India’s top performing mutual fund schemes in January 2024

2 Feb 2024 , 10:03 AM

How equity markets panned out in January 2024

The month of January 2024 was a volatile month with FPI outflows to the tune of $3.10 billion from equities. However, FPIs were aggressive buyers in debt so that the overall net selling by FPIs for January 2024 was just about $791 million. The FPI selling in January comes on the back of $9 billion infused into Indian equities in the month of December 2023. While the flows could not maintain the momentum, there was caution ahead of the US monetary policy and the Indian Union Budget announcement. The Nifty, overall, was volatile in the month but managed to close almost flat for the month of January 2024. The Nifty 50 closed -0.03% lower, Nifty Next-50 index closed +3.66% higher, the Mid-Cap 100 closed +5.36% higher while the Small Cap 100 index closed with +5.83% gains. While there was selling in the high caps ahead of key events, the selective buying in the mid-cap and small cap stocks continued aggressively. The Red Sea crisis and the uncertainty of the Fed trajectory on rates continued to be a major overhang for the Indian markets during January 2024.

How benchmark bond yields turned out in January 2024

Bond markets were largely volatile but range bound in the month of January 2024. The 10 year bond yields hovered between 7.06% and 7.23% during the month of January 2024, although the bond yields only started falling after the budget was announced on the first of February. That is more because the fiscal deficit was pegged at 5.1% of GDP for fiscal year FY25. That is sharply lower than the expected range of 5.3% to 5.5%. Now, a lower fiscal deficit has also been accompanied by lower borrowings outlook for FY25 and would mean less pressure on the private bond markets. If the government is not forced to pay higher yields on its bond issues, then that bodes well for the bond markets as a whole. However, the uncertainty for bond markets stems from the fact that for the full year, the inflation risk continues to be very high. For instance, Red Sea crisis is likely to make the Indian economy vulnerable to higher levels of imported inflation. Bond yields are likely to set the tone for overall markets and that will be closely watched in February 2024 also.

1. Equity Large-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Baroda BNP Paribas Large (G)	32.139%	20.010%	18.921%
ICICI Pru Blue Chip Fund (G)	34.304%	23.081%	18.877%
Canara Robeco Blue-Chip (G)	27.504%	18.111%	18.773%
Category Average	29.558%	18.442%	16.126%
BSE 100 (TR) Index	27.285%	19.321%	16.817%
Data Source: Morningstar

1. Equity Multi-Cap Funds

Top performing Direct Plans% (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Active Fund (G)	43.014%	34.304%	30.042%
Mahindra Manulife Multi (G)	52.152	32.733%	26.329%
Baroda BNPP Multi Cap (G)	37.710%	26.832%	21.328%
Category Average	42.613%	27.930%	22.109%
BSE 500 (TR) Index	33.424%	21.875%	18.493%
Data Source: Morningstar

1. Equity Flexi-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Flexi Cap Fund (G)	50.823%	37.775%	30.909%
PPFAS Flexi Cap Fund (G)	37.807%	24.170%	24.290%
JM Flexi Cap Fund (G)	52.479%	29.957%	24.224%
Category Average	34.924%	21.313%	18.156%
BSE 500 (TR) Index	33.424%	21.875%	18.493%
Data Source: Morningstar

1. Equity Mid-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Mid-Cap Fund (G)	53.806%	41.145%	32.053%
Motilal Oswal Mid-Cap(G)	49.501%	38.004%	27.681%
PGIM Mid-Cap Opps Fund (G)	25.752%	26.181%	27.443%
Category Average	45.470%	28.336%	23.186%
BSE Midcap (TR) Index	59.145%	30.457%	23.031%
Data Source: Morningstar

1. Equity Small-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Small Cap Fund (G)	66.651%	50.926%	37.924%
BOI Small Cap Fund (G)	52.011%	37.072%	33.901%
Nippon Small Cap Fund (G)	58.014%	43.345%	31.737%
Category Average	50.136%	35.137%	27.431%
BSE Midcap (TR) Index	63.526%	37.604%	28.017%
Data Source: Morningstar

1. Equity Linked Savings Schemes (Tax Saving)     

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Tax Plan (G)	48.775%	37.459%	33.028%
BOI ELSS Tax Saver (G)	45.996%	27.406%	26.364%
Bandhan Tax Saving ELSS (G)	35.836%	28.081%	22.263%
Category Average	34.427%	21.669%	18.177%
BSE 200 (TR) Index	30.757%	20.637%	17.843%
Data Source: Morningstar

1. Index Funds (Equity)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
DSP Nifty-50 Equal Weight (G)	34.628%	24.164%	18.896%
Sundaram Nifty 100 EW (G)	38.610%	21.879%	17.331%
UTI Next 50 Index Fund (G)	41.401%	20.802%	16.441%
Category Average	37.833%	19.561%	15.829%
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 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Absolute Fund (G)	30.122%	27.414%	35.351%
BOI S&M Equity and Debt (G)	42.255%	28.556%	22.866%
ICICI Pru Equity & Debt (G)	33.879%	28.633%	21.153%
Category Average	26.884%	18.185%	15.517%
CRISIL MIF Blended Index PR	11.028%	7.116%	9.145%
Data Source: Morningstar

1. Balanced Funds (Conservative Allocation)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Kotak Debt Hybrid (G)	17.416%	12.366%	13.023%
SBI Conservative Hybrid (G)	14.257%	11.206%	11.345%
HDFC Hybrid Debt Fund (G)	16.110%	12.047%	10.877%
Category Average	12.497%	9.228%	8.689%
CRISIL MIF Blended Index PR	11.028%	7.116%	9.145%
Data Source: Morningstar

1. Dynamic Asset Allocation Funds (BAF)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
HDFC BAF (G)	38.214%	27.834%	19.595%
Baroda BNP Paribas BAF (G)	25.137%	15.401%	16.733%
Edelweiss BAF (G)	23.398%	15.192%	15.889%
Category Average	22.579%	13.480%	12.493%
Benchmark Index	N.A.	N.A.	N.A.
Data Source: Morningstar

1. Multi-Asset Allocation Funds (MAAF)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Multi-Asset Fund (G)	36.149%	34.403%	27.449%
ICICI Pru Multi-Asset Fund (G)	27.884%	27.041%	19.933%
HDFC Multi-Asset Fund (G)	21.578%	15.417%	15.456%
Category Average	24.875%	17.329%	15.569%
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 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Tata Equity Arbitrage (G)	8.157%	6.065%	6.112%
Edelweiss Arbitrage Fund (G)	8.149%	6.134%	6.010%
Invesco India Arbitrage (G)	8.291%	6.318%	6.001%
Category Average	7.542%	5.402%	5.273%
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 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
SBI Magnum Gilt Fund (G)	9.021%	6.227%	8.778%
Bandhan G-Sec Fund (G)	9.457%	5.466%	8.698%
Edelweiss G-Sec Fund (G)	8.446%	6.104%	8.656%
Category Average	8.026%	4.965%	7.388%
I-SEC MIBEX Index TR	7.974%	4.898%	7.336%
Data Source: Morningstar

1. Corporate Bond Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
HSBC Corporate Bond (G)	7.190%	5.086%	8.034%
UTI Corporate Bond (G)	7.530%	8.355%	7.597%
ICICI Pru Corporate Bond (G)	7.977%	5.939%	7.593%
Category Average	7.189%	5.076%	6.769%
CRISIL ST Bond Fund Index PR	7.326%	5.434%	7.058%
Data Source: Morningstar

1. Credit Risk Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
ICICI Pru Credit Risk Fund (G)	8.853%	7.232%	8.406%
DSP Credit Risk Fund (G)	16.703%	10.158%	8.192%
HDFC Credit Risk Fund (G)	7.716%	6.649%	8.083%
Category Average	8.498%	9.773%	5.379%
CRISIL ST Bond Fund Index PR	7.326%	5.434%	7.058%
Data Source: Morningstar

1. Liquid Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st Jan-24):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Liquid Plan (G)	7.042%	5.505%	5.785%
Mahindra Manulife Liquid (G)	7.242%	5.209%	5.350%
Edelweiss Liquid Fund (G)	7.193%	5.284%	5.331%
Category Average	6.246%	4.542%	4.715%
CRISIL Liquid Fund Index PR	7.201%	5.385%	5.446%
Data Source: Morningstar

Here are some key takeaways from the January 2024 mutual fund rankings.

1. Equity funds (especially the large cap funds) across the board saw their one-year returns take a hit on the back of a volatility in the markets in January 2024. However, the pressure was limited to the large cap stocks while the mid-caps, small caps and the microcaps actually put up a very strong performance in January 2024. This sentiment broadly rubbed off on the performance of equity funds overall as we saw the non-index and non-large-cap funds doing a lot better than the mainline funds in the month of January 2024. However, the impact on returns over a 3-year period and 5-year period, have been relatively limited across the gamut of equity funds.

    

2. The leaders, or the top 3 performers, across most of the categories of funds have done better than the benchmark. This is a clear signal that the top performers are also generating alpha in terms of excess returns over the index. However, in the case of several debt funds, the mean returns of various debt fund categories have performed below the benchmark returns. That hints at a large number of individual funds underperforming the index on an overall basis. However, in the debt fund category and the hybrid fund category, the selection of index is not always representative and it is more indicative at times of a general median of a theme.

    

3. Debt funds have been generally divergent in their performance. The returns have been largely stable over the last few months, especially in terms of short term returns. However, volatile bond yields in the last few months have allowed the funds at the shorter end of the yield curve to perform better, compared to the longer duration funds. However, the performance of the longer duration debt funds has not been impacted as the bond yields of the 10-year benchmark have been in a narrow range for some time. Needless to say, there are risks in the form of rising US bond yields and rising dollar index, but the direction of yields in India is more a function of RBI reaction to inflation and bond market liquidity.

    

4. An interesting point emerges from the analysis of the above mutual fund rankings across the equity and debt categories for the month of January 2024. These findings are broadly consistent over a 5-year period. The winners (top-3) across the various categories have been consistent and that is good news for investors looking at past returns to select funds for the long term. There could be occasional internal ranking shifts, but the moves are not too material. That also subtly testifies to the fact that; past returns in most mutual fund categories are a fairly reliable indicator of future performance; at least in the case of the leaders. This has larger implications for financial advisors too; who often debate whether past returns are a good index of future performance of mutual funds? The answer appears to be in the affirmative.

The story of January on the equity funds front is that while short term returns have been negatively impacted, the impact on longer term returns have been limited. In the equity space, it is the mid-cap and small-cap funds that have once again managed to outperform the large cap fund names. In the case of debt funds, shorter duration funds have done better while the longer duration funds have seen minimal disruption due to relatively range bound bond yields. The month has been fairly lucrative for mutual fund investors.