The Top-Performing Mutual Funds Of 2018
In a volatile year for stocks, large-cap mutual fund schemes outperformed small- and mid-cap plans tracking the benchmark indices.
After an initial surge, the S&P BSE Sensex fell in 2018 because of rising crude, a weaker rupee and a trade war between the U.S. and China. A credit crunch for non-bank lenders, triggered by IL&FS defaults, added to the selloff. While the Sensex managed to recoup losses, the broader Nifty Midcap 100 Index and Nifty Smallcap 100 Index plunged 17 percent and 30.5 percent, respectively.
That reflects in the returns mutual fund investors earned based on their net asset value of large-, medium- and small-cap schemes. Sectoral and thematic funds or those focused outside of India weren’t considered.
According to an analysis of Bloomberg data, here’s the list of best-performing mutual fund schemes of 2018:
Top-performer: Axis Blue Chip Fund–Direct Plan
- Year-to-date return: 7.2 percent.
The fund returned gains of 7.2 percent in 2018 compared with the benchmark S&P BSE Sensex’s 4.5 percent.
The fund gave annualised returns of 13.9 percent and 15.9 percent for the three-year and five-year period. The Nifty returned annualised gains of 11 percent each during both the periods.
The fund is overweight on financials with an allocation of over 25 percent to banks. Maruti Suzuki (5.7 percent) is the only stock among its top five holdings with negative returns—shares of India’s largest carmaker tumbled more than 20 percent this year.
Top-performer: Axis Midcap Fund
- Year-to-date return: 3.4 percent.
The fund, the only one in the category to gain this year, invests in equity and equity-related instruments of mid-sized companies. Its direct plan returned gains of 3.5 percent compared with the Nifty Midcap 100 index’s 17 percent decline.
The fund gave annualised returns of 13.3 percent and 21.7 percent for the three-year and five-year period. The Nifty Midcap Index returned annualised gains of 9.5 percent and 17 percent during the period.
“It managed to do so because of its higher exposure to financials and consumer cyclicals which delivered significant returns in 2018,” said research firm Morningstar.
Invesco India Mid Cap Fund ranks a distant second in the category with negative returns of 5.5 percent.
Top performer: HDFC Small and Midcap Fund
- Year-to-date return: -7 percent.
The Securities and Exchange Board of India had last year instructed mutual fund houses to recategorise schemes according to market size. This hurt small-cap funds the most as some key investments moved into the mid-cap space, with none of the small-cap funds delivering positive returns.
HDFC Small and Midcap Fund was the top performer in the small-cap category even though its NAV fell 7 percent. That compared with a 30.5 percent decline in the Nifty Smallcap 100 Index.
The fund gave annualised returns of 17 percent for the three-year period while the Nifty Smallcap Index returned 4 percent during the period.
The fund fared better than the benchmark because technology stocks account for 12 percent of its holding, according to Morningstar. “This is on account of its higher exposure to technology stocks like NIIT Technologies and Sonata Software which have done well in 2018,” the research firm said.
L&T Emerging Business Fund, whose NAV fell 13.8 percent, was the second-best performer.
Top performer: Axis Multicap Fund
- Year-to-date return: 8 percent.
A multicap fund is market-cap agnostic as it invests in a broad universe of stocks. The fund managed to give an 8 percent return this year compared with 2.2 percent by second-placed UTI Equity Fund - Growth Option, which has similar holdings to the Axis Bluechip with a higher exposure to financials. The Axis Multicap Fund managed to beat the UTI Equity Fund due to its lower allocation to pharmaceutical stocks, which on an average fell 10 percent.