MUTUAL FUNDS

BEST
MUTUAL
FUNDS
FOR 2023 &
BEYOND
 DISCLAIMER
1) SEBI Registration Status
1) Not Registered
2) Whether the research analyst or research entity or his associate or his relative has any financial interest in the
subject company and the nature of such financial interest. 2) No

3) Whether the research analyst or research entity or its associates or relatives have actual/beneficial ownership of 3) No
one percent or more securities of the subject company (at the end of the month immediately preceding the date
of publication of the research report or date of the public appearance)

4) Whether the research analyst or research entity or its associates or his relative has any other material conflict of 4) No
interest at the time of publication of the research report or at the time of public appearance.

5) Whether it or its associates have managed or co-managed public offering of securities for the subject company 5) No
in the past twelve months

6) Whether it or its associates have managed or co-managed public offering of securities for the subject company 6) No
in the past twelve months

7) Whether it or its associates have received any compensation for products or services other than investment 7) No
banking or brokerage services from the subject company in the past twelve months.

8) Whether it or its associates have received any compensation for Investment banking or merchant banking or 8) No
brokerage services from the subject company in the past twelve months.

9) Whether the subject company is or was a client during twelve months preceding the date of distribution of the 9) No
research report and the types of services provided.

10) Whether the research analyst has served as an officer, director or employee of the subject company. 10) No

11) Whether the research analyst or research entity has been engaged in market making activity for the subject 11) No
company.

SOIC
What are Mutual Funds?

SOIC
 Rank Wise Investing
Large Caps investing in top 100 Companies of the country
Large and Mid Cap Fund invest in Top 200 companies of
the country
Mid-cap mutual funds are those that invest at least 65% of
the corpus in companies lying between 101-250 by market
capitalisation.

Small Cap schemes are mandated to invest in companies

that are ranked below 250 in terms of market
capitalization. At least 65% of PF is invested here.

ELSS Schemes: Tax Saving Schemes.

Thematic Funds: Mutual funds based on entire themes like

digital or Housing.

Index Fund: Passive instruments, which just mimic or

copy the underlying index.
Sectoral Funds: Mutual Funds that just invest in one
sector. Eg:- IT sector Fund.

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 Who Stole my Returns?
HIGH EXPENSE RATIOS

Eg:- 2 Mutual Funds with similar styles. One

charges 2% expense ratio and the other
charges 1% expense ratio.

Over 25 years of 10k SIP every month. Amount

created in First fund will be 1.87 crores

In the second fund, same amount will be 2.24

Crores.

SOIC
Large Cap Funds vs S&P 500

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 Index Huggers
INDEX TURNOVER

When 'actively managed' mutual funds bear a lot of similarity to a relevant

index, they are called index huggers. In fact, these schemes carry so close a
resemblance to the relevant index, that one might as well have purchased an
index fund or index exchange traded fund (ETF) instead.

Typically, in India, only large-cap funds feature significant overlaps with the Nifty
or Sensex, while mid-cap funds invest materially outside of their benchmarks.
This is because of the limited investible universe for large cap funds.

Stocks with market cap exceeding $2.5 billion market cap are considered large
cap in India, and this will mean only 120-130 odd stocks qualify. Many AMCs
which run concentrated portfolios restrict their large cap universe to the top 50
largest stocks. In both cases, building any diversified large cap fund portfolio of
45-50 stocks could result in more choices from the index itself.

SOIC
Indian Active Funds vs Index

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% of Funds Outperformed by Index

SOIC
% of Funds Outperformed by Index

SOIC
 Funds can become too Large in Size

The giant disadvantage we face is size: In

the early years, we needed only good
ideas, but now we need good big ideas.
Unfortunately, the difficulty of finding
these grows in direct proportion to our
financial success, a problem that
increasingly erodes our strengths.
- Warren Buffett

SOIC
 Funds Churn too much
PORTFOLIO TURNOVER

If the portfolio turnover is greater than 100%, that

typically means that the fund manager has churned
the portfolio once over, completely.

A high turnover is not necessarily bad, but a

consistently high turnover is not desirable because
it shows that the fund manager may be chasing
momentum stocks, unless the inherent strategy of
the scheme calls for a high churn.

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Daily Rolling Data

SOIC
 Check the Philosophy of the Fund

Fund Managers are investing their own money in the fund?

Value focused or momentum focused?

Check if gyaan is consistent with actions?

Check how many years have the fund managers worked in

the fund?

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SOIC

WEALTH DESTROYERS
IN THE PAST CYCLE
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