India’s top performing mutual fund schemes in August 2023

1 Sep 2023 , 09:46 AM

August 2023 was a month of relatively tepid FPI inflows. After the FPIs infused $5.3 billion in May, $5.4 billion in June and $5.7 billion in July 2023, the month of August saw inflows of just $1.49 billion into Indian equities. That is not a bad number, but relatively tepid compared to the previous 3 months. Overall, the FPIs have infused nearly $18.5 billion in the last 4 months since May 2023. For the month of August, the Nifty remained under pressure in a range between 19,200 and 19,600; with the 20,000 levels of Nifty starting to look elusive. For the month of August 2023, the Nifty 50 closed -2.53% lower, Nifty Next-50 index closed -1.92% lower, the Mid-Cap 100 closed +3.71% higher while the Small Cap 100 index closed with +4.62% gains for August 2023. Even as the frontline indices showed signs of tiring at higher levels, alpha hunting remains robust in the smaller stocks.

Bond markets saw a bounce in yields in early August but towards the end of the month it again tapered to where it started the month. For August, the 10-year benchmark yields closed at 7.17% compared to 7.18% at the close of July 2023. This surge in inflation to 7.44% in July 2023 had an immediate impact on the bond yields, as it spiked up. However, there were other mitigating factors during the month. US bond yields fell sharply while a surfeit of liquidity in the money markets led to tapering of bond yields across the yield curve, although the impact was more prominent on the treasury bills than on the longer term bonds. Let us now turn to the August 2023 mutual fund performance; across the gamut of equity and debt funds.

Equity Large-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Canara Robeco Blue-Chip (G)	11.553%	20.331%	14.257%
Nippon India Large Cap (G)	21.135%	28.138%	13.825%
Baroda BNP Paribas Large (G)	12.908%	20.506%	13.649%
Category Average	11.091%	20.013%	11.178%
BSE 100 (TR) Index	9.975%	21.489%	11.941%
Data Source: Morningstar

Equity Multi-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Active Fund (G)	16.961%	34.880%	22.882%
Mahindra Manulife Multi (G)	23.207%	32.015%	19.592%
Nippon India Multi Cap (G)	30.774%	36.888%	17.252%
Category Average	19.835%	28.671%	15.760%
BSE 500 (TR) Index	11.344%	23.309%	12.558%
Data Source: Morningstar

Equity Flexi-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Flexi Cap Fund (G)	18.509%	35.758%	22.343%
PPFAS Flexi Cap Fund (G)	19.325%	22.869%	18.226%
PGIM India Flexi Cap Fund (G)	10.464%	24.859%	17.204%
Category Average	14.265%	22.674%	12.889%
BSE 500 (TR) Index	11.344%	23.309%	12.558%
Data Source: Morningstar

Equity Mid-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Mid-Cap Fund (G)	23.456%	40.351%	23.239%
PGIM India Mid-Cap Fund (G)	9.319%	34.033%	21.307%
Nippon India Growth Fund (G)	25.123%	33.584%	19.444%
Category Average	20.509%	30.151%	16.281%
BSE Midcap (TR) Index	24.335%	30.169%	14.358%
Data Source: Morningstar

Equity Small-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Small Cap Fund (G)	39.532%	50.994%	29.781%
Axis Small Cap Fund (G)	24.201%	35.924%	23.737%
Nippon Small Cap Fund (G)	36.434%	45.262%	23.022%
Category Average	26.580%	37.838%	19.568%
BSE Midcap (TR) Index	30.761%	38.501%	17.740%
Data Source: Morningstar

Equity Linked Savings Schemes (Tax Saving)     

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Tax Plan (G)	14.025%	37.007%	24.390%
Mirae Asset Tax Saver (G)	15.412%	24.954%	16.605%
BOI Tax Advantage (G)	17.355%	26.367%	16.422%
Category Average	14.341%	22.984%	12.513%
BSE 200 (TR) Index	9.564%	22.228%	12.290%
Data Source: Morningstar

Index Funds (Equity)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
DSP Nifty-50 Equal Weight (G)	12.195%	25.543%	12.052%
Nippon India Sensex Fund (G)	10.158%	20.003%	11.940%
ICICI Pru Sensex Fund (G)	10.003%	19.860%	11.939%
Category Average	11.831%	20.762%	10.714%
Benchmark Index	N.A.	N.A.	N.A.
Data Source: Morningstar

Balanced Funds (Aggressive Allocation)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Absolute Fund (G)	8.842%	29.045%	19.974%
ICICI Pru Equity & Debt (G)	17.847%	28.225%	16.218%
BOI S&M Equity and Debt (G)	21.827%	28.573%	14.759%
Category Average	12.673%	19.393%	11.516%
CRISIL MIF Blended Index PR	7.394%	7.449%	8.676%
Data Source: Morningstar

Balanced Funds (Conservative Allocation)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Kotak Debt Hybrid (G)	10.405%	12.753%	10.985%
SBI Conservative Hybrid (G)	11.088%	12.961%	10.366%
Canara Robeco Hybrid (G)	7.858%	9.485%	9.707%
Category Average	7.749%	9.779%	7.406%
CRISIL MIF Blended Index PR	7.394%	7.449%	8.676%
Data Source: Morningstar

Dynamic Asset Allocation Funds (BAF)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
HDFC BAF (G)	20.287%	26.991%	14.504%
Edelweiss BAF (G)	10.977%	16.258%	12.005%
ICICI Prudential BAF (G)	10.727%	15.098%	11.334%
Category Average	10.747%	13.160%	9.402%
Benchmark Index	N.A.	N.A.	N.A.
Data Source: Morningstar

Arbitrage Funds (Cash-Futures)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Edelweiss Equity Arbitrage (G)	7.483%	5.481%	5.923%
Nippon Arbitrage Fund (G)	7.411%	5.406%	5.876%
Invesco Arbitrage Fund (G)	7.842%	5.600%	5.848%
Category Average	6.713%	4.672%	5.049%
Benchmark Index	N.A.	N.A.	N.A.
Data Source: Morningstar

Government Securities Funds (Gilt Funds)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
DSP G-Sec Fund (G)	7.654%	5.750%	9.009%
SBI Magnum Gilt Fund (G)	8.412%	6.039%	8.848%
Bandhan G-Sec Fund (G)	6.582%	4.849%	8.799%
Category Average	6.629%	4.758%	7.645%
I-SEC MIBEX Index TR	6.645%	5.085%	7.835%
Data Source: Morningstar

Corporate Bond Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
HSBC Corporate Bond (G)	6.172%	4.957%	8.146%
ABSL Corporate Bond (G)	7.068%	5.673%	7.721%
HDFC MF Corporate Bond (G)	7.074%	5.566%	7.690%
Category Average	6.483%	4.957%	6.846%
CRISIL ST Bond Fund Index PR	6.698%	5.224%	7.163%
Data Source: Morningstar

Credit Risk Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
ICICI Pru Credit Risk Fund (G)	7.236%	7.305%	8.224%
HDFC Credit Risk Fund (G)	6.954%	7.315%	8.023%
Baroda Credit Risk Fund (G)	7.953%	11.866%	7.781%
Category Average	7.074%	9.773%	4.834%
CRISIL ST Bond Fund Index PR	6.698%	5.224%	7.163%
Data Source: Morningstar

Liquid Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Aug-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Liquid Plan (G)	6.671%	5.189%	5.852%
Mahindra Manulife Liquid (G)	6.866%	4.745%	5.390%
Edelweiss Liquid Fund (G)	6.833%	4.731%	5.366%
Category Average	5.909%	4.009%	4.787%
CRISIL Liquid Fund Index PR	6.841%	4.869%	5.486%
Data Source: Morningstar

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

1. Large cap Equity funds have generally given lower 1-year return compared to the previous month due to the tepid performance of the Nifty and the Nifty Next-50 indices. However, the small cap and mid-cap funds have continued to deliver impressive returns over a one year period too. Over a 3-year period and 5-year period, the impact is much lesser even for the large cap funds in the analysis.

    

2. As stated earlier the outperformance is more pronounced in the case of small cap and mid cap funds. That is because, as macros have come under pressure, investors and fund managers are looking out for alpha in smaller focused stocks. The net result of this trend is visible in flows, which are gravitating towards focused small cap and mid-cap funds.

    

3. A word on the median returns across various categories. In case of large cap funds and ELSS funds, median returns are either at par with the benchmark or marginally lower. However, if you consider the mid-cap funds and small cap funds, even the median returns are meaningfully higher than the benchmark returns. The top 3 performers in most cases have comfortably outshone the index benchmark returns.

    

4. Debt funds have given lower returns on a 1-year basis compared to last month, and that can be attributed to the fund NAVs being highly volatile, impacting trading yields on bonds. That has impacted bond returns and the impact is more visible in short term returns. While bond yields were flat, it was the volatility that hit debt fund returns.

    

5. An interesting point emerges from the analysis of the above mutual fund rankings across the equity and debt categories. The top ranking funds across equity and debt categories have been largely consistent over the past few months on a rolling basis, barring some very small exceptions. That is testimony of the fact that; past returns in most mutual fund categories are a fairly reliable indicator of future performance. That is significant from and investor perspective and also from an advisory perspective.

August 2023 has been another good month for small and mid-cap equity funds, but relatively neutral for large cap and multi-cap funds. In the case of bond funds, there has been a subtle shift in favour of arbitrage funds at the short end due to the tax arbitrage. However, for longer tenure debt funds, it is the volatility in yields that has impacted more than any spike in yields, despite inflation reaching a yearly high of 7.44%.