Investors are putting most of their money on Midcap Category. Jan 2020 alone this category has seen net inflows of 1800 Crore. ( Dec 2019 net flow was only 800 Crores )
While the fact is the mid cap valuations are very reasonable and in the last 6 months this category has produced most of the returns simple way to choose the best performing funds is to evaluate the funds on the following criteria
Past Performance of the Fund
Upside and Downside Capture
Underlying Asset performance & Assets Under Management
Equity funds do not give uniform returns, the returns are always go up and down depends on the market, economic conditions and stock selections
So when the markets are doing well, the best performing funds has to capture and deliver the highest returns than the standard benchmark and on the other hand when the markets are tanking, the same fund should protect the investor’s returns from the drag down.
These are the Top 4 Funds which has consistent past performance with upside return capture and downside protection too and also have a good size of Asset under Management too.
Axis Midcap Fund
Edelweiss Midcap Fund
DSP Midcap Fund
But Midcap funds and its returns come always with high risk. Also investor with midcap funds is expected to stay with the investment for a long duration. Midcap may not be suitable for conservative and moderate risk investors.
Disclaimer – Please consult your Investment Advisor before you make any fund decision. Also Mutual Funds are subjected to market risk, please read the scheme related document before your investments. One Call Can Change your Finance Forever – I am Reachable at 9841058689
3 Reason to choose MF against PMS
When the markets succumbing to bear and the fall is more than 35%, does the high cost product like PMS produces better returns to investors? Or the simple Mutual Fund is good enough even for savvy investors?
There are 200 Plus PMS available in the market and more than 1,10 000 cr of Assets under Management are already invested.
Generally Mutual Funds are applicable to ordinary and general investors while the PMS caters to wealthy and Ultra HNI segment. ( The Minimum ticket size of PMS is 50 Lakhs )
Cost comparison of MF Vs PMS
While MF charges 1.5% – 2% of Fixed Fund Management Charges, while the PMS charges both Fixed charge structures and performance related fee ( For PMS the Fixed fee is 1.5% to 2%, with the 15 – 20% Performance related fee in excess of 10% Hurdle )
Also the investor have to bear the De mat Charges ( Because the PMS needs a De Mat account )
Risk Abilities
The most significant difference is between MF and PMS is in the portfolio construction, while PMS is a concentrated portfolio ( 20 handpicked and high conviction funds ) where MF is a Well diversified portfolio ( 50 – 60 Diversified companies )
Hence PMS naturally carries a larger risk than MF portfolio.
Comparison on Performances
Both the MF and PMS shows the corrections and appreciations for their schemes on same level. Investor generally holding more than 5 – 6 schemes holding 100 – 120 stocks, hence there is a possibility of dilution on returns. But when you invest in 2 High performing funds in the respective category, the returns are on par with PMS. Best Performing funds like Axis Bluechip and Axis Midcap Funds have given returns at par with best performing PMS
Source – ET Wealth, PMS AIF.
Conclusion
Despite different investing approaches and fee collected, the performances are not that different. Never choose a PMS over MF unless you have very high exposures on MF. An investor has to have sufficient exposure on MF. Opt for PMS only if you have a large portfolio in MF. Also the PMS needs higher risk appetite and exposure. Client needs to understand the lock in period and exit loads before he signs up the PMS. Having the combination of both MF and PMS are advisable.
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Sathish Kumar
Equity Fund Manager | Wealth Consultant | Author
Email: creatingwealthadvisory@gmail.com
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