Mutual Fund Ratings: October 2015

  Diversified Equity and Equity-oriented Balanced Funds - 5-star / 4-star / 3-star

Fund Name	Risk	Return	Rating
IDFC Premier Equity Fund - Regular Plan	Low	Very High	*****
HDFC Childrens Gift Fund - Investment Plan	Very Low	High	*****
HDFC Balanced Fund	Very Low	High	*****
HDFC Prudence Fund	Low	High	*****
Tata Balanced Fund - Regular Plan	Low	High	*****
Reliance Regular Savings Fund - Balanced Option	Below Average	High	*****
UTI Opportunities Fund	Below Average	Above Average	*****
UTI Equity Fund	Below Average	Above Average	*****
Canara Robeco Balance Fund - Regular Plan	Low	Average	*****
Birla Sun Life 95 Fund	Below Average	Above Average	*****
Birla Sun Life Dividend Yield Plus Fund	Below Average	Above Average	****
ICICI Prudential Balanced Fund - Regular Plan	Low	Average	****
ICICI Prudential Dynamic Fund - Regular Plan	Below Average	Above Average	****
BNP Paribas Dividend Yield Fund	Average	Above Average	****
Quantum Long Term Equity Fund	Average	Above Average	****
Tata Dividend Yield Fund - Regular Plan	Average	Above Average	****
UTI Dividend Yield Fund	Low	Below Average	****
Franklin India Prima Plus Fund	Average	Above Average	****
Reliance Regular Savings Fund - Equity Option	Below Average	Average	****
Franklin India Balanced Fund	Low	Below Average	****
Franklin India Life Stage Fund of Funds 20s	Low	Below Average	****
DSP BlackRock Balanced Fund	Very Low	Below Average	****
Canara Robeco Equity Diversified Fund - Regular Plan	Average	Above Average	****
HDFC Top 200 Fund	Below Average	Average	****
Birla Sun Life Frontline Equity Fund	Average	Above Average	****
Birla Sun Life Asset Allocation Fund - Aggressive Plan	Low	Low	****
HDFC Equity Fund	Average	Average	****
UTI CCP Advantage Fund	Very Low	Low	****
ICICI Prudential Value Discovery Fund - Regular Plan	High	Very High	****
DSP BlackRock Equity Fund	Average	Average	****
HDFC Growth Fund	Below Average	Low	****
DSP BlackRock Top 100 Equity Fund - Regular Plan	Below Average	Below Average	****
Franklin India Bluechip Fund	Average	Below Average	****
L&T Equity Fund	Average	Average	****
Sahara Wealth Plus Fund - Variable Pricing Option	Average	Below Average	****
HDFC Capital Builder Fund	Above Average	Above Average	***
Reliance Equity Opportunities Fund	High	Very High	***
Kotak Balance Regular Plan	Low	Low	***
UTI Mid Cap Fund	Above Average	Above Average	***
Sundaram Select Midcap Fund - Regular Plan	High	High	***
SBI Magnum Balanced Fund	Average	Below Average	***
UTI Mastershare Fund	Average	Low	***
Tata Equity PE Fund - Regular Plan	High	Above Average	***
Sahara Wealth Plus Fund - Fixed Pricing Option	Average	Below Average	***
ICICI Prudential Advisor Series - Very Aggressive Plan - Regular Plan	Low	Very Low	***
Kotak 50 Regular Plan	Below Average	Low	***
Birla Sun Life Top 100 Fund	Above Average	Below Average	***
UTI Balanced Fund	Average	Low	***
Templeton India Equity Income Fund	Above Average	Average	***
Reliance Growth Fund	Above Average	Below Average	***
Sahara Growth Fund	Below Average	Very Low	***
L&T India Special Situations Fund	High	Average	***
HDFC Index Fund - Sensex Plus Plan	Average	Low	***
ICICI Prudential Top 100 Fund - Regular Plan	Above Average	Below Average	***
IDFC Imperial Equity Fund - Regular Plan	Below Average	Very Low	***
SBI Magnum Global Fund	High	Above Average	***
Principal Balanced Fund	Average	Low	***
Kotak Opportunities Regular Plan	Above Average	Below Average	***
SBI Emerging Businesses Fund	Very High	High	***
Sahara Midcap Fund	High	Average	***
Tata Pure Equity Fund - Regular Plan	Above Average	Below Average	***
SBI Magnum Equity Fund	High	Below Average	***
Franklin India Flexi Cap Fund	High	Average	***
LIC Nomura MF Balanced Fund	Below Average	Unacceptable	***
Sundaram Balanced Fund - Regular Plan	Below Average	Very Low	***
BNP Paribas Equity Fund	Above Average	Low	***
Tata Midcap Growth Fund - Regular Plan	High	Average	***
Baroda Pioneer Balance Fund	Below Average	Unacceptable	***
Birla Sun Life Mid Cap Fund	Very High	Average	***
HSBC Equity Fund	Average	Very Low	***

  Sector-specific and Theme-based (non-diversified) Equity Funds - complete list

Fund Name	Risk	Return	Rating
SBI FMCG Fund	Very Low	Very High	*****
Reliance Pharma Fund	Very Low	Very High	*****
UTI Pharma & Healthcare Fund	Very Low	Very High	*****
ICICI Prudential FMCG Fund - Regular Plan	Very Low	Very High	*****
UTI MNC Fund	Very Low	Very High	*****
Birla Sun Life MNC Fund	Low	Very High	*****
SBI Pharma Fund	Low	High	*****
Birla Sun Life India GenNext Fund	Below Average	High	*****
Franklin India Taxshield Fund	Below Average	Above Average	*****
Canara Robeco Equity Tax Saver Fund - Regular Plan	Above Average	High	****
Tata Tax Advantage Fund - 1	Below Average	Average	****
Birla Sun Life Buy India Fund	Above Average	Above Average	****
Reliance Banking Fund	Above Average	High	****
L&T Tax Advantage Fund	Average	Average	****
Sahara Tax Gain Fund	Average	Average	****
ICICI Prudential Long Term Equity Fund (Tax Saving) - Regular Plan	Above Average	Average	****
UTI Transportation and Logistics Fund	High	High	***
Tata Long Term Equity Fund	Average	Below Average	***
Taurus Tax Shield Fund - Regular Plan	Average	Below Average	***
HDFC Long Term Advantage Fund	Above Average	Below Average	***
Franklin Infotech Fund	High	Average	***
Sundaram Taxsaver	Above Average	Low	***
HDFC Taxsaver Fund	Above Average	Below Average	***
ICICI Prudential Technology Fund - Regular Plan	Very High	High	***
Reliance Tax Saver Fund	Very High	Average	***
UTI Master Equity Plan Unit Scheme	Above Average	Low	**
SBI Magnum Taxgain Scheme	High	Below Average	**
Goldman Sachs Banking BeES Fund	Very High	Below Average	**
Sundaram Rural India Fund - Regular Plan	Above Average	Very Low	**
SBI IT Fund	Very High	Below Average	**
UTI Banking Sector Fund - Regular Plan	Very High	Below Average	**
ICICI Prudential Infrastructure Fund - Regular Plan	Average	Unacceptable	**
ICICI Prudential Exports and Other Services Fund - Regular Plan	Unacceptable	Above Average	**
Principal Global Opportunities Fund	Above Average	Unacceptable	**
Birla Sun Life Tax Plan	High	Low	**
UTI Equity Tax Savings Fund	High	Very Low	**
DSP BlackRock Technology.com Fund - Regular Plan	Very High	Low	**
Canara Robeco Infrastructure Fund - Regular Plan	Very High	Low	**
BNP Paribas Long Term Equity Fund	Very High	Low	**
Reliance Media & Entertainment Fund	Unacceptable	Low	*
Birla Sun Life New Millennium Fund	Very High	Very Low	*
Birla Sun Life Tax Relief 96	Unacceptable	Low	*
Birla Sun Life India Opportunities Fund	Unacceptable	Low	*
Kotak Tax Saver Regular Plan	Very High	Very Low	*
LIC Nomura MF Tax Plan	Very High	Unacceptable	*
Principal Personal Tax Saver Fund	Very High	Very Low	*
SBI Magnum COMMA Fund	High	Unacceptable	*
DWS Tax Saving Fund	Very High	Unacceptable	*
Birla Sun Life Tax Savings Fund	Very High	Very Low	*
Baroda Pioneer ELSS 96 Fund	Very High	Very Low	*
Principal Tax Savings Fund	Unacceptable	Very Low	*
Sahara Infrastructure Fund - Variable Pricing Option	Very High	Unacceptable	*
L&T Tax Saver Fund	Unacceptable	Very Low	*
Sahara Infrastructure Fund - Fixed Pricing Option	Very High	Unacceptable	*
DSP BlackRock T.I.G.E.R. Fund - Regular Plan	Unacceptable	Unacceptable	*
Tata Infrastructure Fund - Regular Plan	Very High	Unacceptable	*
Birla Sun Life Infrastructure Fund	Unacceptable	Unacceptable	*
Reliance Diversified Power Sector Fund	Unacceptable	Unacceptable	*
UTI Infrastructure Fund	Unacceptable	Unacceptable	*
Sundaram Infrastructure Advantage Fund - Regular Plan	Unacceptable	Unacceptable	*
Escorts Tax Plan	Unacceptable	Unacceptable	*
JM Basic Fund	Unacceptable	Unacceptable	*

  Diversified Equity and Equity-oriented Balanced Funds - 2-star / 1-star

Fund Name	Risk	Return	Rating
HSBC India Opportunities Fund	Above Average	Low	**
HDFC Premier Multi-Cap Fund	Above Average	Low	**
ICICI Prudential Index Fund - Regular Plan	Above Average	Very Low	**
DWS Alpha Equity Fund	Above Average	Low	**
SBI Magnum Multiplier Fund	Very High	Below Average	**
Templeton India Growth Fund	High	Below Average	**
Sundaram S.M.I.L.E. Fund - Regular Plan	Very High	Average	**
DSP BlackRock Opportunities Fund	High	Below Average	**
Canara Robeco Emerging Equities Fund - Regular Plan	Very High	Above Average	**
Goldman Sachs Nifty ETS Fund	Above Average	Very Low	**
Principal Large Cap Fund	Very High	Below Average	**
L&T Midcap Fund	Very High	Average	**
Tata Ethical Fund - Regular Plan	Very High	Average	**
Franklin India Prima Fund	Very High	Average	**
IDFC Equity Fund - Regular Plan	Above Average	Very Low	**
ICICI Prudential Child Care Plan - Gift Plan - Regular Plan	High	Low	**
Baroda Pioneer Growth Fund	Above Average	Low	**
LIC Nomura MF Unit Linked Insurance	Average	Unacceptable	**
Franklin India Smaller Companies Fund	Very High	Average	**
Kotak Classic Equity Regular Plan	High	Low	**
Tata Equity Opportunities Fund - Regular Plan	High	Low	**
Principal Dividend Yield Fund	Above Average	Very Low	**
ICICI Prudential SPIcE Fund	High	Very Low	**
Franklin India Index Fund - NSE Nifty Plan	Above Average	Very Low	**
HDFC Core & Satellite Fund	High	Low	**
ICICI Prudential Multicap Fund - Regular Plan	Very High	Low	**
DWS Investment Opportunity Fund	High	Very Low	**
Sundaram Select Focus Fund - Regular Plan	Above Average	Very Low	**
UTI Nifty Index Fund	High	Very Low	**
Principal Index Fund - Nifty	Above Average	Very Low	**
Tata Index Nifty Fund - Regular Plan	High	Very Low	**
Reliance NRI Equity Fund	Unacceptable	Below Average	**
SBI Bluechip Fund	Very High	Low	**
Birla Sun Life Index Fund	High	Very Low	**
Birla Sun Life Equity Fund	Very High	Low	**
LIC Nomura MF Index-Nifty Plan	High	Unacceptable	**
Kotak Mid-Cap Regular Plan	Unacceptable	Below Average	**
SBI Nifty Index Fund	High	Very Low	**
BNP Paribas Midcap Fund	Unacceptable	Low	**
Reliance Focused Large Cap Fund	High	Unacceptable	**
SBI Contra Fund	Very High	Very Low	**
Goldman Sachs Nifty Junior BeES Fund	Unacceptable	Below Average	**
Taurus Starshare Fund - Regular Plan	Very High	Very Low	*
Tata Index Sensex Fund - Regular Plan	High	Very Low	*
Reliance Vision Fund	Very High	Very Low	*
Franklin India Opportunities Fund	Very High	Very Low	*
LIC Nomura MF Equity Fund	High	Unacceptable	*
HDFC Index Fund - Nifty Plan	High	Very Low	*
UTI Leadership Equity Fund	Very High	Very Low	*
HDFC Index Fund - Sensex Plan	Very High	Unacceptable	*
SBI Magnum Midcap Fund	Unacceptable	Low	*
LIC Nomura MF Growth Fund	Very High	Very Low	*
Sundaram Growth Fund - Regular Plan	High	Unacceptable	*
IDFC Classic Equity Fund - Regular Plan	Very High	Very Low	*
Birla Sun Life Advantage Fund	Unacceptable	Low	*
ICICI Prudential Midcap Fund - Regular Plan	Unacceptable	Low	*
LIC Nomura MF Index-Sensex Plan	Very High	Unacceptable	*
SBI Magnum Multicap Fund	Unacceptable	Very Low	*
Taurus Bonanza Fund - Regular Plan	Very High	Unacceptable	*
Principal Growth Fund	Unacceptable	Very Low	*
HDFC Large Cap Fund - Regular Plan	Unacceptable	Unacceptable	*
JM Balanced Fund	Unacceptable	Unacceptable	*
Escorts Growth Fund	Unacceptable	Very Low	*
Taurus Discovery Fund - Regular Plan	Unacceptable	Very Low	*
HSBC Midcap Equity Fund	Unacceptable	Very Low	*
LIC Nomura MF Children Fund	Unacceptable	Unacceptable	*
JM Equity Fund	Unacceptable	Unacceptable	*
HSBC Infrastructure Equity Fund	Unacceptable	Unacceptable	*

A short note on mutual fund portfolio

रहिमन देख बड़ेन को, लघु न दीजिये डारि।

जहाँ काम आवै सुई, कहा करै तरवारि॥~*~॥

Modi-led victory of BJP and NDA has brought the much needed cheer back on the Dalal Street. This has resulted into lot of re-rating of stocks and sectors and as usual the devil lies in the excess.

The following statistics reveals some interesting but not unexpected trends of the last year and a half:

Period	July 2006 – June 20013 (7 years)	July 2007 – June 20014 (7 years)	July 2008 – June 20015 (7 years)	July 2006 – June 20015 (9 years)
Mid and Small Cap Funds	9.0	11.0	18.4	16.2
All Mutual Funds (older than 9 years)	9.6	10.0	15.1	13.9
Excluding M&SC Category	9.7	9.8	14.6	13.6
Large Cap Funds (+Sensex/Nifty ETF)	9.3	9.0	12.7	12.2

 

Before Modi: The large cap funds, which are supposed to provide stable and somewhat tepid returns, were faring a bit better than the mid-and-small cap funds, which are supposed to be volatile but are capable of delivering big. The smaller fares clocked 9.0% whereas the leaders delivered 9.3%. The average market clocked 9.6-9.7%, mainly led by some specific sectors like FMCG and Pharma.

With Modi: The large cap funds and the average market both stayed at roughly the same level of performance (slight degradation for the former and slight improvement for the latter) whereas the mid-and-small cap funds moved up significantly to a respectable 11%. It would have been nice if all categories moved in sync from there. But that’s only a desire and the reality is very different.

After Modi: The large cap funds moved up by about 2.5% absolute and the average market excluding the mid-and-small cap funds moved by about 4.5% absolute. However, the mid-and-small cap category moved up by a whopping 7.5% absolute. The law of averages tells us that such over-performance is not likely to sustain itself. It could if it was a single company, but we are discussing a whole country here.

Following possibilities exist in the near future (3-5 years which is mid-term in equity investing):

• The bull run continues:
  • We will see the large cap funds delivering superior returns from this point, taking their average performance to long term mean of around 15%. In this scenario, one can expect these funds to clock 16-17% per annum or more from current market levels.
  • The mid-and-small cap funds will also revert to the long term mean of around 15% and this will mean them clocking something in the range of 13-14% per annum or less.
• The bull run subsides:
  • We will see extremely poor performance of the mid-and-small cap funds. The average returns could range from a bad 6-7% to a tragic 2-3%. There could even be a possibility of negative returns, though that is not very likely for investments done via SIP.
  • The large-cap funds will also give a poor performance but it will be more stable and should lie somewhere in the bad 8-9% range or respectable 11-12% range. The SIP investments might clock a bit better than the lumpsum ones.
• Start of a bear market / catastrophic local or global events
  • This is conjecture territory and nobody can predict anything about such scenario. However, it is certain that the mid-and-small cap funds will perform very poorly compared to the funds investing in companies with larger market capitalization.

It is clear that the recent rally in mid-cap and small-cap stocks is not going to be sustainable and the sanity will return the market. The sooner the better for the bigger bubbles burst the worse.

There will certainly be a handful of hardworking or fortunate companies that will transition into the large cap territory due to their good fundamental performance. But that is a matter of individual stock study. The segment is poised to deliver some pain in the medium term.

A possibly sensible (all-weather) portfolio could be as follows:

• Large-cap funds – 30-40%
• Multi-cap funds – 30-40%
• Mid-small-caps – 10-20%
• Balanced funds – 10-20%

If you have a similar, or even a different, relative allocation determined based on your risk appetite and return expectation, there is no need to alter it only because some stupid fund returned 50% in the last one year. And do remember to check that fund’s performance 3-5 years from now.

If you do not need the money in the next 8-10 years, rest assured that the equity funds provide the best risk-adjusted returns and that the large-cap (and multi-cap) funds help you reach your goals (possibly a bit slowly) without giving you sleepless nights. Bite only what you can chew and do not take unnecessary risk with your long term goals. To finish first, you need to first finish.

PS: It should be obvious to the people who understood the opening couplet that here the small refers to the large-cap funds that have done (relatively) poor during the recent bull run.