The festival of lights is now behind us and like I mentioned in my last column a fortnight ago, if at all one must play the ‘game’ of mutual fund picks, it makes far more sense to rather discuss some pedigreed and proven long-term performers who have delivered high double-digit CAGR returns over seven years and more, as that according to me is the minimum holding period an investor in equity must-have.
Last fortnight, we had turned the spotlight on proven long-term outperformers like Kotak Standard Multicap, L&T India Value and Mirae Asset Emerging Bluechip.
In this column, we shall focus on some slightly less conventional funds that have often bucked the trend and fulfilled the seven-year high double-digit CAGR filter. They are Axis Focused 25 Fund, Principal Emerging Bluechip Fund and DSP Mid Cap Fund.
Axis Focused 25 Fund is a Rs 7,800 crore plus fund that invests in firms with the capability to sail through their business cycles without being affected by short-term market volatility. The fund focuses on companies having cyclical tailwind and emerging themes with high growth potential. Its portfolio is well diversified across sectors and this fund is tilted towards large-caps with moderate exposure to mid-caps. Its equity exposure currently is 95-96 per cent, with large-caps forming 80-85 per cent and the balance in mid-cap stocks.
Principal Emerging Bluechip Fund is a Rs 2,000 crore plus fund that follows a bottom-up approach of stock selection with focus on emerging leaders in the industry. Its exposure to equity stands at 96-98 per cent and it holds around 70 stocks in its portfolio with adequate diversification across 20-25 odd industries. Currently, large-caps form 51 per cent, mid-caps form 36 per cent and small-caps form 13 per cent of its portfolio. This fund has been a fairly consistent performer across market cycles and it has a track record of 10 years.
DSP Mid-cap Fund is a Rs 6,300 crore plus fund that follows a ‘buy and hold’ strategy with focus on bottom-up stock-picking. It focuses on incremental RoE and Price/Book, in addition to other fundamental parameters. It tends to be overweight on its high conviction bets.
This fund largely follows the value style of investing and comprises around 50 stocks with 12-15 per cent large-caps, while the rest are mid-caps. Its equity exposure till recently was around 92 per cent with the remaining spread across money market and cash. This fund has been a fairly consistent performer across market cycles with a track record of more than 10 years.
Yet again, I must conclude with the caveat that while these may not necessarily be the best funds in their categories or across Life Cycle Stages, there is no mistaking the fact that they have been sound long-term performers that have handsomely rewarded their investors.
Ashok Kumar heads LKW-INDIA. He can be reached at ceolotus@hotmail.com