It was a problem of plenty for mutual fund managers in 2017. Even as the broader market raced higher with the Nifty gaining 28 per cent and the CNX 500 gaining 35 per cent this year, outdoing the benchmark returns was not an easy task. However, fund managers in the multi-cap category managed to show a far better performance compared to managers in other equity categories.
A BusinessLine analysis of the hit ratio (number of funds that gave better positive returns when compared to the benchmark) in equity diversified funds shows that fund managers of multi-cap funds have fared far better. The hit ratio of multi-cap funds was 73 per cent in 2017, against 52 per cent in 2016. Tax planning funds that adopt a multi-cap investing strategy have also put up good performances, with a hit ratio of 86 per cent in 2017.
Among multi-cap funds IDFC Focussed Equity Fund, Tata Retirement Savings Fund — Progressive Fund and Principal Dividend Yield Fund managed to outperform their benchmarks by a margin of 21-24 per cent. These funds are allowed by their mandates to invest in large-, mid- and small-cap companies. The diversification appears to have helped.
