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India’s top performing mutual fund schemes in May 2024

1 Jun 2024 , 03:15 PM

POLITICAL UNCERTAINTY HITS MARKETS IN MAY 2024

May 2024 was a month in which the FPIs continued to be net sellers. FPIs sold Indian equities worth $3,666 Million in the secondary markets, but were net buyers in the IPO market to the tune of $603 million, ending the month as net sellers to the tune of $3,063 Million in equities overall. However, the FPIs were net buyers in debt and hybrids in May 2024 to the tune of $1,522 Million, ending up as overall net sellers to the tune of $1,541 million for May 2024. For calendar 2024 so far, FPIs were net sellers in equities to the tune of $2,770 million but the aggressive buying in debt ensured that at an overall level, the FPIs were still net buyers to the tune of $5,834 Million. However, the deluge of domestic money from Indian mutual funds and LIC (which manage over $1.1 trillion between them, has ensured that the markets did not have much to worry about.

The month of May 2024 was marked by elevated levels of political uncertainty and a mixed outcome of Q4 results. Let us talk about the results first. The sales revenue growth in Q4 was better than previous quarters, but that was largely on account of a boost in banking top line. However, profit performance was not too great due to cost pressures and banks facing thinning markets. Political uncertainty continued to be the name of the game, especially with VIX rising to above the 24 levels. However, there were two pieces of good tidings on the last day of May. The Q4 GDP growth came in at 7.8%, against the street expectations of 6.5%, resulting in full year FY24 GDP growth at a whopping 8.2%. To spice up the story further, the fiscal deficit for FY24 came in at just 5.6% of GDP, 20 bps lower than the revised fiscal deficit target of 5.8% of GDP. This fiscal prudence is likely to go down well with the equity and bond markets; although we will get to see the impact only next week.

BOND YIELDS FALL SHARPLY IN MAY 2024

For the month of May 2024, the 10-year benchmark yields started off at around 7.16%, but fell sharply after the RBI announced its bumper dividend of ₹2.11 trillion to the Indian government. That is hardly surprising. The surge in the RBI dividend by more than 100% above the interim budget estimates means that the government now has the ammunition to push the fiscal deficit even below the initial FY25 fiscal deficit estimates of 5.1%. Alternatively, it is also possible that the government may choose to use these funds to enhance their capex outlay for the year. For FY25, the government had cut the capex growth from 30% to 11%. However, this additional dividend boost allows the government to set the capex growth at 20% for FY25. If you add the lower 5.6% fiscal deficit for FY24, we could see the bond yields tapering further from current levels. That should be value accretive to equities and pave the way for rate cuts by the RBI after the full budget in July.

  1. Equity Large-Cap Funds

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Baroda BNP Paribas Large (G) 39.051% 19.320% 18.777%
JM Large Cap (G) 45.534% 21.344% 18.563%
ICICI Pru Blue-Chip Fund (G) 37.548% 20.380% 18.442%
Category Average 31.680% 16.037% 15.664%
S&P BSE 100 (TR) Index 27.357% 16.106% 16.113%
Data Source: Morningstar
  1. Equity Multi-Cap Funds

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Quant Active Fund (G) 52.337% 25.139% 30.581%
Mahindra Manulife Multi (G) 49.204% 24.877% 25.707%
Nippon India Multi Cap (G) 51.078% 31.575% 22.312%
Category Average 44.098% 22.551% 21.731%
S&P BSE 500 (TR) Index 34.698% 18.077% 18.043%
Data Source: Morningstar
  1. Equity Flexi-Cap Funds

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Quant Flexi Cap Fund (G) 60.952% 28.381% 32.436%
JM Flexi Cap Fund (G) 63.385% 30.379% 25.648%
PPFAS Flexi Cap Fund (G) 33.086% 21.198% 24.557%
Category Average 36.589% 18.259% 17.885%
S&P BSE 500 (TR) Index 34.698% 18.077% 18.043%
Data Source: Morningstar
  1. Equity Mid-Cap Funds

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Quant Mid-Cap Fund (G) 75.466% 34.955% 35.649%
Motilal Oswal Mid-Cap(G) 50.794% 36.095% 28.592%
Mahindra Manulife Mid-Cap (G) 61.660% 28.846% 28.288%
Category Average 49.596% 24.548% 23.962%
S&P BSE Midcap (TR) Index 59.919% 26.771% 24.642%
Data Source: Morningstar
  1. Equity Small-Cap Funds

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Quant Small Cap Fund (G) 66.283% 35.053% 41.456%
BOI Small Cap Fund (G) 48.777% 27.221% 33.354%
Nippon Small Cap Fund (G) 54.130% 33.508% 31.792%
Category Average 46.258% 26.158% 27.210%
S&P BSE Midcap (TR) Index 56.056% 37.068% 27.190%
Data Source: Morningstar
  1. Equity Linked Savings Schemes (Tax Saving)

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Quant Tax Plan (G) 60.898% 28.410% 34.068%
BOI ELSS Tax Saver (G) 55.667% 24.807% 26.709%
SBI Long Term Equity Fund (G) 57.178% 27.168% 22.771%
Category Average 36.464% 18.700% 18.017%
S&P BSE 200 (TR) Index 32.557% 17.308% 17.447%
Data Source: Morningstar
  1. Index Funds (Equity)

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
UTI Next 50 Index Fund (G) 61.072% 21.953% 20.023%
DSP Nifty-50 Equal Weight (G) 61.109% 22.058% 19.787%
LIC MF Nifty Next-50 Fund (G) 60.677% 21.986% 19.757%
Category Average 41.821% 17.483% 15.455%
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 May-24):

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Quant Absolute Fund (G) 40.390% 21.470% 25.526%
BOI S&M Equity and Debt (G) 49.742% 23.858% 23.142%
ICICI Pru Equity & Debt (G) 37.543% 23.833% 20.932%
Category Average 28.982% 15.676% 15.415%
CRISIL MIF Blended Index PR 10.436% 7.186% 8.836%
Data Source: Morningstar
  1. Balanced Funds (Conservative Allocation)

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Kotak Debt Hybrid (G) 17.011% 11.697% 12.767%
SBI Conservative Hybrid (G) 14.026% 10.790% 11.185%
HDFC Hybrid Debt Fund (G) 16.034% 11.151% 10.766%
Category Average 12.389% 9.053% 8.543%
CRISIL MIF Blended Index PR 10.436% 7.186% 8.836%
Data Source: Morningstar
  1. Dynamic Asset Allocation Funds (BAF)

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
HDFC BAF (G) 41.791% 24.390% 19.170%
Baroda BNP Paribas BAF (G) 26.987% 15.472% 16.928%
Edelweiss BAF (G) 25.012% 14.155% 15.889%
Category Average 24.268% 12.571% 12.409%
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 May-24):

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Quant Multi-Asset Fund (G) 52.192% 26.606% 30.325%
ICICI Pru Multi-Asset Fund (G) 32.489% 23.459% 20.255%
UTI Multi-Asset Fund (G) 37.765% 18.444% 15.529%
Category Average 27.294% 16.135% 16.427%
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 May-24):

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Tata Equity Arbitrage (G) 8.417% 6.321% 6.099%
Invesco Arbitrage Fund (G) 8.490% 6.612% 6.047%
Edelweiss India Arbitrage (G) 8.510% 6.475% 6.044%
Category Average 7.805% 5.713% 5.778%
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 May-24):

Name of Fund 1-Year Return 3-Year Return 5-Year Return
ICICI Pru Gilt Fund (G) 8.244% 6.672% 8.220%
SBI Magnum Gilt Fund (G) 7.630% 6.554% 8.173%
DSP G-Sec Fund (G) 8.268% 5.266% 8.068%
Category Average 7.178% 5.459% 6.870%
I-SEC MIBEX Index TR 6.868% 5.414% 7.049%
Data Source: Morningstar
  1. Corporate Bond Funds

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
ICICI Pru Corporate Bond (G) 7.717% 6.269% 7.358%
HSBC Corporate Bond (G) 6.363% 5.340% 7.342%
ABSL Corporate Bond (G) 7.595% 5.925% 7.332%
Category Average 6.827% 6.808% 6.491%
CRISIL ST Bond Fund Index PR 7.093% 5.544% 6.826%
Data Source: Morningstar
  1. Credit Risk Funds

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
ICICI Pru Credit Risk Fund (G) 8.409% 7.114% 8.244%
DSP Credit Risk Fund (G) 16.112% 10.500% 8.190%
Baroda BNP Credit Risk Fund (G) 8.263% 9.730% 8.021%
Category Average 8.014% 9.613% 5.507%
CRISIL ST Bond Fund Index PR 7.093% 5.544% 6.826%
Data Source: Morningstar
  1. Liquid Funds

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

Name of Fund 1-Year Return 3-Year Return 5-Year Return
Quant Liquid Plan (G) 7.186% 5.810% 5.763%
Mahindra Manulife Liquid (G) 7.398% 5.785% 5.356%
Edelweiss Liquid Fund (G) 7.418% 5.764% 5.354%
Category Average 6.334% 4.969% 4.731%
CRISIL Liquid Fund Index PR 7.327% 5.811% 5.445%
Data Source: Morningstar

Let us quickly turn to what determined the flows into mutual funds in recent months, and whether these returns were related to the performance of the funds as captured above?

CORRELATION OF FLOWS AND CATEGORY PERFORMANCE

Were the flows in April 2024 related to returns. Of course, the flow figures are with a lag of one month, but the idea would still be there. . We will take the last 1 year AUM change, as captured in the table below, and try to correlate the AUM shift with the returns. Mutual fund AUM rallied sharply in April, due to a mix of strong debt fund flows and equity market appreciation.

Month Debt AUM

(₹ Trillion)

Equity AUM

(₹ Trillion)

Alternate AUM

(₹ Trillion)

Total AUM

(₹ Trillion)

Apr-23 12.99 15.85 12.47 41.62
May-23 13.49 16.57 12.85 43.20
Jun-23 13.48 17.43 13.22 44.39
Jul-23 14.17 18.25 13.69 46.38
Aug-23 14.00 18.60 13.74 46.64
Sep-23 13.05 19.08 14.17 46.58
Oct-23 13.54 18.79 14.10 46.72
Nov-23 13.58 20.33 14.87 49.05
Dec-23 12.91 21.79 15.78 50.78
Jan-24 13.77 22.50 16.17 52.74
Feb-24 14.50 23.12 16.62 54.54
Mar-24 12.62 23.49 17.02 53.40
Apr-24 14.59 24.74 17.66 57.26

Data Source AMFI

As can be seen in the above table, the overall AUM has grown by 37.6% yoy to ₹57.26 Trillion as of the close of April 2024. This has been triggered by 12.3% growth in debt fund AUM, 56.1% growth in equity AUM and 41.6% growth in alternative assets. The enthusiasm of equity flows and hybrid flows are largely borne out by the performance of these funds. In the case of debt funds, most of the swing in flow accretion appears to have come in April, when the liquid flows were reversed.

WHAT WE READ FROM THE MAY 2024 MUTUAL FUND RANKINGS

Here are some key trends we could decipher from the rankings of various categories of mutual funds over different time periods as of end of May 2024.

  1. Surprisingly, in May 2024, it was the small cap funds that faced pressure on a one-year returns basis. The 1-year returns were under pressure across the board, although the longer term returns were not impacted. Other equity funds maintained their show.
  2. The alpha story is quite interesting for the equity funds. The top 3 rankers, across most of the categories of equity funds have been beating the benchmark index by a margin. Category averages have, however, often underperformed benchmarks.
  3. On debt funds, the preference continues to be at the short end of the yield curve rather than the long end. That was the trend in May also, but that can be attributed more to the nature of corporate treasury management in India.
  4. The biggest takeaway was that; for the umpteenth time the leaders across categories have been substantially consistent. That means; past returns can be a reliable indicator of future performance. This has fund selection implications for retail investors and for financial advisors; as asset allocation in financial planning becomes a lot easier.

Amidst the volatility of general elections and geopolitical risk, mutual fund performance has been largely steady in May. The coming months could be interesting!

Related Tags

  • AMFI
  • Large Cap Funds
  • MF rankings
  • MidCap Funds
  • mutual funds
  • SmallCap Funds
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