MAM
How to identify the top performing mutual funds for your portfolio
Mutual funds have become one of the most popular investment options for Indians looking to grow their wealth over the long run. With thousands of mutual fund schemes available across different categories like equity, debt, hybrid etc., choosing the right funds to build an effective mutual fund portfolio can be an overwhelming task. It is essential to identify top performing funds that have consistently delivered superior returns over various market cycles. This article discusses some key parameters and criteria that investors can consider to shortlist the best performing mutual funds for their portfolio in the Indian market.
Factors to consider
There are several factors an investor needs to analyze to identify top funds that have the potential to continue delivering strong returns in the future. Some of the important parameters are:
● Past Performance – The track record and past returns delivered by a fund over various time periods like 1 year, 3 years, 5 years and since inception gives a good indication of its performance capabilities. Funds that have consistently outperformed their benchmark indices and category averages over longer periods should be preferred.
● Fund Manager – Stability and experience of the fund manager is an important determining factor in a fund’s performance. Funds managed by experienced managers who have successfully navigated different market cycles tend to deliver better long term returns. It is also good to check the track record of similar schemes managed by the same fund manager in the past.
● Portfolio Holdings – Analyzing the portfolio holdings and sector/stock allocation of a scheme gives insights into the fund manager’s investment style and process. Diversified portfolios with strong businesses and quality stocks tend to perform better through market ups and downs. Concentrated portfolios require more active monitoring.
● Expense Ratio – The total expense ratio indicates the fund’s operating costs which are deducted from the returns delivered to investors. Opt for funds with reasonably low expense ratios of less than 2-2.5% for actively managed equity funds.
● Benchmark – The benchmark index determines a fund’s benchmark to compare its performance. Equity schemes are generally compared with S&P BSE Sensex or Nifty 50 returns. Funds able to consistently beat their benchmarks after factoring in costs should be preferred.
● Risk Metrics – Other key risk metrics like standard deviation (volatility), Sharpe ratio and alpha should be analyzed to understand the fund’s risk-adjusted returns. Relatively lower risk funds delivering higher returns make for better long term investments.
● Rating – Ratings by independent agencies like CRISIL, ICRA etc. provide an indicative assessment of a fund’s portfolio quality, process consistency and risk management. Highly rated funds (4 or 5 stars) tend to be more stable long term performers.
Monitoring and review
While past performance is an important indicator, investors should also continuously monitor the selected funds on these performance parameters. Funds can go through style and market cycle changes which may impact future performance. An annual review is recommended to check if a particular fund needs to be replaced due to falling ratings, poor recent performance or strategy/management changes. This approach enables investors to optimize their portfolio and maximize long term returns.
Conclusion
By comprehensively analyzing metrics like long term track record, fund managers’ experience, portfolio quality, costs and risk-adjusted returns, investors can effectively shortlist the top performing equity and debt mutual funds to construct an efficient mutual fund portfolio. Regular monitoring and reviews further help optimize returns over various market cycles in the long run. Use systematic investment plans (SIP) for long term growth in top mutual funds.
MAM
PwC India announces leadership change in Deals practice
Shashank Jain steps down as co-leader after nearly three decades with the firm.
MUMBAI: When one dealmaker steps off the pitch, another is ready to take the baton because in the fast-moving world of transactions, the game never really stops. PwC India has announced a leadership transition in its Deals practice, with Shashank Jain stepping down from his role as co-leader to pursue an opportunity in the industry. The practice will continue to be led by Mohit Chopra, ensuring continuity and sustained growth momentum.
PwC India partner and leader for advisory dinesh Arora paid tribute to Jain’s contributions. “We deeply appreciate the significant contributions made by Shashank over close to three decades he has spent with PwC, particularly his defining role in shaping and strengthening our Transaction Services practice in India,” he said. Arora highlighted Jain’s support for clients through some of the most complex and significant transactions in the Indian market, noting his deep technical expertise, sound judgment and nuanced understanding of the evolving M&A landscape.
The Deals practice remains a key growth driver for PwC India, and the firm expects continued expansion under Mohit Chopra’s leadership. He will continue to guide clients through complex transactions and transformational business moments, building on the strong foundation established over the years.
Reflecting on his journey, Shashank Jain said, “I have had an exceptional journey at PwC. I owe my growth and learning to the nurturing environment and leadership development that PwC provided.” He added that he had been working closely with Mohit and the larger team to ensure a smooth transition and expressed confidence that Chopra would take the Deals practice to newer heights.
From intern to respected deals leader, Shashank Jain has clearly closed many successful transactions and now, it seems, he’s ready to strike a new deal of his own.
