Just A Handful Of Fund Houses Show Consistent Top Quartile Performance

When it comes to overall equity performance of fund houses, less than half the fund houses showed a consistent top quartile ranking of their equity funds across their equity AUMs. In an aggregation of the past one-year performance, fund houses that had a larger proportion of their equity AUMs in the top quartile included ICICI Prudential MF, HDFC Mutual Fund and UTI Mutual Fund. 

Among the fund houses, ICICI Prudential Mutual Fund has 81.57 percent of its equity AUM featuring in the top quartile funds, while HDFC AMC has 56.78 per, and UTI MF has about 52.23 percent of its equity funds among the top funds, according to data available from Value Research, an independent mutual fund research house. 

The one-year performance measures as on October 31, 2018, look at the total equity corpus of the fund house figuring in the top quartile funds. Mutual funds are categorised into four quartiles i.e. top quartile, upper-middle quartile, lower-middle quartile, and bottom quartile. A quartile ranking indicates how well a fund has performed in its category. 

At a time when the market has been volatile and investors are turning jittery about future investments, it’s worth taking a look at how the Indian fund houses are placed in terms of their investments.

In the past one year, equity markets have performed marginally lower with the mid- and small-caps turning volatile since the start of 2018. 

Says Pankaj Mathpal, CFP and managing director, Optima Money Managers: “Some AMCs are showing consistency in a downturn. In any market, consistency is more important. Whenever there is a rally in the market, many AMCs pick up stocks that help them make high returns only in a rally. Not many fund houses position themselves for a downturn too.” 

A dip in the stock market that started with the mid- and small-caps correcting at the beginning of the year snowballed into a major fall in the last few months. The analysis from ValueResearch shows that only about four fund houses have been able to show consistent performance across their schemes in a downturn, including Reliance MF, which has 47 percent of its total equity funds in top quartile funds. 

“As a fund manager, you should always take care that the downside is protected. Equity markets by nature is volatile. One should not only position for a bull market but also see that people should not lose money in a bear market. ICICI MF has been consistent in the top quartile by a big margin, and they had taken a defensive position across their schemes, which has played out well,” said Mathpal. 

The last one year return of benchmark indices has been listless with Nifty 50 at 0.5% and S&P BSE Sensex at 3.7%. 

The data analyses fund houses over a one year period as on October 31, 2018. Value Research looked at how the equity schemes of various fund houses were placed on a quartile basis. For this analysis, all the equity schemes of a particular fund house were considered. Further, the percentage of equity assets in the top quartile for each fund houses has been assessed based on the percentage of funds in the top quartile. 

The results show that few fund managers have successfully managed to navigate volatile times in equity markets across their equity funds.