India’s top performing mutual fund schemes in September 2023

2 Oct 2023 , 08:51 AM

September 2023 saw FPI outflows for the first time since February 2023. The indications had been there in August, but September was a nasty surprise. After the FPIs infused $5.3 billion in May, $5.4 billion in June and $5.7 billion in July 2023, FPI inflows into Indian equities had tapered in August to just $1.49 billion. However, September saw net FPI selling of $(1.78) billion. One can argue that $1.78 billion of outflows is not bad after $18.5 billion of net inflows in the previous 4 months. But, it remains to be seen, whether this is a flash in the pan or it is a shift in trend. The Nifty, overall, was volatile in the month with a sharp spike followed by a sharp fall. For the month of September 2023, the Nifty 50 closed +2.00% higher, Nifty Next-50 index closed +1.40% higher, the Mid-Cap 100 closed +3.63% higher while the Small Cap 100 index closed with +1.92% gains. All the indices look good on a MOM basis, but there were deep cuts from the sharp rally till the middle of September.

How benchmark bond yields turned out in September 2023

Bond markets saw yields tapering in early September but towards the end of the month it again came back to the 7.21% mark, where it had started out. The yields have been largely rangebound in the last 2 months. The surge in consumer inflation to 7.44% for July 2023 and to 6.81% for August 2023, did not have a very deep impact. However, there are some concerns for the yield story. US bond yields at 4.6% are at the highest level since October 2007 and are up 107 bps since the start of May 2023. What kept yields in India in check was the surplus liquidity in the system. A clearer picture on yields will emerge only after the liquidity situation normalizes. Let us now turn to the September 2023 mutual fund performance; across the gamut of equity and debt funds.

1. Equity Large-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Canara Robeco Blue-Chip (G)	18.637%	21.287%	16.407%
Nippon India Large Cap (G)	28.214%	31.381%	16.133%
Baroda BNP Paribas Large (G)	20.813%	21.917%	16.065%
Category Average	18.496%	21.504%	13.352%
BSE 100 (TR) Index	16.089%	22.529%	14.046%
Data Source: Morningstar

1. Equity Multi-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Active Fund (G)	20.434%	33.873%	25.190%
Mahindra Manulife Multi (G)	27.978%	33.005%	22.169%
Nippon India Multi Cap (G)	32.295%	39.304%	19.507%
Category Average	24.954%	29.655%	18.387%
BSE 500 (TR) Index	17.476%	24.259%	15.123%
Data Source: Morningstar

1. Equity Flexi-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Flexi Cap Fund (G)	22.160%	34.710%	24.671%
PPFAS Flexi Cap Fund (G)	25.574%	25.550%	20.115%
PGIM India Flexi Cap Fund (G)	15.552%	24.046%	19.554%
Category Average	20.615%	23.659%	15.134%
BSE 500 (TR) Index	17.476%	24.259%	15.123%
Data Source: Morningstar

1. Equity Mid-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Mid-Cap Fund (G)	31.708%	40.553%	26.312%
PGIM India Mid-Cap Fund (G)	11.858%	31.217%	24.682%
Nippon India Growth Fund (G)	32.207%	34.492%	23.020%
Category Average	25.295%	29.873%	19.438%
BSE Midcap (TR) Index	31.630%	31.572%	18.294%
Data Source: Morningstar

1. Equity Small-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Small Cap Fund (G)	42.068%	47.732%	30.939%
Nippon Small Cap Fund (G)	38.980%	44.172%	26.644%
Axis Small Cap Fund (G)	25.332%	34.727%	26.453%
Category Average	29.280%	36.685%	22.655%
BSE Midcap (TR) Index	33.169%	37.353%	22.212%
Data Source: Morningstar

1. Equity Linked Savings Schemes (Tax Saving)     

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Tax Plan (G)	18.441%	36.581%	26.820%
BOI Tax Advantage (G)	26.308%	26.975%	21.517%
Mirae Asset Tax Saver (G)	22.526%	25.249%	18.799%
Category Average	20.944%	23.822%	15.023%
BSE 200 (TR) Index	16.070%	23.302%	14.689%
Data Source: Morningstar

1. Index Funds (Equity)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
DSP Nifty-50 Equal Weight (G)	21.660%	28.183%	14.604%
Nippon India Sensex Fund (G)	18.036%	21.291%	13.734%
ICICI Pru Sensex Fund (G)	17.876%	21.142%	13.704%
Category Average	19.891%	22.043%	12.853%
Benchmark Index	N.A.	N.A.	N.A.
Data Source: Morningstar

1. Balanced Funds (Aggressive Allocation)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Absolute Fund (G)	11.093%	28.142%	21.560%
BOI S&M Equity and Debt (G)	28.108%	28.151%	18.694%
ICICI Pru Equity & Debt (G)	25.107%	31.583%	17.926%
Category Average	17.611%	20.157%	13.240%
CRISIL MIF Blended Index PR	8.987%	7.548%	9.127%
Data Source: Morningstar

1. Balanced Funds (Conservative Allocation)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Kotak Debt Hybrid (G)	12.389%	12.835%	12.047%
SBI Conservative Hybrid (G)	12.312%	13.142%	11.117%
Canara Robeco Hybrid (G)	9.799%	9.728%	10.436%
Category Average	9.731%	9.939%	8.138%
CRISIL MIF Blended Index PR	8.987%	7.548%	9.127%
Data Source: Morningstar

1. Dynamic Asset Allocation Funds (BAF)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
HDFC BAF (G)	28.494%	30.836%	16.755%
Edelweiss BAF (G)	15.001%	16.589%	13.643%
ICICI Prudential BAF (G)	13.809%	15.921%	12.263%
Category Average	15.031%	13.895%	10.482%
Benchmark Index	N.A.	N.A.	N.A.
Data Source: Morningstar

1. Arbitrage Funds (Cash-Futures)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Edelweiss Equity Arbitrage (G)	7.730%	5.609%	5.922%
Invesco Arbitrage Fund (G)	8.004%	5.739%	5.830%
Nippon Arbitrage Fund (G)	7.660%	5.527%	5.827%
Category Average	6.957%	4.802%	5.093%
Benchmark Index	N.A.	N.A.	N.A.
Data Source: Morningstar

1. Government Securities Funds (Gilt Funds)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
DSP G-Sec Fund (G)	7.433%	4.662%	8.849%
SBI Magnum Gilt Fund (G)	8.130%	5.836%	8.837%
Bandhan G-Sec Fund (G)	7.428%	4.521%	8.746%
Category Average	6.954%	4.526%	7.608%
I-SEC MIBEX Index TR	7.967%	4.888%	7.908%
Data Source: Morningstar

1. Corporate Bond Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
HSBC Corporate Bond (G)	7.465%	5.025%	8.317%
HDFC Corporate Bond (G)	7.741%	5.596%	7.821%
UTI MF Corporate Bond (G)	7.184%	5.225%	7.765%
Category Average	7.056%	4.992%	6.966%
CRISIL ST Bond Fund Index PR	7.331%	5.321%	7.274%
Data Source: Morningstar

1. Credit Risk Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
ICICI Pru Credit Risk Fund (G)	7.647%	7.138%	8.330%
HDFC Credit Risk Fund (G)	7.384%	7.199%	8.129%
Baroda Credit Risk Fund (G)	8.005%	11.452%	7.922%
Category Average	7.491%	9.616%	5.037%
CRISIL ST Bond Fund Index PR	7.331%	5.321%	7.274%
Data Source: Morningstar

1. Liquid Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 30th Sep-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Liquid Plan (G)	6.816%	5.238%	5.845%
Mahindra Manulife Liquid (G)	7.025%	4.847%	5.384%
Edelweiss Liquid Fund (G)	6.988%	4.827%	5.366%
Category Average	6.052%	4.139%	4.841%
CRISIL Liquid Fund Index PR	6.952%	4.951%	5.477%
Data Source: Morningstar

Here are some key takeaways from the September 2023 mutual fund rankings.

1. Equity funds across the board have given better one-year returns due to the robust performance by the Nifty and the mid-cap and small cap indices during the month of September. However, the impact on returns over a 3-year period and 5-year period, have been relatively lesser across the gamut of equity funds.

    

2. One observation is that the mid-cap and small cap funds have been consistent in delivering alpha; as long as you stick to the winners in the above list. Multi-cap and flexi cap funds continue to outperform the large cap funds, underlining the importance of diversifying across capitalization classes.

    

3. A word on the median returns across various categories. In case of many equity fund categories, the one-year returns of the top 3 funds have performed below the index benchmark performance. However, over a 5-year time frame the category leaders continue to beat the benchmark indices by a margin.

    

4. Debt fund returns have been largely stable over the last few months, especially in terms of short term returns. That is more because the bond yields of the 10-year benchmark have been in a narrow range for some time. However, with the US bond yields at a 16 year high of 4.6% and the RBI likely to bite the bullet on hawkishness, the yield shifts could be more decisive in the future.

    

5. An interesting point emerges from the analysis of the above mutual fund rankings across the equity and debt categories; and this is consistent story over a 5-year period. The winners have been consistent as a category and that is good news for investors looking at past returns to select funds for the long term. That is also proof of the fact that; past returns in most mutual fund categories are a fairly reliable indicator of future performance. 

The story of September 2023 on the mutual funds front is that, the leaders continue to maintain their lead and stock selection and asset allocation has helped them outperform the benchmarks by a margin over the longer time frame.