The Indian mutual fund industry now stands at AUM of Rs.25 lakh crore. It is now 20% of incremental bank deposit. This has not been possible without the actual heroes of the mutual fund industry i.e. schemes which have created wealth for investors over the years.
To mark the 25 years of private mutual funds in India, Cafemutual and ValueResearch presented Wealth creators award at the seventh edition of Cafemutual Confluence held today in Mumbai.
ValueResearch identified nine scheme that have created wealth for investors over the last ten years.
Sharing the methodology, Dhirendra Kumar, Founder and CEO, ValueResearch said, “Let me start by talking a little bit about India’s greatest all-rounder Kapil Dev. Our method of evaluating funds is inspired by the method he used to maintain his legendary fitness. The method used by him contrasted a lot with that of modern sportspersons, and there’s a lesson in fund analysis in that. Modern sportspersons have elaborate and finely tuned fitness programs created by highly qualified specialists. These involve all kinds of exercises which are done in precisely planned sequences and amounts. And yet, we cricket fans find that players specially fast bowlers miss a lot of cricket due to injuries. Kapil Dev, in contrast, missed just one match in his entire career. How did he achieve this amazing feat of fitness? The answer is that to maintain fitness for bowling, he just used to practice bowling a lot. It’s the simplest approach possible. To be fit for fast bowling, you should just do fast bowling! What an idea, sirji!”
He further elaborated, “Our approach to fund evaluation is very much based on the same concept. We could build an elaborate model using modern portfolio theory and all the greek alphabets from alpha and beta all the way to omega. We could even have studied the astrological charts of the fund managers here. Instead, we took the Kapil Dev approach. Our goal was to find the best funds with which savers can do SIP for a long term. So our evaluation model does only that--it simulates doing SIP for the long term. That’s it. In fact, we added a bit more reality. The typical saver increases the SIP amount as the household income increases over the years. So we added an 8% annual step-up in the amount invested for 10 years.”
Just like real life investors, there are three categories. Conservative, which has balanced and large cap funds. Growth having large & mid, multi cap funds. And aggressive which has mid and small cap funds.
The study has included funds that have followed the same strategy throughout this period.
Here is the list of wealth creators
Mid and Small Cap |
Franklin India Smaller Companies Fund |
HDFC Mid-Cap Opportunities Fund |
L&T Midcap Fund |
Balanced and Large |
ICICI Prudential Equity & Debt Fund |
Principal Hybrid Equity Fund |
Reliance Large Cap Fund |
Equity: Multi Cap and Large & MidCap |
Canara Robeco Emerging Equities Fund |
Invesco India Multicap Fund |
SBI Focused Equity Fund |