personal finance

Looking for `safe’ mutual funds with higher return potential? Here is our list

Many mutual fund investors are increasingly becoming mindful of the risk associated with their schemes thanks to the current volatility in the stock market. Suddenly, everyone is looking for a `safe’ or `consistent’ performer. Asked to define the safe schemes, the investors would say they want a scheme that wouldn’t suffer much in a falling market and offers good returns in a bull market. Is it possible? Mutual Funds tried to find out whether there are equity mutual fund schemes that have outperformed during the buoyant market conditions, and fallen less when the markets were down.

We looked at ‘Up capture ratio’ and ‘Down capture ratio’ of equity mutual fund schemes, including largecap, midcap, smallcap, large and midcap, multicap, focused and value funds. We looked at the data category wise. Next, we took out all those schemes which had an up-capture ratio of more than 100 and down-capture ratio of less than 100.

What do these ratios capture? An up-capture ratio shows how a scheme has performed vs its benchmark when the benchmark had a positive return. And, a down-capture ratio shows the performance of a scheme vs its benchmark when the benchmark had a negative return.

A ratio of 100 for a scheme means, the scheme’s performance was in line with its benchmark.

Moving back to our selection of schemes, we have taken out those schemes which have outperformed their respective benchmarks in both the bull and the bear phases of a market.

In a bearish market, if a scheme falls less than its benchmark, it is considered an outperformance. In other words, we can say that these schemes have given higher returns than their benchmark in all the bull runs and have fallen less than their benchmark in bear markets during a certain period. For our study, we have taken a period of five years.

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Out of a total universe of 157 schemes, we found six mutual fund schemes which fulfilled our selection criteria. Among them, two were large and midcap schemes, three were multicap schemes and one is a focused scheme.

Here are the safe mutual fund schemes:

Scheme name Category 3-yr returns (%) 5-yr returns (%)
Canara Robeco Emerging Equities Fund Large and midcap 10.02 27.48
Mirae Asset Emerging Bluechip Large and midcap 13.47 28.08
Mirae Asset India Equity Fund Multicap 10.93 18.73
Aditya Birla SL Equity Fund Multicap 9.90 18.73
Reliance Multi Cap Fund Multicap 4.39 15.75
Reliance Focused Equity Fund Focused 6.79 21.89

We do not advise investors to outrightly invest in these schemes. While it is important to look for schemes which gives you a downside protection, there are several other factors to consider while choosing mutual fund schemes. For example, your goals, time in your hand and your risk appetite, among others.


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