less than 32% of the portfolio value.



• Tata Ethical Fund:

  This diversified equity fund was launched in May 1996. Surprisingly, it has a small asset base of only Rs 126 crores and an expense ratio of 2.6%. Despite the small asset base, the fund has performed extremely well relative to its category across 1 year, 3 years and 5 years, both in terms of returns and risk. In terms of volatility or risk, the fund’s 3 year annualized standard deviation of monthly return of only 10.7% was much lower than the category. The fund has a large cap bias with a high growth focus. Because of the fund’s investment objectives, the fund avoids certain sectors. The fund has substantial allocations to Technology, Pharmaceuticals, Oil & Gas, Automotive and Engineering sectors. The top 5 sectors account for about 70% of the portfolio value. In terms of company concentration, the fund is fairly well diversified, with the top 5 holdings, TCS, Reliance, Divis Labs, HCL Tech and ONGC, accounting for less than 28% of the portfolio value.



• Birla Sun Life India GenNext Fund:

  This diversified equity fund was launched in July 2005. It has a small asset base of Rs 190 crores and a fairly high expense ratio of 2.8%. In terms of last one year trailing returns, it is lagging behind the small and midcap funds category. But the fund has given excellent 3 and 5 year trailing returns. In terms of volatility or risk, the fund’s 3 year annualized standard deviation of monthly return of 16.5% was lower than the category. The fund has a large cap bias with a high growth focus. The fund has substantial allocations to BFSI, Media, Pharmaceuticals, Automotive and FMCG sectors. The top 5 sectors account for about 70% of the portfolio value. In terms of company concentration, the fund is fairly well diversified, with the top 5 holdings, ICICI Bank, Zee Entertainment, United Spirits, HDFC Bank, Sun TV Network, accounting for 22% of the portfolio value.



• ICICI Prudential Dynamic Fund:

  This diversified equity fund is a winner of the recent Morningstar fund awards. The fund was launched in October 2002. It has a small asset base of over Rs 3600 crores and an expense ratio of 2%. The fund has performed well relative to its category across 1 year, 3 years and 5 years, both in terms of returns and risk. The fund’s 3 year annualized standard deviation of monthly return was only 16.2%. The fund has a large cap bias. In terms of sector concentration, the fund is overweight on BFSI with substantial allocations to Technology, Utilities, Oil & Gas and Pharmaceuticals. The top 5 sectors account for about 55% of the portfolio value. In terms of company concentration, the fund is fairly well diversified, with the top 5 holdings, Power Grid Corp, Infosys, ICICI Bank, HDFC Bank and SBI, accounting for 27% of the portfolio holdings.



• UTI Opportunities Fund:

  This large cap fund from the UTI stable was launched in September 2006. It has an asset base of over Rs 3500 crores and an expense ratio of 2.1%. The fund has performed well relative to its category across 1 year, 3 years and 5 years, both in terms of returns and risk. The fund’s 3 year annualized standard deviation of monthly return was only 14.1%. From a portfolio perspective, the fund has a bias for BFSI with substantial allocations to Technology, Automotive, Engineering and Oil & Gas sectors. The top 5 sectors account for about 60% of the portfolio value. In terms of company concentration, the fund is fairly well diversified, with the top 5 holdings, ICICI Bank, Infosys, HDFC Bank, ITC and TCS, accounting for less than 30% of the portfolio holdings



• UTI Equity Fund:

  This large cap fund from the UTI stable was launched in May 1992. It has an asset base of nearly Rs 2450 crores with an expense ratio of 1.98%. The fund has performed well relative to its category across 1 year, 3 years and 5 years, both in terms of returns and risk. The fund’s 3 year annualized standard deviation of monthly return was only 15.3%. From a portfolio perspective, the fund has a bias for BFSI with substantial allocations to Technology, Oil & Gas, Pharmaceuticals and Automotive sectors. The top 5 sectors account for about 63% of the portfolio value. In terms of company concentration, the fund is fairly well diversified, with the top 5 holdings, TCS, ICICI Bank, Infosys, Reliance and ITC, accounting for only 26% of the portfolio holdings.

The table below summarizes the key features of these funds:

Conclusion

Consistent performers aim to outperform the market and generate good returns across all time scales from short to long term. In bear markets, while the returns of the consistent performers may be negative, the NAV does not fall in line with the market. Similarly when bull market returns, it outperforms the market by generating better returns. Good financial planners suggest that consistent performers should form a large part of your mutual fund portfolio. In future articles, we will take a more detailed look at the performance of some of these top consistent performers.

CRISIL Rank: 1 – Very Good; 2 – Good; 3 – Average; 4 – Below Average; 5 - Relatively Weak