A look at mutual funds' performance and key portfolio mistakes you should avoid

In this latest episode of ‘Mutual Fund Corner’, Vineet Nanda, Managing Director at Sift Capital talked about mutual fund outperformers. On the other hand, Mrin Agarwal, Financial Educator & Director at Finsafe India Private Ltd,  talked about portfolio mistakes that investors make.

Nanda said, “In the last 12 months, HDFC flexi cap, ICICI Prudential flexi cap and Quant flexi cap have done better than the peers. However, performances over various cycles will vary based on the relative positioning of the funds.”

According to him, there have been three major factors responsible for this rotation.

One is that as interest rates have gone up, there's been a compression on PEs and value stocks have done much better compared to growth stocks. Second is that the small-caps have underperformed in this period compared to the large and mid-caps. So, because of this the funds which are more large-cap oriented, like HDFC, ICICI which are nearly 85 percent large-cap oriented, have done better compared to the other funds, which had a larger exposure to small and mid-caps. Third is that there were certain flexi cap funds, which had exposure to global stocks, especially NASDAQ, linked stocks, and NASDAQ have seen a meltdown with the index being down by 3 percent.

"So based on the relative positioning of individual funds, there has been rotation on account of these three major factors," Nanda said.

Meanwhile, according to Aggarwal, figuring out the best fund is difficult as there are many funds available in the market.

"The second point is that it is very difficult for investors to evaluate funds, even if the metrics like volatility ratios, or rolling returns are available for most investors. So, while mutual funds have a lot of benefits a basic thing that they need help in is choosing the right fund," he said.

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