Smart diversification, trending stocks at right prices help funds deliver on SIPs

In the three-year and five-year time-frames, in the multi-cap category, the SIP returns of Parag Parikh Long-term Equity Fund have been considerably higher than the category average.

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Finally, in the large-cap category, in terms of SIP returns, low-cost passively managed scheme Nippon India ETF Shariah BeES and actively managed scheme Axis Bluechip have emerged as top performers in the three-year and five-year time-frames.
ET Spotlight
ET Intelligence Group: What’s the recipe for persistent success with SIPs? Fresh ideas and fresh faces, the concentration of portfolio, and intelligent diversification.

So, change in fund managers — or, fresh ideas and fresh faces — has played a role in some funds outrunning others in one, two and five-year timeframes. New fund managers bought into stocks that were “flavours of the market” at good price points. Mirae, Canara Robeco and Axis Mutual Fund, for instance, had appointed new fund managers over the past five years and outscored others.

  • 15.5%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 4.12 YearsTime taken to double money
  • 14.69%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 4.9 YearsTime taken to double money
“To a considerable extent, the ‘average buying price’ of stocks bought by fund managers of schemes which did well in their respective categories has been quite low,” said Rupesh Bhansali, head-mutual funds, GEPL Capital. This has boosted the SIP performance of most equity schemes.

Smart Diversification, Trending Stocks at Right Prices Help Funds Deliver on SIPs
Separately, two factors have boosted the performance of schemes which feature in the top-performing list. In the three-year and five-year time-frames, in the multi-cap category, the SIP returns of Parag Parikh Long-term Equity Fund have been considerably higher than the category average.

Distributors point out that the scheme is multi-cap in the truest sense of the word. It has a diversified portfolio not only in terms of geography but also in terms of themes. Close to 65% of the scheme is invested in Indian stocks and about 30% in stocks listed on the US stock exchanges.

Finally, in the large-cap category, in terms of SIP returns, low-cost passively managed scheme Nippon India ETF Shariah BeES and actively managed scheme Axis Bluechip have emerged as top performers in the three-year and five-year time-frames.
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