India’s top performing mutual fund schemes in October 2023

1 Nov 2023 , 09:29 AM

How equity markets panned out in October 2023

October 2023 was a volatile month with FPI outflows to the tune of $2.95 billion on top of FPI outflows of $1.49 billion in the month of September 2023. FPIs have sold nearly $4.5 billion in equities in the last 2 months and the inflows into debt, while positive, have only been instrumental in compensating part of the fall. It remains to be seen, whether this is a temporary phase amidst global headwinds or a shift in trend. The Nifty, overall, was volatile in the month with a sharp fall followed by a late recovery, albeit marginal. For the month of October 2023, the Nifty 50 closed -2.85% lower, Nifty Next-50 index closed -2.26% lower, the Mid-Cap 100 closed -4.10% higher while the Small Cap 100 index closed with -0.77% losses. While the losses were almost across the board, the small cap stocks managed to defend itself better. However, October 2023 markets were largely about global headwinds.

How benchmark bond yields turned out in October 2023

Bond markets saw high levels of volatility in the month of October 2023 and this was largely an outcome of the spike in US bond yields, which briefly touched 5% during the month. In addition, the consistent strength in the US dollar index (DXY) also raised the spectre of imported inflation into India. The US has reported strong Q3 GDP growth at 4.9%, with PCE inflation still elevated at 3.4%. A lot will depend on the Fed policy on November 01, 2023; but it is clear that the Fed is not giving up on its hawkish stance. For the month, the bond yields opened at around 7.23% and closed the month at 7.35% staying under 7.40% even in the most volatile times. What kept yields in India in check was the surplus liquidity in the system. Therefore, a clearer picture on yields will emerge only after the liquidity situation normalizes. Let us now turn to the October 2023 mutual fund performance; across the gamut of equity and debt funds. We also benchmark to peer group and to the index.

1. Equity Large-Cap Funds

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Canara Robeco Blue-Chip (G)	8.480%	18.925%	16.730%
Baroda BNP Paribas Large (G)	10.166%	19.504%	16.291%
Kotak Bluechip Fund (G)	8.996%	19.905%	15.915%
Category Average	8.667%	19.024%	13.655%
BSE 100 (TR) Index	7.726%	20.188%	14.399%
Data Source: Morningstar

1. Equity Multi-Cap Funds

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Active Fund (G)	10.636%	31.804%	24.767%
Mahindra Manulife Multi (G)	18.315%	30.839%	22.229%
Nippon India Multi Cap (G)	23.157%	37.810%	19.103%
Category Average	16.061%	27.680%	18.272%
BSE 500 (TR) Index	9.634%	22.012%	15.353%
Data Source: Morningstar

1. Equity Flexi-Cap Funds

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Flexi Cap Fund (G)	12.296%	32.814%	24.744%
PPFAS Flexi Cap Fund (G)	21.722%	24.370%	21.850%
JM Flexi Cap Fund (G)	24.479%	30.483%	19.961%
Category Average	12.278%	21.513%	13.353%
BSE 500 (TR) Index	9.634%	22.012%	15.353%
Data Source: Morningstar

1. Equity Mid-Cap Funds

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Mid-Cap Fund (G)	22.121%	38.866%	26.006%
PGIM India Mid-Cap Fund (G)	6.572%	30.064%	24.195%
MOSL Midcap Growth (G)	19.734%	36.637%	23.019%
Category Average	18.371%	28.340%	19.159%
BSE Midcap (TR) Index	24.625%	29.476%	17.721%
Data Source: Morningstar

1. Equity Small-Cap Funds

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Small Cap Fund (G)	32.050%	45.106%	29.616%
Nippon Small Cap Fund (G)	32.327%	44.289%	26.616%
Axis Small Cap Fund (G)	23.061%	33.631%	26.532%
Category Average	24.247%	35.916%	22.639%
BSE Midcap (TR) Index	29.221%	36.501%	22.180%
Data Source: Morningstar

1. Equity Linked Savings Schemes (Tax Saving)     

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Tax Plan (G)	9.336%	34.694%	27.026%
BOI Tax Advantage (G)	14.728%	24.239%	21.334%
Bandhan Tax Saving ELSS (G)	15.221%	30.525%	18.681%
Category Average	11.357%	21.713%	15.112%
BSE 200 (TR) Index	7.877%	20.951%	14.958%
Data Source: Morningstar

1. Index Funds (Equity)

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
DSP Nifty-50 Equal Weight (G)	12.473%	26.062%	15.228%
Nippon India Sensex Fund (G)	6.369%	18.375%	14.202%
ICICI Pru Sensex Fund (G)	6.218%	18.230%	14.161%
Category Average	11.299%	19.751%	13.278%
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 Oct-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Absolute Fund (G)	3.846%	26.059%	21.454%
BOI S&M Equity and Debt (G)	22.153%	26.806%	18.634%
ICICI Pru Equity & Debt (G)	16.092%	31.010%	17.834%
Category Average	10.373%	18.391%	13.303%
CRISIL MIF Blended Index PR	7.630%	6.691%	8.965%
Data Source: Morningstar

1. Balanced Funds (Conservative Allocation)

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Kotak Debt Hybrid (G)	9.415%	11.962%	11.863%
SBI Conservative Hybrid (G)	9.978%	12.087%	11.050%
Canara Robeco Hybrid (G)	7.567%	8.885%	10.307%
Category Average	7.512%	9.167%	8.077%
CRISIL MIF Blended Index PR	7.630%	6.691%	8.965%
Data Source: Morningstar

1. Dynamic Asset Allocation Funds (BAF)

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
HDFC BAF (G)	19.613%	29.367%	16.299%
Edelweiss BAF (G)	9.745%	15.414%	13.829%
ICICI Prudential BAF (G)	9.931%	15.098%	12.353%
Category Average	9.863%	12.727%	10.458%
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 Oct-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Multi-Asset Fund (G)	11.205%	27.605%	22.704%
ICICI Pru Multi-Asset Fund (G)	18.634%	29.620%	17.525%
HDFC Multi-Asset Fund (G)	11.800%	16.669%	13.851%
Category Average	13.475%	16.790%	13.403%
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 Oct-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Edelweiss Equity Arbitrage (G)	7.965%	5.655%	5.898%
Invesco Arbitrage Fund (G)	8.144%	5.784%	5.828%
Nippon Arbitrage Fund (G)	7.908%	5.567%	5.788%
Category Average	7.278%	4.902%	5.128%
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 Oct-23):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
SBI Magnum Gilt Fund (G)	7.776%	5.113%	8.621%
DSP G-Sec Fund (G)	6.895%	4.417%	8.528%
ICICI Pru Gilt Fund (G)	8.342%	5.667%	8.511%
Category Average	6.387%	3.810%	7.301%
I-SEC MIBEX Index TR	7.346%	4.309%	7.487%
Data Source: Morningstar

1. Corporate Bond Funds

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
HSBC Corporate Bond (G)	7.150%	4.321%	8.086%
HDFC Corporate Bond (G)	7.454%	5.125%	7.711%
UTI MF Corporate Bond (G)	6.956%	4.787%	7.704%
Category Average	6.837%	4.593%	6.875%
CRISIL ST Bond Fund Index PR	7.377%	5.023%	7.182%
Data Source: Morningstar

1. Credit Risk Funds

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
ICICI Pru Credit Risk Fund (G)	7.649%	6.886%	8.305%
HDFC Credit Risk Fund (G)	7.222%	6.588%	8.080%
Baroda Credit Risk Fund (G)	8.080%	11.161%	7.926%
Category Average	8.141%	9.591%	5.237%
CRISIL ST Bond Fund Index PR	7.389%	5.020%	7.188%
Data Source: Morningstar

1. Liquid Funds

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

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Liquid Plan (G)	6.877%	5.286%	5.824%
Mahindra Manulife Liquid (G)	7.070%	4.945%	5.369%
ABSL Liquid Fund (G)	7.113%	4.922%	5.348%
Category Average	6.104%	4.230%	4.829%
CRISIL Liquid Fund Index PR	7.047%	5.047%	5.470%
Data Source: Morningstar

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

1. Equity funds across the board saw their one-year returns taking a hit on the back of a steep correction in the markets in the month of October 2023. The correction was sharp across large caps, mid-caps, and small caps and that rubbed off on the performance overall. 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. The leaders, or the top 3 performers, across most of the categories of funds have done better than the benchmark, which is a signal that the top performers are also generating alpha in terms of excess returns over the index returns. 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. These variations are true of equity funds also.

    

3. Debt fund returns have been largely stable over the last few months, especially in terms of short term returns. However, rising bond yields in the last few months have allowed the funds at the shorter end of the yield curve to perform better. 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. There are risks in the form of rising US bond yields and rising dollar index, but the direction of yields in India are 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; and this is consistent story over a 5-year period. The winners 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 shifts, but the moves are not too material. That is also proof of the fact that; past returns in most mutual fund categories are a fairly reliable indicator of future performance. This has larger implications for financial advisors too; who often struggle on the criteria for recommending funds to investors.

The story of October 2023 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 case of debt funds, shorter duration funds have done better while the longer duration funds have seen minimal disruption due to relatively stable bond yields.