Et_wealth_sep2nd.pdf

S P E C I A L

I S S U E

THE ECONOMIC TIMES

Small measures, big impact P14

www.etwealth.co | Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, Pune | September 2-8, 2019 | 28 pages | `8

BEST FUND MANAGERS 2019 The fund managers who created the most wealth for investors. P2

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ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

The Economic Times Wealth September 2-8, 2019

PHOTOS: GETTTY IMAGES, BHARAT CHANDA AND NITIN SONAWANE

ET WEALTH MORNINGSTAR RANKING OF

BEST FUND MANAGERS 2019 Fund managers who created the most wealth for investors.

By Sanket Dhanorkar

W

ith the economy slowing down, the professionals who manage your money have had to burn the midnight oil for longer. Equity fund managers have been toiling hard, steering portfolios to safety. It has not been

an easy task, given the tough market conditions and unprecedented developments on the domestic and global fronts in recent years. Even so, a few fund managers have managed to deliver healthy returns while keeping risk at bay. ET Wealth teamed up with Morningstar India to identify the best equity fund managers who created the most wealth for investors.

Our ranking is not based on perceptions or surveys but relies solely on hard data. It’s an objective study that digs deep into the five-year track record of equity schemes and sorts them on the basis of riskadjusted returns. We segregated the fund managers into three broad buckets and identified the top achievers within each segment (see methodology on page 13).

The top wealth creators of 2019 Large cap

1

NEELESH SURANA

2

SOHINI ANDANI

3

SHREYASH DEVALKAR

4

SAILESH RAJ BHAN

5

HARISH KRISHNAN

Mirae Asset Global Investments

SBI Mutual Fund

Axis Mutual Fund

Reliance Mutual Fund

Kotak Mahindra Mutual Fund

Multi cap

1

NEELESH SURANA

2

JINESH GOPANI

3

HARSHA UPADHYAYA

4

RAJEEV THAKKAR

5

DHIMANT SHAH

Mirae Asset Global Investments

Axis Mutual Fund

Kotak Mahindra Mutual Fund

Parag Parikh Mutual Fund

Principal Mutual Fund

Small and mid cap

1

SHREYASH DEVALKAR

2

R. SRINIVASAN

3

PANKAJ TIBREWAL

4

R. JANKIRAMAN

5

S.N. LAHIRI

Axis Mutual Fund

SBI Mutual Fund

Kotak Mahindra Mutual fund

Franklin Templeton Mutual Fund

L&T Mutual Fund

Neelesh Surana of Mirae Asset Mutual Fund dominates the fund manager rankings this year as well. This astute stock picker has continued his emphasis on being in the right pockets through companyspecific research rather than playing on sector rotation. “There are many opportunities in businesses where the long-term prospects are intact, although the nearterm could be impaired,” he asserts. There is a common thread running through the investing approach of these top fund managers—the emphasis on downside protection. Given the climate of uncertainty, these fund managers would rather err on the side of caution than make costly mistakes. Instead of going on a hunt for the next multi-bagger, many of them prefer to minimise errors. “What you don’t buy during such times adds significantly to fund outperformance in the long run,” points out Sohini Andani of SBI Mutual Fund. She prefers businesses that show superior execution in a rough environment. The list also has many early movers. Harsha Upadhyaya of Kotak Mutual Fund and Rajeev Thakkar of PPFAS Mutual Fund, are among a few who pared exposure to the consumption and mid-cap segments well before the rest of the market. Fund managers have also taken divergent paths. Some like Pankaj Tibrewal of Kotak Mutual Fund moved towards healthy diversification to mitigate risks while others like Shreyas Devalkar of Axis Mutual Fund made the portfolio more compact, preferring to back conviction ideas. Read on to know how else the best investing brains in the country have negotiated the tides of the market.

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ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

The Economic Times Wealth September 2-8, 2019

LARGE-CAP FUNDS

How new rules have impacted the fund managers

Neelesh Surana AGE: 50 YEARS EDUCATION B.E.(Mechanical), MBA (Finance)

RECATEGORISATION BY SEBI has made fund mandates distinct and given more clarity to investors. But fund managers have had to grapple with myriad issues. For large-cap funds, the strict threshold of 80% investment in top 100 stocks by market cap has not left much room for maneuovrability. Earlier, some fund managers could stray into mid-cap territory to create alpha. Fund managers still hope to beat the index by deviating from the index and cherry picking within this universe. Only time will tell if they can deliver alpha within the confines of a narrow universe.

D MAN UN

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BEST F

EXPERIENCE 24 years

2019

PROFILE fter a decade marked with consistent outperformance, the multi-cap oriented Mirae Asset India Equity helmed by Neelesh Surana altered its positioning last year. Amid the re-categorisation, the fund house felt that aligning with the largecap mandate would improve scalability and liquidity of a scheme absorbing heavy inflows. Being large-cap biased anyway, this change in mandate didn’t require

A

QUICK TAKE What the market tells me We are coming out of a period of sub-par earnings growth, as reflected by the low profit to GDP ratio compared to the historical average. We expect corporate profitability to improve over the next two years. Post the recent correction, there are good longterm investment opportunities across sectors.

My portfolio is aligned for Our approach continues to focus on businesses which could grow earnings despite the ongoing challenges. In the current environment, there are many opportunities in businesses where the long-term prospects are intact, although the near-term could be

any alteration in Surana’s approach. Continuing his unwavering focus on stock selection, he has avoided two extremes—excellent businesses priced exorbitantly and firms exhibiting issues with their business model. Amid heavy market polarisation, he skillfully targeted businesses witnessing near-term impairment in earnings but whose long-term earnings trajectory was intact. He has put emphasis on limiting

impaired.

Promising theme for the next 3-5 years We are positive on the consump-

large drawdowns during any market downturn, keeping the portfolio well diversified. This approach is reflected in the superior risk-adjusted return delivered by the fund.

tion oriented businesses. Longterm growth drivers related to favourable demographics, rising income levels and urbanisation, etc. are intact.

TOP SECTOR BETS

TOP STOCK PICKS

Mirae Asset Global Investments

5-year asset weighted return

14.40% Average 5-year AUM

`4,418

Financial Services

36.68%

HDFC Bank Ltd

8.95%

Technology

10.12%

ICICI Bank Ltd

6.25%

CRORE

Reliance Industries

5.50%

Risk adjusted returns

Consumer Cyclical

9%

FUND MANAGED FUND NAME

Mirae Asset Large Cap

ANNUALISED RETURNS (%) AUM (`CR)

3-YEAR

5-YEAR

13,492

11.20

13.04

Asset weighted returns as on 30 June; Annualised returns, AUM and sector data as on 31 July

0.64

Source: Morningstar India

Fund managers in the mid- and small-cap categories have faced different problems. Initially, some fund managers found it challenging to realign their portfolios to meet the revised norms. As fund managers rushed to plug gaps in the largecap presence, demand shifted away from midand small-cap stocks towards frontline stocks. Many mid- and smallcap stocks which didn’t meet the revised norms (even within the midand small-cap universe) had to be sold. Besides, investor confidence in mid-cap space was also dwindling around this time. As a consequence, liquidity dried up quickly in this basket, leaving fund managers in the mid- and small-cap segment high and dry. Faced with a dearth in liquidity, fund managers found it difficult to take positions within this universe. They were gradually able to align their portfolios over a few months.

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ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

The Economic Times Wealth September 2-8, 2019

PROFILE

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2019

Sohini Andani Age: 47 years EDUCATION B.Com, C.A. EXPERIENCE 22 years

SBI Mutual Fund

PROFILE

L

5-year asset weighted return

12.48%

Average 5-year AUM

`10,969 cr

Risk adjusted returns

0.52

TOP SECTOR BETS

TOP STOCK PICKS

Financial services

37.47%

HDFC Bank Ltd

8.93%

Industrials

10.71%

ICICI Bank Ltd

5.91%

Consumer defensive

9.14%

Larsen & Toubro

5.18%

FUND MANAGED FUND NAME

ANNUALISED RETURNS (%) AUM (`CR)

3-YEAR

5-YEAR

21,585

6.39

10.75

SBI Bluechip

QUICK TAKE What the market tells me Currently, the market seems to be worried about the overall growth slowdown, both on the domestic and global fronts. Continuing negative flows are likely to put pressure on the currency and hence exert further pressure on the markets.

My portfolio is aligned for Our portfolio is aligned for revival in growth. While consumption

has driven growth in the past few years, we believe it cannot sustain on its own unless supported by a revival in investments and employment growth. If the growth does not revive, the consumption may disappoint more due to high growth expectations built into the valuations.

Promising theme for the next 3-5 years A pick up in the investment cycle would still be a promising theme in the next 3-5 years even though the near-term scenario indicates otherwise.

TOP STOCK PICKS

Financial Services

42.23%

Kotak Mahindra Bank

9.46%

Technology

11.92%

HDFC Bank

7.97%

Consumer defensive

9.09%

Bajaj Finance

7.80%

FUND MANAGED

D MAN UN

3

ERS AG

ike many fund managers, Shreyash Devalkar treats the quality bias as the backbone of his approach. But he also stresses on objectivity in his quality filters. At a time when businesses that exhibit both growth and quality are quoting a hefty premium, he insists this objectivity can bring some differentiation to his fund’s performance. This is reflected in the portfolio consolidation and distinct tilt towards heavyweights in Axis Bluechip. Not surprisingly, the fund has proven to be an outlier in the large-cap category over the past few years. Even as its peers have struggled to outperform the benchmark, this fund has generated healthy alpha. Superior downside protection has helped put the fund ahead of competition. Devalkar insists that with disruption abundant everywhere, investors need to be wary about rich valuations and narrowing moats, particularly in large-caps.

eing underweight on soaring index heavyweights has hurt SBI Bluechip in the near term, yet Sohini Andani has not veered from her core philosophy. She insists that what you don’t buy during such times helps create alpha in the long run. Andani has shown preference for businesses that are showing superior execution in a rough environment. She maintains that the market scenario has been changing pace furiously in recent years and reckons the pain in the financial sector has made things worse than what was earlier expected. On her part, she admits lagging behind in estimating the extent of the pain, but maintains conviction in businesses that have a longer runway for growth. Adjusting the portfolio for a relatively better risk-reward proposition should help her maintain a healthy return profile.

TOP SECTOR BETS

BEST F

2

ERS AG

BEST F

04

2019

ANNUALISED RETURNS (%)

FUND NAME

AUM (`CR)

3-YEAR

5-YEAR

Axis Bluechip

6,501

12.56

11.33

QUICK TAKE What the market tells me We have seen a clear bias towards quality in this downturn. Fundamentally weak businesses have been at the receiving end of the market’s wrath as investor confidence has been low. This, coupled with weak demand and poor macroeconomic factors, has led to a steep correction. Much of the pain has already been priced in and hence we believe that going forward, things should get better in a phased manner.

My portfolio is aligned for

We remain quality centric. We are objective in implementing our Quality and Growth strategy and are watchful on any disruption in any of the businesses we own

Shreyash Devalkar

Promising theme for the next 3-5 years Consumption remains the theme for us. Consumption includes financiers (retail banks, NBFCs), durables, staples, auto and discretionary. There will be periods where some segments slow down, but we need to tide over it through a cycle. Demographics and aspirations have been in favour of the consumption theme over the longer term.

5-Year asset weighted return

11.81%

Risk adjusted returns

0.46

Average 5-year AUM

`2,276 cr

Age: 40 years EDUCATION B.E. (Chemical Engineering), Masters In Management Studies EXPERIENCE 14 years

Axis Mutual Fund

cover story The Economic Times Wealth September 2-8, 2019

PROFILE

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ERS AG

BEST F

ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

I

2019

Sailesh Raj Bhan Age: 46 years EDUCATION MBA(Finance) CFA (ICFAI) EXPERIENCE 23 years

Reliance Mutual Fund

n the recent phase characterised by a narrow market, Sailesh Bhan has remained adamant about not overpaying for growth. He believes that while chasing momentum may prove rewarding in the near term, it eventually does more harm than good. Bhan insists that the index often doesn’t respect valuations, and so has chosen higher weights for companies that quote cheaper multiples than the index yet boast better earnings profile. This fluidity in approach has allowed him to play to his strengths. Bhan firmly believes that even a small shift in sentiment would yield outsized return in select pockets. Reliance Large Cap has repositioned from its earlier avatar (Reliance Top 200). But given its largecap tilt since 2014, the fund manager has continued on the same path.

5-Year asset weighted return

12.51%

Average 5-year AUM

`4,998 cr

Risk adjusted returns

0.46

TOP SECTOR BETS

TOP STOCK PICKS

Financial Services

31.48%

State Bank of India

8.40%

Industrials

17.27%

ICICI Bank Ltd

8.31%

Consumer Cyclical

13.92%

Larsen & Toubro Ltd

6.34%

FUND MANAGED FUND NAME

ANNUALISED RETURNS (%) AUM (`CR)

3-YEAR

5-YEAR

12,261

10.19

11.05

Reliance Large Cap

QUICK TAKE What the market tells me Performers of the next few years can be very different from those of the last few years as growth and valuations shifts happen. The narrow markets are creating opportunities to create alpha over the next 2-3 years.

My portfolio is aligned for Not overpaying for growth and

aligning towards businesses which can significantly outperform in the next three years. The current volatility has created opportunities and valuations are attractive from a 3-year perspective despite slow near-term growth.

Promising theme for the next 3-5 years Domestic cyclicals, corporate lenders, pharma and auto sectors are well positioned from a 3-year perspective.

05

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ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

The Economic Times Wealth September 2-8, 2019

H

TOP STOCK PICKS

Financial Services

38.80%

HDFC Bank

9.52%

Technology

12.86%

Reliance Industries

8.06%

Basic Materials

9.91%

5

2019

7.90%

ICICI Bank

D MAN UN

ERS AG

arish Krishnan’s Kotak Bluechip has held on to well-run businesses. Steering clear of financial leverage, he buys debt-laden businesses only if supported by strong cash flows. The thrust is on identifying pockets with a growing profit pool and focusing on businesses that can best capture the opportunity. Striving to avoid landmines, he has ventured a few notches lower on the quality curve owing to the rich valuations in the creamy layer. He exited early from select consumer stocks into industrials. In hindsight, Krishnan admits he should have been slower in tweaking the quality profile.

TOP SECTOR BETS

BEST F

PROFILE

ANNUALISED RETURNS (%)

FUND MANAGED FUND NAME

AUM (`CR)

3-YEAR

5-YEAR

Kotak Bluechip

1,303

6.46

9.44

QUICK TAKE What the market tells me India is undergoing a prolonged phase of balance sheet adjustment. With banks having to recapitalise, stressed corporate groups have had difficulty either

selling few of their illiquid assets or refinance. There is no quick fix and hence don’t expect a dramatic recovery. But we are now closer to the end of the deleveraging cycle.

Harish Krishnan

My portfolio is aligned for We are positioned in sectoral leaders that have invested in their

Age: 39 years

5-year asset weighted return

10.85%

Risk adjusted returns

MULTI-CAP FUNDS

0.37

Neelesh Surana

Average 5-year AUM

`1,197 cr

EDUCATION CFA, PGDBM (IIM Kozhikode), B. Tech (Electronics & Communications) EXPERIENCE 14 years

Kotak Mutual Fund

AGE: 50 YEARS businesses, that have low financial leverage and who can capitalise on the opportunities in the upcoming business cycle.

EDUCATION B.E.(Mechanical), MBA (Finance) EXPERIENCE 24 years

Promising theme for the next 3-5 years

D MAN UN

1

While the infrastructure theme

ERS AG

BEST F

06

typically conjures up images of debt-heavy businesses with significant project delays, cost over-runs etc, the upcoming infrastructure cycle will be very different. There are interesting sub-themes within this broader theme.

TOP SECTOR BETS

2019

TOP STOCK PICKS

Financial Services

33.29%

HDFC Bank Ltd

6.00%

Healthcare

12.15%

ICICI Bank Ltd

6.00%

Consumer Cyclical

12.10%

Axis Bank Ltd

4.00%

FUNDS MANAGED FUND NAME

PROFILE nother fund steered by Neelesh Surana— Mirae Asset Emerging Bluechip—underwent a makeover last year. Even as it repositioned in the newly created ‘large & mid cap’ category, its large-cap heavy presence under the previous mid-cap avatar facilitated a smooth transition to the revised mandate. Surana’s impressive track record of outperformance with this fund continues even today. It was a period when the mid-cap segment veered from exuberance to despondency. Yet Surana focused on the right pockets through stock-specific research rather than playing on sector rotation. He has stitched together the best of large-cap and midcap ideas for this fund, favouring the larger midcaps and avoided straying lower on the quality ladder. A distinctly superior risk-return profile puts this fund miles ahead of its peers.

A

ANNUALISED RETURNS (%) AUM (`CR)

3-YEAR

5-YEAR

Mirae Asset Emerging Bluechip

7,499

12.97

18.51

Mirae Asset Tax Saver

2,208

14.31

NA

QUICK TAKE Mirae Asset Global Investments

Average 5-year AUM

`3,806 CRORE

5-year asset weighted return

20.23% Risk adjusted returns

1.01

What the market tells me Owing to multiple factors, there has been a sharp correction in midcap stocks. Many stocks are now trading at a discount to their historical averages. Given the favourable ‘price-value’ gap, there are attractive long-term investment opportunities across sectors.

My portfolio is aligned for Our core portfolio is aligned to structural growth themes related

to banking, domestic consumption, insurance, healthcare, etc. In addition, we believe that there is good value in many businesses, particularly where the near-term earnings trajectory is hazy, but the long-term prospects are intact.

Promising theme for next 3-5 years We are positive on businesses where the profitability ratios will ‘revert-to-the-mean’ over the next few years. These include the banking, consumer discretionary and healthcare sectors.

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D MAN UN

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The Economic Times Wealth September 2-8, 2019

Financial Services

41.02%

Kotak Mahindra Bank

9.19%

current market environment. We are also looking at companies which have built or maintained market niches and enjoy favourable pricing power.

Consumer Cyclical

14.95%

Bajaj Finance

8.40%

Promising theme for 3-5 years

Technology

14.25%

Tata Consultancy

8.20%

TOP SECTOR BETS

ERS AG

BEST F

ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

2019

TOP STOCK PICKS

FUND MANAGED FUND NAME

Axis Long Term Equity

Jinesh Gopani Age: 40 years EDUCATION B.Com, Master of Management Studies EXPERIENCE 17 years

Axis Mutual Fund

14.81%

Average 5-year AUM

`11,287 cr

Risk adjusted returns

0.68

AUM (`CR)

3-YEAR

5-YEAR

18,953

9.62

12.92

PROFILE

QUICK TAKE

usiness cycles are getting shorter and companies that adapt will grab a disproportionate share of the profits. That’s why Jinesh Gopani has identified firms that innovate and are backed by good managements. He also prefers businesses that use capital efficiently. Gopani sees few opportunities in the market right now, but once the macros recover, he expects a broad-based upswing.

What the market tells me

B

5-year asset weighted return

ANNUALISED RETURNS (%)

Markets are negative as investors have lost their risk appetite due to a flurry of bad news. However, this is not likely to sustain for too long. We see positive demand in the run up to the festive season.

My portfolio is aligned for The focus is on companies that are industry leaders with strong balance sheets. The bias is towards large-caps given the

Given our demographic dividend and aspirational population, consumer demand cannot remain subdued for long. This is likely to remain a strong investment theme over the next 3-5 years.

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ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

The Economic Times Wealth September 2-8, 2019

PROFILE

D MAN UN

3

ERS AG

BEST F

Harsha Upadhyaya Age: 45 years EDUCATION B.E. (Mechanical) National Institute of Technology, Suratkal, PGDM (Finance) IIM Lucknow & CFA US. EXPERIENCE 19 years

Kotak Mutual Fund

5-year asset weighted return

14.58%

Risk adjusted returns Average 5-year AUM

`12,492 cr

PROFILE

B

0.64

4

TOP SECTOR BETS

TOP STOCK PICKS

Financial Services

35.75%

ICICI Bank

6.67%

Industrials

11.73%

HDFC Bank

6.60%

Basic Materials

10.95%

Reliance Industries

6.02%

ANNUALISED RETURNS (%)

FUNDS MANAGED FUND NAME

AUM (`CR)

3-YEAR

5-YEAR

2,467

8.11

11.63

24,960

9.89

13.44

896

8.62

12.16

Kotak Equity Opp Kotak Standard Multicap Kotak Taxsaver

over the long term. Our portfolio is focused on companies with low financial leverage and steady cash flow generation.

QUICK TAKE What the market tells me The economic recovery is going to be gradual, leading to potential interim choppiness in the market. Valuations in domestic equities are getting corrected after a long time.

My portfolio is aligned for While protecting downside is important at present, one should not be too fearful in betting on good investment ideas to create wealth

Promising theme for the next 3-5 years Many strong businesses backed by focused management teams are today available at reasonable valuations given the short-term challenges. Rather than looking at themes, we would want to focus on stock picking across sectors.

TOP SECTOR BETS

D MAN UN

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eing a value hawk, Rajeev Thakkar had called out the excessive optimism around the mid and small-cap segment much before the wheel came off the wagon. He points out that whenever excesses happen, mean reversion follows and that is why mid-caps have given up the accumulated fat in recent years. Thakkar had similarly scoffed at the hefty premiums in the NBFC and consumption space well before the rot set in. He has chosen to align with companies generating consistent return on capital employed across cycles. He has also shown comfort in staying in cash when faced with a dearth of investible ideas. During the height of the market euphoria, PPFAS Long Term Value kept as much as 30% in cash. With a sharp correction in the broader market, Thakkar sees opportunities trickling through and is poised to deploy the dry gunpowder at his disposal.

traddling three distinct mandates, Harsha Upadhyaya used the inherent flexibility allowed by each to deftly maneouvre the portfolio through a volatile market. He sharply culled mid and small-cap exposure well before the tide turned against the segment in 2018. In fact, he actively reduced positions wherever the margin of safety was eroding. Even though this resulted in some underperformance during the last leg of the rally, it later helped Upadhyaya protect the downside much better. He also pared exposure to the consumption theme early last year, when there initial signs of fatigue and positives were drying up. Upadhyaya insists he is in no hurry to hike exposure to expensive quality names and will continue to remain stock specific. Like many other fund managers, he prefers to avoid costly mistakes and maintain a healthy diversification at all times.

S

2019

BEST F

08

2019

TOP STOCK PICKS

Financial Services

32.69%

Alphabet Inc Class C

10.74%

Technology

23.87%

HDFC Bank Ltd

9.66%

Consumer Cyclical

21.73%

Bajaj Holdings and Investment

6.84%

FUNDS MANAGED FUND NAME

ANNUALISED RETURNS (%)

AUM (`CR)

3-YEAR

5-YEAR

2,004

10.90

11.22

Parag Parikh Long Term Equity

QUICK TAKE What the market tells me

Rajeev Thakkar

Given that we are in a low-interest rate, low inflation and low growth environment, nominal returns going forward may be low compared to previous years. This is not necessarily a bad thing as real returns (adjusted for inflation) would be more or less similar.

Age: 43 years EDUCATION B. Com., CA, CFA Charter Holder, Grad ICWA EXPERIENCE 18 years

PPFAS Mutual Fund

5-year asset weighted return

12.38%

Risk adjusted returns Average 5-year AUM

`881 cr

0.62

My portfolio is aligned for Our portfolio is invested across market caps and sectors. Also, we are invested to the extent of 30% in the overseas markets. This

should help us withstand volatility better and also to avail of opportunities that are otherwise not available in India. We have about 15% in cash and arbitrage positions which will be deployed when fresh opportunities emerge.

Promising theme for the next 3-5 years Private sector banks could benefit from the troubles being faced by the PSU banks and NBFCs at present. Internet-related businesses are also expected to do well given the growing role of smartphones and the Internet in our daily lives.

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ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

The Economic Times Wealth September 2-8, 2019

How large sized funds have fared OVER THE YEARS, as the asset base of equity funds ballooned, a lot of debate raged around the relevance of size to the performance of the fund. Does size really matter? Are larger sized funds better positioned over smaller peers or are they handicapped by their own heft? There is no conclusive evidence supporting either argument. We looked at the five-year performance of different equity fund categories, subdivided into three distinct buck-

ets as per asset size—greater than `5,000 crore, between `500 crore

and `5,000 crore, and less than `500 crore. In large-cap funds, the

Does asset size matter? 5-YEAR MEDIAN CAGR (%) LARGE-CAP

MULTI-CAP

MID-CAP

SMALL-CAP

>5,000

9.6

9.4

10.8

11.8

500-5,000

8.2

9.6

11

9.1

<500

8.9

5.2

7.9

ASSET SIZE (`CR)

Data as on 30 June

6.6 Source: Ace MF

larger sized funds have fared better. Among small-cap funds too, the larger sized funds have delivered better returns during the period under consideration. Within the multicap funds category, the larger sized funds have fared marginally better than mid-sized funds. However, there is nothing separating the two in the mid-cap category. Across all fund categories, however, the smallest of funds have put up a poor showing.

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D MAN UN

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Principal Mutual Fund

ERS AG

BEST F

The Economic Times Wealth September 2-8, 2019

Average 5-year AUM

2019

`1,066 cr

Dhimant Shah Age: 46 years

EDUCATION B Com, ACA EXPERIENCE 19 years

5-year asset weighted return

TOP SECTOR BETS

15.31%

Financial Services

Risk adjusted returns

Consumer Cyclical

0.58

himant Shah believes the segmentation of investible universe polarised the market. Liquidity dried up, necessitating a shift towards safety over everything else. Consequently, it took him some time to realign the small-cap heavy Principal Emerging Bluechip to its new mandate. But the market cannot remain so polarised for long, asserts Shah. He acknowledges that growth is increasingly coming from newer business models, which are not yet represented in the indices. He has put his weight behind businesses that have sustainable competitive advantage and managements that use capital efficiently.

PROFILE

D

Basic Materials

TOP STOCK PICKS

29.30% 15.31% 13.56%

HDFC Bank ICICI Bank Reliance Industries

5.64% 4.45% 2.61%

ANNUALISED RETURNS (%)

FUND MANAGED FUND NAME

AUM (`CR)

3-YEAR

5-YEAR

2,051

7.12

13.53

Principal Emerging Bluechip

Near term is going to be volatile and we are relatively defensive.

QUICK TAKE What market tells me Earnings recovery is likely to be weaker than expected. Markets will remain sideways till end of 2019. Mid, small caps look good.

Portfolio is aligned for

Promising theme for the next 3-5 years Insurance and healthcare seem good. Telecom likely to do well over the long term. Chemicals can do well given the shift from China due to environment concerns.

MID & SMALL CAP FUNDS

Shreyash Devalkar

TOP SECTOR BETS

AGE: 40 YEARS EDUCATION B.E. (Chemical Engineering), Masters In Management Studies

24.73%

Info Edge (India)

6.17%

Consumer Cyclical

19.19%

City Union Bank

5.19%

Technology

12.29%

Avenue Supermarkets

4.98%

FUND MANAGED

ERS AG

D MAN UN

1

TOP STOCK PICKS

Financial Services

EXPERIENCE 14 years

BEST F

10

ANNUALISED RETURNS (%)

FUND NAME

AUM (`CR)

3-YEAR

5-YEAR

Axis Midcap

2,634

9.73

11.62

2019

QUICK TAKE What the market tells me

PROFILE hreyash Devalkar says a lot of caution and spadework is needed while navigating the mid-cap terrain. Gauging the promoters’ merit and execution capabilities is critical for this segment. He prefers to align with businesses that either have leadership position within a niche area or are capable challengers in a larger playground. Clearly, differentiating between growth and sustainability has been a central pillar to his approach to this segment. Devalkar’s strict focus on quality has led to a very compact portfolio featuring only the highest conviction bets scoring high on different aspects of quality. Across time periods, he has been effective in taming the fund’s risk profile, offering superior downside protection in a high-risk segment. Not surprisingly, the fund boasts the best risk-return profile among peers in its category.

S

Axis Mutual Fund

Average 5-year AUM

`1,003 CRORE

5-year asset weighted return

18.48% Risk adjusted returns

0.88

The market was fully discovered across market cap segments by 2017 end. After that, across large, mid and small-caps, there are a set of stocks which are giving returns while rest are underperforming. In the past three years, the percentage of stocks that have given good returns (more than 10% CAGR) in all three buckets are almost the same. Contrary to what benchmark indices show, mid-caps as a category has not underperformed large-caps. The market will get more discerning and objective as far as quality and growth is concerned.

My portfolio is aligned for We continue to own quality and growth stocks across portfolios. We are more objective on the philosophy. The number of sectors

that are doing well has come down in the past one year. For example, auto ancillaries in the mid-cap space are getting impacted due to the slowdown. Some NBFCs have also slowed down as a result of this. Hence, we are focusing more on sectors and companies which are likely to deliver relatively higher earnings growth. Accordingly, the portfolio is getting more concentrated and nimble.

Promising theme for the next 3-5 years Mid-caps normally give uneven returns due to stocks getting discovered and stronger earnings growth due to their niche business and low base. The investment theme for mid-caps has always been India-centric businesses and mostly consumption focused companies, including retail banks, NBFCs, durables, staples, auto and discretionary.

cover story

2

R. Srinivasan EDUCATION M.Com , MFM EXPERIENCE 27 years

SBI Mutual Fund

hen mid-and-smallcaps were rallying a few years ago, R. Srinivasan kept a wary eye on the rising valuations and heavy inflows into his fund (earlier SBI Small & Midcap). As inflows rose beyond the fund’s capacity to absorb them, it stopped fresh investments. However, following the recategorisation, when the fund adopted the small-cap mandate, it found access to a larger investible universe with higher market capitalisation and was partially reopened in mid-2018. Srinivasan also spread out the portfolio to soften the fund’s risk profile. He prefers companies with some competitive advantage, scalability, better cash conversion and longevity. He also seeks higher margin of safety, which he reckons is critical in this segment. This has ensured a healthy risk-return profile.

W

2019

Age: 48 years

The Economic Times Wealth September 2-8, 2019

PROFILE

D MAN UN

ERS AG

BEST F

ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

5-year asset weighted return

20.94%

Average 5-year AUM

`800 cr

Risk adjusted returns

0.80

TOP SECTOR BETS

TOP STOCK PICKS

Consumer Cyclical

20.62%

JK Cement Ltd

4.61%

Industrials

20.32%

Hawkins Cookers

4.30%

Basic Materials

18.43%

Dixon Techologies

3.55%

FUND MANAGED FUND NAME

ANNUALISED RETURNS (%) AUM (`CR)

3-YEAR

5-YEAR

2,256

10.80

18.29

SBI Small Cap Fund

QUICK TAKE What the market tells me Adjusted for risk, the market has just about started to look attractive in the small cap space.

a good management and a good price. It’s about weighing these characteristics for their intensity or closeness to where you want them to be and choosing the right combination.

My portfolio is aligned for

Promising theme for the next 3-5 years

We are looking for three basic characteristics – a good business,

This is a pure bottom-up philosophy.

11

cover story

ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

The Economic Times Wealth September 2-8, 2019

PROFILE

D MAN UN

3

ERS AG

BEST F

Pankaj Tibrewal Age: 40 years EDUCATION Commerce graduate from St. Xavier‘s College, Kolkata and holds Masters in Finance from Manchester University. EXPERIENCE 18 years

Kotak Mutual Fund

5-year asset weighted return

14.83%

Risk adjusted returns Average 5-year AUM

`2,445 cr

PROFILE

T

0.58

4

TOP SECTOR BETS

TOP STOCK PICKS

Basic Materials

26.40%

PI Industries Ltd

3.52%

Consumer Cyclical

17.81%

Supreme Industries

3.28%

Financial Services

17.56%

AU Small Finance Bank Ltd

3.16%

FUNDS MANAGED FUND NAME

ANNUALISED RETURNS (%)

AUM (`CR)

3-YEAR

5-YEAR

Kotak Small Cap

1,121

2.35

10.28

Kotak Emerging Equity

4,321

6.00

13.85

My portfolio is aligned for

QUICK TAKE What the market tells me Post the sharp correction in mid and small-cap stocks over the last 18 months, we believe the performance between mid-small caps vis-à-vis Nifty is at historical extremes. History suggests that such divergences don’t exist for too long. Post such large underperformances, mid-small caps tend to outperform large-caps over the next 12-18 months.

We are using this correction and volatility as an opportunity to own quality businesses available at decent valuations from a medium to long term perspective.

Promising theme for the next 3-5 years We believe cement, private sector corporate lenders and early cycle capital good companies can be interesting investment themes for next 3-5years.

TOP SECTOR BETS

D MAN UN

ERS AG

ill a few years ago, the very high quality businesses offered healthy earnings growth. But now, even this creamy layer has been buffeted by the slowdown in the economy. While there has been some correction in prices in this segment, the layer below the highest quality has seen a sharper correction, points out R. Janakiraman. He finds that even as the high quality segment now trades at fair prices, the bigger opportunity exists one notch lower down the quality ladder. Janakiraman’s focus during this period has been towards making the portfolio robust and compact, improving its quality profile without affecting its risk positioning. Being a seasoned campaigner in the mid and small-cap segment, Janakiraman knows better than to be adventurous in this space. Cutting down on risks has taken precedence over identifying the next big idea.

ankaj Tibrewal maintains a strict focus on protecting the downside and minimising errors. He refuses to deviate from the chosen investment philosophy, insisting that this consistency will reflect in the outcome later. He prefers to align with businesses boasting a high quality franchise and a tested management with the ability to scale up while maintaining capital efficiency. Tibrewal lays strong emphasis on maintaining a healthy liquidity in the portfolio, reflected in the sizing and nature of his bets. He was early to spot the opportunity in specialty chemicals and select contra bets in cement and industrials worked well. He avoids firms with highly leveraged balance sheets to side-step the traps camouflaged as growth. Tibrewal also believes in healthy diversification to minimise risk, reflected in the superior downside capture in his fund.

P

2019

BEST F

12

2019

TOP STOCK PICKS

Financial Services

20.40%

HDFC Bank Ltd

4.08%

Basic Materials

18.58%

Voltas Ltd

2.32%

Consumer Cyclical

14.40%

Kotak Mahindra Bank

2.29%

ANNUALISED RETURNS (%)

FUNDS MANAGED FUND NAME

AUM (`CR)

3-YEAR

5-YEAR

Franklin India Smaller Co.

6,729

1.73

10.40

Franklin India Prima

6,686

5.49

12.24

QUICK TAKE What the market tells me

R. Jankiraman Age: 48 years EDUCATION BE, PGDM (IIM Bangalore) EXPERIENCE 22 years

Franklin Templeton Mutual Fund

5-year asset weighted return

13.53%

Risk adjusted returns Average 5-year AUM

`9,572 cr

0.54

It is evident that we are in the midst of a broadbased slowdown. Risk aversion has risen in the lending side and is unlikely to wear off simply on the back of better liquidity. A reasonably satisfactory monsoon, social welfare transfer payments and stable crop prices should bring about a stronger rural demand.

My portfolio is aligned for The ongoing weakness in the midcap segment has made the valu-

ations of many such businesses quite attractive. The fund has either upsized such positions or has introduced a few new stocks. The intent is not to time the recovery, but to use the downcycle to make the portfolio more robust.

Promising theme for the next 3-5 years Apparels and chemicals are two big opportunities. Online businesses or aggregators, logistics and allied categories are likely to see good growth from rise in smartphone and broadband penetration. Healthcare likely to see sustained growth.

cover story

5

S.N. Lahiri Age: 52 years 5-year asset weighted return

14.69%

Average 5-year AUM

L&T Mutual Fund

mid the high degree of polarisation even in mid and smallcap indices, S.N. Lahiri has kept re-evaluating existing ideas. He acknowledges that valuations got too expensive earlier at a time when earnings were not quite coming through. In such a situation, it helps to be index agnostic and take a pure bottom-up approach, he insists. He has also been inclined to diversify more heavily than before given the higher degree of uncertainty. Lahiri feels that the current sell-off is justified in some names, but overdone in others. In hindsight, he feels he could have sold some of the better performers, but maintains that businesses with inherent strengths— differentiated products, wide moats, pricing power—have the ability to come back stronger. Lahiri places a lot of emphasis on bringing consistency to fund returns rather than focusing on creating huge alpha.

TOP SECTOR BETS

A

2019

EDUCATION B.E (Mechanical), PGDM – (IIM Bangalore) EXPERIENCE 29 years

The Economic Times Wealth September 2-8, 2019

PROFILE

D MAN UN

ERS AG

BEST F

ET WEALTH-MORNINGSTAR FUND MANAGER RANKING

`3,496 cr

Risk adjusted returns

0.54

TOP STOCK PICKS

Basic Materials

21.58%

Ramco Cements Ltd

2.60%

Consumer Cyclical

19.66%

City Union Bank Ltd

2.30%

Industrials

15.21%

Abbott India Ltd

2.00%

ANNUALISED RETURNS (%)

FUNDS MANAGED FUND NAME

AUM (`CR)

3-YEAR

5-YEAR

L&T Midcap

4,805

7.26

13.05

L&T Emerging Businesses

5,611

8.03

12.94

QUICK TAKE What the market tells me The recent correction in the equity markets has provided attractive entry points for quality companies available at reasonable valuations, more so in the mid- and small-cap space. Earnings revival and resolution of NPAs in the banking system will be the key drivers for the markets.

My portfolio is aligned for Our portfolio focus is aligned

to companies that have a strong corporate governance framework along with a good management track record. Additionally, we look for three filters in such companies: Entry barriers, scalable opportunities and reasonable price.

Promising theme for the next 3-5 years We are positive on the infrastructure segment at this point in time. Order book accretion, increase in capacity utilisation and strong execution have been driving the sector so far.

How we ranked the managers UNIVERSE OF FUNDS Our study is restricted to open-ended, actively managed, diversified equity funds segregated into three distinct categories— large cap, multi cap (includes ELSS and ‘large & mid’ cap) and mid & small cap—as per the Morningstar India classification. Schemes with a corpus of at least `200 crore were considered. No index, thematic, sector or balanced funds were considered for evaluation.

TIME PERIOD The study is based on the performance of funds managed between 1 July 2014 and 30 June 2019.

EXPERIENCE & AUM CRITERIA Only funds managed continuously for the five-year period under study were considered, with the exception of fund managers who have up to four month gap between two stints. Track record only for completed months was considered for this analysis. For a fund to qualify, the fund manager needed a minimum two-year track record with that fund as a lead manager. The study was restricted to fund managers cumulatively managing an AUM of at least `500 crore, across all qualifying funds. Only the

primary fund manager is considered as a manager for the fund in this analysis.

RISK AND RETURNS After shortlisting the fund managers, the aggregate returns generated by each fund manager were calculated over the five-year period for all the funds managed by him which satisfied the qualifying criteria. The returns were then adjusted for risk. This is to account for the degree of risk taken by the fund manager to generate the return. To get the risk-adjusted score, the asset-weighted monthly returns of all the funds satisfying the above-mentioned criteria were calculated. Weighing scheme performance by its corpus size helps give due importance to the size of each fund. Then, the annualised geometric mean for the five-year period was calculated to arrive at the annualised five-year returns. Further, the annualised standard deviation of the monthly asset-weighted returns was calculated. The final risk-adjusted return was calculated by deducting the risk-free return—return of FBIL MIBOR Overnight—from the annualised geometric returns generated by each fund manager, and dividing these by the respective standard deviation.

13

learn & keep The Economic Times Wealth September 2-8, 2019

Small measures, big impact Even seemingly small tweaks can have a significant impact on your savings over the long term. Preeti Kulkarni shows you how. Don’t buy a term plan to cover retirement

Buy a longer term health cover Age

35 years

35 years

20 years

40 years

Age at maturity

55 years

75 years

Annual premium

`9,204

`14,514

`1.84 lakh

`5.81 lakh

Age now Tenure

Total outgo

This is how much a 35-year-old non-smoker male will pay to buy a `1-crore term plan from Max Life Insurance.

40 years

41 years

`7,386

`9,103

One-year premium Premium over 2 years if one does not lock into current rates at 40

`16,849

Premium for 2 yrs if paid at one go at 40

`13,665 `3,184 (23.27%)

Savings* Smart tip: A life cover is meant to replace your income and provide for your dependants in case of your death. Therefore, it is not needed after retirement. If you wish to leave behind a legacy, create a kitty over time instead.

* For a `5lakh cover with unlimited recharge from Religare Health

Smart tip: Your premium will rise steeply as you turn 41, as the age slab will change. You can save by buying a two- or three-year cover, by locking into the current slab’s premium. You can also pocket longer-tenure premium discount by paying at one go.

Be a 'least risky' borrower for banks 1

4

8.65%

8.75%

Interest outgo

`82.92 lakh

`84.07 lakh

Savings on interest outgo*

`1.15 lakh

Risk group Home loan interest rate

* For a salaried, male taking a `75-lakh MCLR-based home loan with a 20year tenure from SBI.

Invest in direct plans of mutual funds Age

Regular plan

Direct plan

Expense ratio

1.75%

1.25%

Final corpus after 20 years

`14.08 lakh

`15.41 lakh

Difference Smart tip: While banks use their internal risk scoring mechanism to categorise borrowers, credit score is a key parameter. Borrowers with CIBIL credit scores of over 750 are considered least risky. Ensure you pay your credit card bills, EMIs and utility bills on time to boost your score.

-

`1.33 lakh

`2-lakh invested in an equity fund yielding 12% gross per annum with a 20-year investment horizon.

Smart tip: Investing through direct plans of mutual funds can make a substantial difference to your final corpus.

Hike EMI nominally when interest rates go up If the interest rate is raised… Home loan

Savings if you increase the EMI marginally…

If the rate is raised… Newinterest rate of interest Original EMI

`50 lakh

8.75%

`43,391

Interest

New tenure

New EMI

8.5%

21 years

`44,186

Original tenure

Interest payable

Extra payment per month

20 years

`59.53 lakh

`795

EMI

Additional interest

Interest payable

`43,391

`5.39 lakh

`56.04 lakh

Interest payable

Savings on interest*

`54.14 lakh

`3.49 lakh Source: MortgageWorld

Surrender charges in year 4 *Savings compared to higher interest outgo if EMI was not hiked.

`2,000

Auto pay bills to avoid late charges

Good health saves you more

Don’t surrender Ulip in the fourth year

Annual premium for a 35-year-old healthy individual Surrender charges year 5 onwards

Nil

Smart tip: Don't surrender Ulip after paying premiums in the fourth year. Hold on for a year. This will save you discontinuance charges, especially if you can afford to pay premium for another year.

`6,300

Annual premium for diabetes* patient

`8,190

Assuming a loading of 30% on the health insurance premium payable. *For a `5 lakh cover

Smart tip: Premium loading depends on the insurer. It can range from 30-300%, as per Wellthy Therapeutics. Final premium depends on multiple factors.

PA Y

14

Utility

Late payment fee

MTNL

`20

MSEB

`70#

Mahanagar Gas

`100

Credit card

`800*

Total

`990

*For outstanding amount of `10,00025,000 if not paid on due date; could vary as per bank and card #For a bill amount of `3,230.

Smart tip: Missing utility and credit card bill payments for a month could result in sizeable penalty outgo. Instead, opt for billpay and issue standard instructions for credit card bill payment to avoid these charges.

guest column The Economic Times Wealth September 2-8, 2019

Tricks we need to help people choose right Just spreading awareness is perhaps not enough to get people to make the right financial choices. It’s time for some tricks, says Dhirendra Kumar.

DHIRENDR A KUMAR CEO, VALUE RESE ARCH

money mysteries

Would you buy a tontine? I would definitely consider one. At some point, tontines were banned, apparently because of some scams. Or maybe members started murdering each other. In any case, it’s possible that a tontinelike system would encourage more retirees to buy annuities.

W

hy don’t people do what they should be doing for their own good? It’s a tough question, or maybe it’s a foolish one or may be both. However, when it comes to creating a behavioural change, there seems to be a widespread belief that exhorting people to do the right thing is enough. We see this in many areas—in fact, almost all of the so-called public service advertising is an example—but there are many others. Take the case of the ultimate no-brainer in personal finance—term insurance. Anyone who has an income and has dependants should have term insurance, and yet there is a great deal of resistance among many people against buying something that doesn’t give back anything. Much of this behaviour may have been taught by insurance agents but it’s nonetheless real. How can this be changed? The generally acceptable answer is that someone should educate people about insurance, the idea being that those who refuse to buy insurance do so out of ignorance and if one fixes ignorance then the problem can be fixed. Sure enough, for a small proportion of people this is true but such attitudes are deep set. The attempt to change the psychology of savers may need a trick. Here’s a trick that, long ago, would get people to buy insurance. In the late nineteenth century, when insurance companies were first trying to get people to buy their products, there used to be a form of annuity called a ‘tontine’. In a tontine, a group of people of similar age would buy from an insurance company what would

In personal finance, there’s so much that is wrong with choices people make that perhaps some innovative thinking is needed. effectively be a single, joint annuity. They would each get their share of the income that was generated by the annuity amount. When any member died, his share would go back into a common pool. Thus, the total income stream from the annuity remained constant. It was paid out to all survivors, divided equally between them. This made the product quite unique. As time went by, and members died one by one, those who were still alive got a higher and higher income. When only a handful survived (tontine groups generally had 20 to 50 members), then the income was enormous compared to what it had been in the beginning. When the last member died, the insurance com-

GETTYIMAGES

16

pany got full possession of the deposited amount. In effect, buying a membership of a tontine was a bet on your own longevity, but with the added bonanza that the longer you lived, the more financially comfortably you were. Would you buy a tontine? I would definitely consider one. At some point, tontines were banned, apparently because of some scams. Or maybe members started murdering each other. In any case, it’s possible that a tontine-like system would encourage more retirees to buy annuities. Perhaps a modern tontine could be designed whereby members are anonymous to each other. Of course, insurance is so heavily regulated that it’s effectively limited to the same (ineffective) business model so it’s unlikely that one would ever see any modern tontine. Here’s another example of an unusual money-related trick that could come in useful for the government in getting customers to force sellers to not do unaccounted business. Since 1951, Taiwan has had a national lottery system whose tickets are the invoices that are issued for retail purchases by shops across the country. The entire country follows what

is called a Uniform Invoice System with a common numbering system and on the 25th of every odd-numbered month, lottery winners are announced. The prizes are quite hefty, ranging from a single first prize of TWD 10 million (about `2.3 crore) down to numerous TWD 200 (`460) prizes. There’s some sort of a gradation system which makes a connection between the size of the purchase and the level of prize that one is eligible for. At the retail level in India, honesty in taxation would probably get a huge boost from something like this. Buyers would insist on proper billing because the invoices would also be tickets to a lucrative lottery. The cost of the prizes would be trivial compared to the tax revenue. Of course, in practice, neither of these things are going to happen. However, the fact is that the oddest things can change behavior, for better or for worse. In personal finance, there’s so much that is wrong with the choices that people make that perhaps some innovative thinking is needed. Please send your feedback to [email protected]

stocks The Economic Times Wealth September 2-8, 2019

17

Take the SIP route to direct equities and manage volatility Online platforms offer SIP in direct equities. Investors can fix amount or number of shares to be bought. by Sameer Bhardwaj

GETTYIMAGES

S

tock markets are witnessing increased volatility, which is evident from the significant jump in the average VIX or volatility index levels. The fear index jumped 30% between August 2018 and August 2019, relative to -4% between August 2017 and August 2018. When market conditions are erratic, the systematic investing plan (SIP) mode of investing is highly recommended, as it allows you to invest small amounts every month. The SIP mode of investing helps in minimising risks and promotes disciplined investment planning. It encourages regular savings that helps in wealth accumulation and proves very useful for risk-conscious investors. The arrangement enables investors to operate in both rising and falling markets and thereby helps them derive benefits of volatility. SIPs are generally used while investing in mutual funds where the units are purchased regularly using the fund’s NAV and it averages out the buying cost of units. Experts believe volatility in equities will continue unless corporate earnings improve at the macro level. Under such conditions, direct equity investors can use the SIP route to invest small amounts in stocks at different intervals, thereby taking advantage of the unpredictable stock price movements. Most online trading platforms offer SIP in direct equities and allow investors to fix either the amount to be invested or the number of shares to be purchased at pre-defined intervals for a fixed tenure. The online system automatically executes the transaction on the date defined by the investor. The intervals can be weekly, fortnightly or monthly. For example, an investor can decide to buy 10 shares every month or can fix `5,000 to be invested every month. In the first case, the monthly invested amount will be `2,520 (`252 X 10 shares), if the share is trading at `252 on the trigger date or the specified date of purchase. On the other hand, if the investor chooses to invest `5,000 every month, the system will purchase 19 shares, utilising `4,788 out of the allocated amount of `5,000. The above calculations are just for illustrative purposes and does not include the impact of the brokerages or commissions that are charged by the respective trading platforms. Data for 900 stocks with a market cap greater than `500 crore were studied to identify stocks in which SIP investments have comprehensively outperformed lump sums across 1-year, 2-year and 3-year time frames. Closing prices on the last trading day of every month is considered, start-

Small, regular investments yield more Investing through SIPS helps in minimising risks and encouraging regular savings. 3-yr return (%)

Estimates

Q1: 2019-20 (y-o-y growth in %)

SIP

Lump sum

ROE

PE

Sales

Operating profit

Adjusted EPS

Asian Paints

19.1

11

26.1

53.4

16.6

24.1

17.7

Marico

14.6

10.7

36.2

42.3

6.9

25.4

20.8

Pidilite Industries

29.8

25.1

25.5

55.8

10

16.9

22.7

32

19.6

18.3

18.8

8.7

23.5

41.2

Company

SRF

PE and ROE (%) estimates are 12 month blended forward. Operating profit include other income. Source: ACE Equity & Bloomberg.

ing from August 2014. It is assumed that 10 shares are purchased every month and final investment value of the cumulative number of shares is calculated at the closing price of 19 August 2019. Annualised IRR is used for SIP returns and CAGR is used for lump sum returns. Let us demonstrate the functionality of SIP in direct equities for a 3-year tenure using Apollo Hospitals Enterprise. In 36 months, 360 shares are purchased between August 2016 and July 2019 (10 shares every month X 36 months). The price of Apollo Hospitals on 19 August 2019 was `1,484 and therefore, the market value of investments works out to `5.34 lakh. The annualised SIP IRR works out to 15%. On the other hand, if 360 shares are purchased at the beginning of the tenure, which is on 31 August 2016, the purchase value would have been `4.85 lakh (360 shares X `1,348.85). The three year CAGR for lump sum works out to 3.2%.

We found 18 stocks that have comprehensively delivered SIP annualised returns that were higher than CAGR lump sum returns across the three defined time frames. Let us look at four out of 18 stocks that not only have sound fundamentals, but their future price movements are expected to remain volatile due to their current rich valuations. As SIP works well when price movements are expected to remain erratic, systematic investments can be considered in such stocks.

Asian Paints The company has reported strong numbers in the June 2019 quarter. However, analysts feel the current valuations fully captures the company’s growth potential and the market outlook is unexciting. The company has already surpassed Bloomberg’s estimated one-year target price and therefore, there is a likelihood of volatile price swings

in the future.

Marico The company has maintained market leadership and posted strong volume growth in both domestic and international operations in the June 2019 quarter. The SIP mode is preferred here as analysts feel that the current valuations reasonably mirror the long-term growth opportunities and potential earnings fluctuations from the overseas operations.

Pidilite Industries In the June 2019 quarter, recovery in volume growth and price hikes helped the company to deliver strong profits. In terms of valuation, ICICI Direct believes that the current price discounts major key factors like strong revenue, earnings growth along with strong balance sheet with healthy return ratios.

SRF The company has reported strong numbers in the June 2019 quarter. A recent Edelweiss report believes that the chemical business will continue to see robust growth and overseas expansions will benefit the packaging films segment in the future. However, the report mentions concerns regarding over-supply in packaging films and auto sector slowdown, which will limit future price performance.

Please send your feedback to [email protected]

mutual fund 18

The Economic Times Wealth September 2-8, 2019

Arbitrage funds are not riskier, but don’t suit all investors Some fund houses have started side pocketing in arbitrage funds, but investors need not panic.

market is going up or when it is volatile. However, arbitrage opportunities recede when the market slides,” says Lakshmi Iyer, Head of Fixed Income and Product, Kotak Mutual Fund. In other words, be ready for short-term volatility in arbitrage fund returns. Though the average return is around 6%, it is high for a few months and low for the rest. Volatility in short-term returns can also occur because of the mark to market valuation rules. What arbitrage funds do is simultaneously buy in one market and sell in another market to corner the price difference. Let’s assume that a scheme buys Infosys for `780 in the cash market and sells it for `800 in the 3-month future market and pockets the difference—`20 or absolute return of 2.6% for three months. However, this locked-in profit can be realised only when the arbitrage trade is finally settled. The scheme will be forced to report losses if the gap widens in between. Arbitrage funds reporting small daily losses is thus common. GETTYIMAGES

Not for short-term investors

by Narendra Nathan

M

ost mutual fund investors were always aware about the risks in equity funds. It’s only recently they have become acquainted with the risks in debt funds—after mutual funds started ‘side pocketing’ downgraded debt papers. Side pocketing entails removing defaulted or downgraded papers from the main portfolio. The NAV of the main scheme is marked down to that extent and the scheme continues as an open-ended one. The side pocketed scheme, created with defaulted or downgraded papers, remains close-ended. The money is returned to investors if some recovery is made. Investor interest in arbitrage funds, a

Arbitrage funds have reasonable exposure to debt No mutual fund can completely avoid debt-related risks.

low risk product, had been high in recent weeks because of their worry over debt funds. However, some fund houses have started side pocketing in arbitrage funds as well. Does it mean arbitrage funds have turned riskier? Not really. Investors should not panic because what fund houses are doing now is ‘enabling provisions’, or preparing for the future. The reason is such schemes have some debt component in their portfolios. “Don’t assume arbitrage funds are pure equity funds. They invest in debt instruments when arbitrage opportunities are not there,” says Vidya Bala, Co-Founder, Redwood Research. This means some debt related risks like interest and credit risks, will be applicable here too. The debt component is not high in arbi-

trage funds as the fund houses have to keep the average equity exposure above 65% to avail of equity taxation benefits. However, the actual debt holding is not small either. There are several large arbitrage funds with a debt exposure of 15-20%(see chart). Though most mutual funds try to manage the debt portion safely, it is impossible to avoid debt-related risks completely. This is because a default can occur even in AAA rated companies. IL&FS and DHFL were AAA-rated before being downgraded.

Other risks Arbitrage funds also face two other risks. The first is the periodic lack of arbitrage opportunities. Arbitrage opportunities are not constant and come in phases. “Arbitrage opportunity is high when the

CAGR (%)

DEBT COMPONENT (%)

1-YEAR

3-YEAR

5-YEAR

EXPENSE RATIO (%)

Axis Arbitrage Fund

19.53

6.40

6.17

6.48

0.99

UTI Arbitrage Fund

19.31

6.79

6.21

6.56

0.82

ICICI Pru Equity-Arbitrage Fund

18.87

6.63

6.15

6.57

0.95

IDFC Arbitrage Fund

16.01

6.84

6.19

6.50

1.08

SBI Arbitrage Opportunities Fund

15.04

6.68

6.14

6.48

0.88

SCHEME

Only schemes with AUM of `1,000 cr or above considered. Source: ACE MF; Compiled by ETIG Database

To keep away short-term players, most arbitrage funds charge an exit load if you withdraw your money within a month. Since active futures and options contracts in India are for three months, the shortterm marked to market volatility is high for this time period. “Don’t use arbitrage funds as a substitute for liquid funds and park your money for a few months. Arbitrage funds should be used only if the holding period is at least four months,” says Vijay Singhania, Founder & Director, Trade Smart Online. Bala feels the ideal holding period for arbitrage funds is a year. “If the holding period is less than a year, it is better to be in less volatile overnight debt funds. The one year holding period also makes it tax efficient, attracting long-term capital gains tax of only 10%,” she says.

Not for long-term too “Though the risk is low, arbitrage fund is not a long-term product because returns are also limited,” says Singhania. This is because arbitrage strategy used to contain downside risk also caps its upside. The possible gain here is only the locked-in profit. Long-term investors should consider growth investments like equity mutual funds instead. Taxation advantage of arbitrage funds against debt funds also diminish when the holding period is above three years . The difference between 10% tax and 20% tax after indexation benefit is not much.

Please send your feedback to [email protected]

family finance The Economic Times Wealth September 2-8, 2019

Invest in line with goals

AMIT & SNEHA, 35 & 30 YEARS, SALARIED, BENGALURU

How to invest for goals GOAL

FUTURE COST (`) / TIME TO ACHIEVE

RESOURCES USED

INVESTMENT NEEDED (`/MONTH)

The Bengaluru-based couple will have to increase their equity exposure and secure their risks.

Emergency fund

2.5 lakh

Cash,fixed deposit, bonus

-

1st child’s education

37.9 lakh / 14 yrs

Mutual funds, insurance

2,845

by Riju Mehta

2nd child’s education

83.3 lakh / 18 yrs

-

11,717

1st child’s wedding

38.1 lakh / 23 yrs

-

2,860

2nd child’s wedding

42.9 lakh / 25 yrs

-

2,521

Retirement

2.15 crore / 25 yrs

PPF, EPF

5,871*

A

mit and Sneha stay in Bengaluru with their two kids, aged three and six months. Both are employed and get a combined monthly salary of `94,142. After considering all their expenses and investment, the couple is left with a surplus of `12,182. Their portfolio includes `1.1 crore of real estate, with one self-occupied house and another as investment. They have taken two home loans of nearly `60 lakh, and are paying EMIs of `38,900. Besides, they have `55,000 in cash, `1.7 lakh of equity mutual funds, and debt worth `7.9 lakh in the form of EPF, PPF, fixed deposit and insurance value. Their goals include building a contingency corpus, buying a car and a house, taking a vacation, saving for their kids’ education and weddings, and their retirement. The couple will have to put off their goals of buying a car and taking a vacation for now due to lack of surplus. The financial planning team from Fincart suggests they build the emergency corpus of `2.5 lakh, equal to four months’ expenses, by allocating their cash, fixed deposit and annual bonus of `1 lakh. This amount should be invested in an ultra short duration fund. For the education of their children in 14 and 18 years, the couple has estimated a need of `37.9 lakh and `83.3 lakh, respectively. For the older child, they can allocate their mutual fund corpus and insurance surrender value. In addition, they will have to start an SIP of `2,845 in a diversified equity fund. For the younger child, they will have to start an SIP of `11,717 in a diversified equity fund. For the children’s weddings in 23 and 25 years, the couple wants `38.1 lakh and `42.9 lakh, respectively. They will have to start SIPs of `2,860 and `2,521 in diversified equity funds, respectively. For retirement, the couple will need `2.5 crore in 25 years and will have to allocate their EPF and PPF corpuses. They will also have to start an SIP of `5,871 in a diversified equity fund and continue to invest `500 a year in the PPF. For life insurance, the couple has four traditional plans and are advised to surrender all. Fincart suggests Amit take a term plan of `2.7 crore at a cost of `2,330 a month. For health insurance, the couple has a `5 lakh cover by the employer. They should also buy a `5 lakh family floater plan and a `20 lakh top-up plan, which will cost `1,662 a month. This should take care of their insurance needs.

Portfolio CURRENT VALUE (`)

ASSET

Real estate

1.16 crore

Cash

55,000

Debt Fixed deposit

1 lakh

PPF

62,000

EPF

2.69 lakh

Insurance

3.65 lakh

Investible surplus needed

* Investment for this goal also includes `42 in the PPF every month. Annual return assumed to be 12% for equity and 7% for debt funds. Inflation assumed to be 7%.

Insurance portfolio

Equity Mutual funds

1.71 lakh

Total

25,814

EXISTING COVER (`)

EXISTING MONTHLY PREMIUM (`)

SUGGESTIONS

SUGGESTED MONTHLY PREMIUM (`)

Term plan

-

-

Buy `2.7 crore

2,330

Traditional plans (4)

19.2 lakh

7,643

Surrender all

-

-

-

-

19.2 lakh

7,643

`2.8 crore

2,330

Employers’

5 lakh

-

-

-

Own

-

-

Buy `5 lakh family floater + `20 lakh top-up plans

1,662

TOTAL

5 lakh

-

`30 lakh

1,662

Critical illness & accident disability

-

-

-

-

TOTAL

-

-

-

-

Insurance cost

-

7,643

-

3,992

INSURANCE

1.26 crore Life insurance CURRENT VALUE (`)

LIABILITIES

Home loans (2)

60.08 lakh

Total liability

60.08 lakh

Net worth

`66.13 lakh

Ulips TOTAL

Cash flow

Health insurance

EXISTING (`)

Income

SUGGESTED (`)

94,142

94,142

Household expenses

25,000

25,000

Home EMI

38,900

38,900

Insurance premium

7,643

3,992

Investment

10,417

25,856

Total outflow

81,960

93,748

Surplus

12,182

394

Outflow

Financial plan by FINCART

Premiums are indicative and could vary for different insurers.

Write to us for expert advice

Looking for a professional to analyse your investment portfolio? Write to us at [email protected] with ‘Family Finances’ as the subject. Our experts will study your portfolio and offer objective advice on where and how much you need to invest to reach your goals.

19

financial planning The Economic Times Wealth September 2-8, 2019

The joy of being self-employed Contractors in the informal sector are unwilling to go back to formal employment, says Uma Shashikant.

GETTY IMAGES

20

E UMA SHASHIK ANT IS CHAIRPER SON, CENTRE FOR INVES TMENT EDUC ATION AND LE ARNING

Surveys show only a small percentage of contractors who work in the informal segment, holding themselves responsible for the monetisation of their labour, are willing to go back to formal employment.

conomists worldwide have been ringing alarm bells about how more and more jobs are being handled by contractors and service providers, rather than employees. Many see this trend as one of exploitation, with low wages, long hours, non-existent benefits and unstable incomes. However, many contractors who have stepped in with their teams to do jobs earlier assigned to employees, have a different story to tell. Surveys show only a small percentage of contractors who work in the informal segment, holding themselves responsible for the monetisation of their labour, are willing to go back to formal employment. Many enjoy the freedom, flexibility and growth their enterprises offer them. The high personal stake is the very incentive to push themselves further in their chosen line of work. This week’s story is about Ganga and how she built a business from scratch. When the burden of supporting the family fell on her shoulders, she was a housewife in her midthirties. She was an economics graduate with no work experience. She was rejected even in simple job interviews. Ganga decided to tap her skills as an accomplished cook and turn it into a business venture. That was 18 years ago. She began supplying home-cooked lunches at offices. The learning curve was tough and steep, but Ganga persisted. Today she is a recognised name in her business, managing a team of cooks and staff who not only cater food but also manage large weddings and events. Ganga laughs at the suggestion of being

employed. She says she would be languishing with a low pay, commuting tiring disances and keeping odd hours. College students would beat her in skills and pay. She instead has a vast network of people she works with, to whom she offers business and mandates and they in turn supply her goods and services. She would not trade this for a job, ever. What lessons do Ganga’s journey hold? Why do people like her choose and persist with small scale informal enterprises? First, Ganga focused on her job description scripted by herself, not a remote manager, and invested herself completely into it. She began with her cooking skills, but constantly kept learning the nuances of large scale cooking from the many cooks who came to work with her. She developed the capability to cook, cater and deliver for large orders. She extended her services to manage events. She did not allow the bothers of waking up at 2am and walking deserted streets to deter her. Whatever was needed to do a fine job, she was ready and willing to do. She does not believe a paid job can invoke such commitment. Second, she became a consummate manager, leveraging on her people skills. Ganga is soft-spoken, known for her kindness, and keeps a cheerful demeanour despite severe odds. She brought together people she knew and people with problems like her—the neighborhood girl who had been orphaned at a young age became her assistant; the auto driver who hauled her supplies became her Man Friday; skilled maids in the apartment block she lived in became her contract workers; and soon enough she had built a network

of people who did specific tasks for her, willing to be paid as the mandates came in. She shared and cared and they stuck with her. Third, Ganga led from the front and was always worked where needed, unquestioningly. She chipped in to cut and prep when hands were short; she slipped in to cook when her cooks tired; she was willing to make the umpteen trips to the bazaar for materials. Many accused her of being a poor delegator of tasks, and she often heard family members accuse her of not “managing” but “working”. But in her profession, seamlessness mattered and Ganga intuitively knew that she could not develop too much dependency on resources who have to exert physically. She argued that her cook tiring or her team member falling ill were normal expected events in the business and she and her team needed to be multi-skilled to fill in as needed. As for her own strain, she always said nothing healed like a good night’s sleep. Fourth, Ganga leveraged on her strengths. She was a great communicator and cared for people. Customer service came naturally to her. She was meticulous and detail-oriented in how she ran her home. Her business benefitted from her eye for detail and ability to plan. She was able to scale up and cater to weddings and expand her services, leaning on her planning and execution skills. She identified suppliers, managed costs tightly, outsourced where needed, and built a profitable business model. She argues that being an employee would have only offered a limited bouquet of repetitive, menial tasks. Fifth, Ganga kept her ear to the ground. She knew what the competition was offering; she knew from her contract labourers how menus were changing; she understood from customer conversations how trends were emerging. She refused to define her services in terms of what she could do and instead focused on what needs to be done to stay ahead. The authority and respect she commands comes from the intelligence she has imbibed over the years, delivering for clients and earning tremendous good will. Most of her business comes from referrals and she likes it that way. She is not sure if a job would have enabled such authority and expertise. When asked about the risks and uncertainties of not having a steady income, Ganga says without optimism, one cannot run a business. There have been enough instances in her business when she has had to rework, redo, rethink and she sees such risks as par for the course. She is confident of finding a way. Since she does whatever she is able and willing, she says she will remain busy. In her view, the economists have got it wrong as the tables have long turned against employees seeking secure jobs in favour of the self-employed like herself.

Please send your feedback to [email protected]

financial planning The Economic Times Wealth September 2-8, 2019

Job loss and home loans

PAPER WORK :: Monitoring mutual fund investments

How does one tackle a home loan EMI when faced with retrenchment?

Regular review of mutual fund investments allows one to ascertain if the investment has performed as expected, whether the goal for which it was made has been achieved, and whether any restructuring is required. There are some mandatory public disclosures made by funds that provide insights into their performance.

Amit took a `75 lakh home loan soon after his marriage in 2010 to buy a 2-bedroom apartment. He earned a good salary and met his EMI obiligations easily, that is till he got retrenched recently. The bank has been unable to reach him after he defaulted on his last EMI payment. He is worried that the bank may now start harassing him. Will the bank initiate foreclosure and default proceedings if he misses 2-3 EMIs? What are his options?

Daily NAV Every fund house publishes the net asset value of each scheme daily on its website as well as on the AMFI website. To ascertain the value of an investment, one can use this NAV and multiply it with the number of units held.

A

Monthly portfolio Fund houses publish the portfolio of a scheme every month. The portfolio lists securities in which the scheme has invested in and their weightage. Fact sheets include portfolio and other scheme related information. This information is vital to understand risks in the portfolio.

Consolidated Account Statement (CAS) An investor gets a CAS monthly (if there were transactions in the previous month) or half yearly. This records all transactions and the value of the investment on the given date.

Key changes to fund

GETTY IMAGES

mit must realise that just as he wants a way out of this situation, it is also not in the bank’s interest to foreclose the loan. Banks are typically more interested in recovering the money than in starting legal proceedings as the process of attaching and auctioning a house is lengthy and takes time. So, the bank will be open to negotiations. The bank will typically not immediately repossess Amit’s house and would wait and watch before taking any legal action. Given the shortage of funds, Amit’s concern is the very high EMI. Even if he manages to find another job, he fears he may not be able to get the same salary. In such a case, he can approach the bank to restructure his loan. For example, assuming he currently pays `10,000 as EMI for a tenure of 20 years, the bank might offer him an EMI of about `6,000, for 30 years. So his EMI will go down, giving him some breathing room and the bank will not lose money either—a win-win situation. Such a restructure under stress may eventually cost him more in terms of total money repaid, but he must realise that this arrangement will give him the much-needed breathing space, which is his current priority. Amit might also ask for deferral of payments. The bank may grant relief, considering his past payment history and genuineness of the problem. He could also use the funds received as severance package to prepay a part of his loan, which will lower his EMI. Continuing to remain a defaulter and not contacting the bank can only make his relationship with the bank, and his credit scores, worse.

The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

smart things to know

1

Recession is a phase in the economic cycle of any economy when there is a decline in GDP, income, employment, manufacturing and sales.

2

It may be triggered due to a financial crisis or an external trade shock, an adverse supply shock or the bursting of an economic bubble.

Recession

In this phase, inflation stays pushed down, but so does demand. As a result, both growth and inflation are poor.

3

4

In a low inflation, low growth environment there is an expectation that rates will be cut, which pushes up bond prices. Bonds typically outperform other asset classes.

Monetary authorities have space to reduce interest rates, so liquidity eases and investment is incentivised. If other economic conditions are conducive, a recovery may start.

5

Sometimes, key attributes of a scheme changes. An email is typically sent to investors informing them about it. Such changes may have an impact on the scheme performance and should be evaluated. For many such changes, Sebi makes it mandatory for fund houses to provide an exit option.

Using tracking websites One can find out how a scheme has fared compared to similar ones in its peer group. This information can be found on aggregator websites. One can upload investment details and get a snapshot of scheme performance.

::Points to note •While it is important to track one’s investments, it is worthwhile to consult an expert. An investment adviser can advise, monitor and critically review the portfolio and suggest changes if needed.

21

career strategy The Economic Times Wealth September 2-8, 2019

THE GROWTH MINDSET

Your future is at risk

1

How fast you can evolve decides your future at work, says Devashish Chakravarty.

T

he future of your career is at risk. Your education, current skill-set and work experience are rapidly diminishing in value each year. Every year more jobs are being eliminated or reduced in scope due to business challenges and rapid advances in technology and automation. Sooner or later, you will be impacted. All is not lost though. Simultaneously, the Internet is continuously creating innumerable new career opportunities—unrestricted by current access to knowledge and skills, time and bandwidth constraints, physical distance from a potential employer or income opportunity and ability to reach out and connect with decision makers. So how do you recreate yourself to be constantly valuable in a future that is unpredictable and scary?

Generalist vs specialist You have been taught that specialists are irreplaceable and hence being one makes sure that you earn well. Think again. So, you trained to be an accountant and have specialised in audit matters. You are clearly a specialist. Your typical work-day 10 years hence will be nowhere similar to what you are doing today. Regulations, taxes and case laws – all would have changed. Your clients and you will not be able to audit without advanced digital accounting and audit tools that would have been developed and integrated with regulatory authorities, vendors and customers. As a specialist with your current skill sets, you will soon become redundant and replaced by a new batch of younger people who are trained for the changed world. Your only hope at being extremely valuable as a specialist lies in continuous upgradation of skills at the same pace as the new crop. Are you spending 5-10 hours a week on your own learning? Consider that the future belongs to the generalist. You are someone who constantly exposes herself to different responsibilities and is willing to rapidly pivot to new roles, integrate a variety of

past skills and knowledge and learn the missing stuff required for that job. Your critical question is – how quickly can you learn each time?

Knowledge vs application From the bleak future for specialists, you can figure out that knowledge is no more the barrier that protects your career. Your current knowledge base has a limited shelf life and will result in reducing income each year. Also, knowledge is nearly freely available for anyone who wants to replace you. Your primary value to the world is your ability to deliver outcomes which is powered by your ability to correctly put some knowledge to good use. How can your strengthen your application muscle? Firstly, each time you will only use a part of the knowledge you possess. Thus, making a habit of continuously learning will increase your cumulative knowledge and thus your chances of finding a suitable application for a problem. Secondly, you must be willing to spend time to think. In a world crammed with continuous distractions from your phone, emails and entertainment options, you may be spending little time in thinking about what new can work and what can’t. The more you think about complex problems and potential solutions, the better you get at this game. Finally, be ready to step out of your comfort zone to try implementing your thoughts even though it is comfortable to simply continue in the old way of doing things. Only after this last step, have you applied your knowledge. This is not easy, because your ideas and execution will not work perfectly every time and you will fall and fail often. Are you willing to embrace being embarrassed or are you locked up in the habit of always wanting to look Instagram-good?

In a future that will become unfavourable for specialists, it will be increasingly challenging to have continuous growth as an individual contributor. Whether you are a strong individual contributor or not, you will do well if you are known to be an effective team player. Firstly, working in a connected team ensures that you have a steady stream of information and inputs through team interactions that keeps you updated. Secondly, with increased automation, simple problems cease to exist and complex ones are beyond the scope of any individual. Thus, new teams will continue to be created in organisations and adequately budgeted to bring together people from different backgrounds to find solutions together. Being uncomfortable in a collaborative setup will make you unsuitable for leadership roles and often mark you out as a burden on the team despite your abilities.

New frames vs existing frames Finally, since continuous and quick learning is critical for survival, you will master the process of learning. Begin with “Un-learning”. Maybe, you are a coder-engineer. You are trained to think mathematically, incrementally and rationally. Maybe you can’t figure out what skills does the HR team bring to the table or how is the salesperson able to sell the product though he knows so little about it. Once you accept your lack of knowledge and choose to learn more about people skills, recognise that you cannot approach communication and storytelling from an engineering perspective. Only if you are willing to drop your existing mental frames and begin learning from scratch to build a new set of thinking structures and frameworks can you learn fast enough to be continuously useful.

Team vs contributor That brings you to the next question – are you better off as an individual contributor or as an integral part of a team where individually you may have little or no value?

IT’S ABOUT CHANGE

Carol Dweck’s popular study on growth mindset says the brain is plastic or that it is capable of continuous growth and change. So, if you possess a fixed mindset and like to believe that intelligence or talents are a limited commodity, it’s obvious that you will avoid change or new learnings and thus make yourself redundant faster. GETTY IMAGES

22

THE WRITER IS FOUNDER AND CEO AT QUEZX.COM AND HEADHONCHOS.COM.

2

ACQUIRING SKILLS

3

HOW YOU SPEAK

4

WAIT FOR SUCCESS

5

JUST A PROCESS

From a growth mindset, you can accept that any skill can be learnt. However, learning requires good inputs and exposure, correct methods and habits and a lot of effort and discomfort. Seek them out because if any one of the three is missing, chances are that you are progressing slowly or not at all.

A growth mindset changes how you speak. Is your conversation about the impossible hurdles and negative circumstances you faced? Or about the interesting challenges and creative solutions that you look forward to? What words do you use and what beliefs and mindsets trigger them? Change your conversations to trigger belief and mindset change.

There is no concept of failure in a growth mindset. Not achieving a goal today is simply a function of skills and thus time. You haven’t failed but rather you haven’t achieved it yet. Remember your past wins, where you put in effort, took the time, got back into the game and succeeded. You can only grow from here onwards.

The best part is that a growth mindset is simply a process you can adopt. Firstly, reward and praise yourself for putting in structured hard work towards goals that are challenging but not impossible. Secondly, celebrate and be grateful whether the goal is achieved or not because either will teach you something new.

SMART STATS ET WEALTH TOP 50 STOCKS

The Economic Times Wealth September 2-8, 2019

In This Section MUTUAL FUNDS - P22 LOANS AND DEPOSITS - P24

Every week we put about 3,000 stocks through four key filters and rate them on a mix of factors. The end result of this is the listing of the top 50 stocks based on the composite rating to help ease your fortune hunt. RANK

PRICE `

Current Previous Rank Rank

Stock Price

GROWTH%*

VA LUAT I O N R AT I O S

Revenue

Net Profit

PE

PB

Div Yield

RISK

PEG

Downside Risk

Bear Beta

R AT I N G No. of Consensus Analysts Rating

Apar Industries

1

1

533.95

19.00

47.00

15.02

1.70

1.72

0.32

1.08

0.71

10

4.90

KEC International

2

4

244.00

23.00

27.00

12.90

2.58

1.11

0.48

1.49

0.94

30

4.70

Capacit'e Infraprojects

3

3

194.45

30.00

40.00

13.81

1.57

0.51

0.33

1.83

0.99

11

4.82

JK Cement

4

5

1054.40

19.00

61.00

28.78

3.03

0.95

0.35

1.01

0.71

22

4.64

HG Infra Engineering

5

6

201.15

32.00

37.00

10.29

1.98

0.25

0.27

2.09

0.67

13

5.00

Aurobindo Pharma

6

8

591.10

30.00

25.00

14.65

2.49

0.42

0.57

1.43

1.14

36

4.64

Gujarat Gas

7

10

177.10

33.00

73.00

29.13

5.53

0.45

0.43

1.33

0.78

27

JSW Energy

8

43

67.05

31.00

36.00

15.81

0.93

1.49

0.43

1.40

1.14

DB Corp

9

11

135.85

5.00

26.00

8.87

1.30

8.06

0.28

1.28

BHEL

10

15

50.60

10.00

38.00

18.20

0.57

3.54

0.39

Star Cement

11

9

95.75

24.00

27.00

15.74

3.83

1.02

Zensar Technologies

12

12

221.75

19.00

23.00

3.17

2.56

NTPC

13

16

123.10

17.00

6.00

8.03

PGCIL

14

20

204.80

10.00

13.00

8.53

Parag Milk Foods

15

17

138.95

22.00

23.00

Ipca Laboratories

16

30

938.80

21.00

Oberoi Realty

17

13

549.50

Engineers India

18

14

Allcargo Logistics

19

Century Plyboards

20

Jagran Prakashan Redington India

1

Fast growing stocks Top 5 stocks with the highest expected revenue % growth over the previous year Sterlite Technologies

39

4.59

Gujarat Gas

33

17

3.12

32

1.12

16

4.19

HG Infra Engineering JSW Energy

1.80

1.32

34

3.00

31

0.48

1.40

0.79

11

4.64

PI Industries

31

1.29

0.15

1.73

1.34

16

4.63

1.11

4.57

1.02

1.07

0.83

27

4.85

1.81

4.05

0.61

1.00

0.62

29

4.28

9.66

1.41

0.54

0.45

1.70

0.82

15

4.40

40.00

26.66

3.80

0.32

0.66

1.17

0.63

26

4.42

21.00

45.00

24.46

2.49

0.37

0.50

1.69

1.11

25

4.12

105.90

25.00

23.00

18.10

2.85

4.56

0.98

1.67

0.69

17

4.35

Zensar Technologies Jagran Prakashan

23

90.65

14.00

14.00

9.20

1.11

3.80

0.46

1.37

0.88

10

4.70

NTPC

22

132.85

14.00

41.00

19.89

3.03

0.75

0.48

1.76

1.03

19

4.53

21

26

64.15

6.00

20.00

6.94

1.01

4.70

0.34

1.58

0.84

14

4.36

22

21

109.90

15.00

15.00

8.52

1.09

3.01

0.58

1.86

0.40

10

4.70

Sterlite Technologies Redington India

2

Least expensive stocks Top 5 stocks with the lowest price-earnings ratio 3.17 6.94 8.03 8.08 8.52

Alkem Laboratories

23

28

1817.75

17.00

37.00

28.53

3.99

0.87

0.79

0.85

-0.11

17

4.59

Rallis India

24

27

154.10

17.00

27.00

19.35

2.34

1.60

0.73

1.13

0.34

20

3.80

Sterlite Technologies

25

18

114.55

39.00

18.00

8.08

2.68

2.86

0.49

2.35

1.38

12

4.42

CCL Products India

26

34

238.10

24.00

25.00

20.41

3.77

0.72

0.82

1.02

0.33

11

4.73

UltraTech Cement

27

24

4073.90

25.00

76.00

45.92

3.94

0.28

0.64

1.28

1.27

39

4.03

Ahluwalia Contracts

28

35

305.05

20.00

29.00

17.49

2.79

0.10

0.59

1.47

0.94

16

4.81

Emami

29

29

296.55

14.00

86.00

44.39

6.48

1.33

0.54

1.45

1.08

33

4.30

Sun Pharma Ind

30

31

434.65

20.00

43.00

39.16

2.52

0.67

0.93

1.70

1.13

43

3.54

Narayana Hrudayalaya

31

33

233.40

20.00

127.00

79.49

4.35

0.43

0.64

1.34

0.40

11

5.00

Larsen & Toubro

32

36

1342.45

19.00

17.00

21.14

3.02

1.34

1.28

0.97

0.93

39

4.61

Lupin

33

41

735.05

14.00

69.00

54.81

2.42

0.68

0.79

1.21

0.95

46

2.87

VA Tech Wabag

34

37

276.80

22.00

23.00

14.44

1.42

1.42

0.67

1.80

1.70

15

3.93

Info Edge India

35

39

2002.40

26.00

95.00

40.43

9.61

0.26

0.31

1.64

0.30

29

3.52

HeidelbergCement

36

38

197.85

12.00

37.00

20.25

3.82

1.75

0.54

1.60

1.58

15

4.47

Reliance Industries

37

44

1241.75

9.00

26.00

18.58

1.90

0.51

0.76

1.25

0.99

36

4.28

DB Corp

8.06

Jagran Prakashan Ashok Leyland

4.70

NTPC

4.57

Engineers India

4.56

Hexaware Technologies

38

46

387.50

24.00

21.00

19.69

4.55

2.33

1.09

1.35

0.46

28

3.79

Jubilant Life Sciences

39

42

428.00

8.00

23.00

11.87

1.42

0.72

0.50

1.64

1.52

13

4.77

PI Industries

40

--

1100.25

31.00

38.00

37.00

6.65

0.45

0.96

1.14

0.78

24

4.08

Ashok Leyland

41

40

65.75

17.00

11.00

9.29

2.21

4.64

0.84

1.72

1.25

49

3.24

Motherson Sumi Systems

42

47

96.95

15.00

22.00

18.97

2.79

1.54

0.92

1.91

1.48

33

4.33

NBCC India

43

19

36.65

23.00

30.00

17.62

4.37

1.56

0.59

2.28

2.22

14

4.07

Mahanagar Gas

44

--

846.25

7.00

16.00

15.30

3.48

2.40

0.98

1.08

0.66

27

4.48

Cipla

45

50

465.20

13.00

26.00

24.48

2.49

0.65

0.97

1.08

0.66

42

3.57

Adani Ports & SEZ

46

--

366.20

19.00

24.00

19.00

3.11

0.05

0.75

1.62

1.66

24

4.75

Mphasis

47

--

968.00

18.00

11.00

17.29

3.44

2.76

1.26

1.24

1.02

32

4.34

Thermax

48

--

1008.60

10.00

55.00

34.91

3.99

0.69

0.70

1.19

0.69

32

2.78

Kajaria Ceramics

49

--

469.95

18.00

32.00

32.98

4.74

0.64

0.95

1.53

0.96

31

3.97

Crompton Greaves Cons

50

--

225.95

20.00

24.00

35.30

12.91

0.88

1.54

1.34

0.51

36

4.58

*REVENUE AND NET PROFIT GROWTH IS BASED ON CONSENSUS ANALYSTS' EXPECTATIONS. NR: NOT IN THE RANKING. DATA AS ON 14 AUG 2019.

SOURCE: BLOOMBERG

3

Best PEGs Top 5 stocks with the least price-earnings to growth ratio HG Infra Engineering 0.15

0.27

Zensar Technologies

4

5

Info Edge India

0.28

0.31

DB Corp

0.32

Apar Industries

Income generators Top 5 stocks with the highest dividend yield (%)

4.64

Least risky Top 5 stocks with the lowest downside risk Larsen & Toubro

0.85

0.97

Alkem Laboratories

JK Cement

1.00

PGCIL

1.01

1.02

CCL Products India

SEE DOWNSIDE RISK AND BEAR BETA COLUMNS IN THE ADJACENT TABLE.

smart stats 24

The Economic Times Wealth September 2-8, 2019

ETW FUNDS 100

LAGGARDS & LEADERS Taking a long-term view of fund returns, here is a list of 10 funds in each category—five leaders (worth investing) and five laggards (that may be a drag on your portfolio).

BEST FUNDS TO BUILD YOUR PORTFOLIO

LAGGARDS

ET Wealth collaborates with Value Research to identify the top-performing funds across categories. Equity funds and equity-oriented hybrid funds are ranked on 3-year returns while debt-oriented hybrid and income funds are ranked on 1-year returns. Value Research Fund Rating

Net Assets (` Cr) 3-Month

1-Year

3-Year

5-Year

6500.66

-1.35

8.81

0.1

12.95

10.74

2.02

Sundaram Select Focus Fund



975.66

-4.91

6.78

-3.58

11.2

8.15

2.48

Mirae Asset Large Cap Fund



13491.69

-6.22

3.34

-3.63

10.97

11.79

1.7

Canara Robeco Bluechip Equity Fund



211.7

-4.94

4.76

-4.3

9.2

8.62

2.72

HDFC Top 100 Fund



17094.91

-10.19

1.85

-4.28

8.89

7.57

1.78



21124.93

-7.23

1.51

-6.69

8.45

8.69

1.83



157.99

-5.44

3.87

-7.88

8.44

9.03

2

ICICI Prudential Bluechip Fund Edelweiss Large Cap Fund



1044.66

-4.73

6.99

-5.52

8.19

9.59

2.25



12260.85

-13.67

-2.22

-8.48

8.11

9.01

1.86

JM Core 11 Fund



47.93

-7.32

-1.32

-9.97

7.33

10.03

—

SBI Bluechip Fund



21584.91

-7.15

4.68

-5.12

6.16

9.59

2

Motilal Oswal Focused 25 Fund Reliance Large Cap Fund



7498.56

-6.01

4.51

-2.54

11.87

17.18

1.79

Sundaram Large and Mid Cap Fund



694.86

-7.38

1.79

-9.37

10.4

10.91

2.65

Invesco India Growth Opportunities Fund



1559.94

-4.64

2.33

-8.72

9.74

10.7

2.18

LIC MF Large & Mid Cap Fund



490.57

-3.01

4.54

-8.43

9.12

—

2.77



2466.93

-6.94

2.97

-4.54

7.9

10.57

2.1



4640.03

-10.5

-1.91

-13

7.83

13.33

1.93



2051.44

-9.14

-1.29

-14.56

5.88

12.19

2.1

Axis Focused 25 Fund



7784.89

-3

6.68

-7.98

12.01

12.48

2.03

Parag Parikh Long Term Equity Fund



2003.99

-2.34

1.46

-4.63

10.17

11.18

2.08

Tata Retirement Savings Fund



624.72

-5.61

3.49

-9.13

9.72

11.72

2.47

Edelweiss Multi Cap Fund



394.58

-8.04

1.83

-7.76

9.68

—

2.44

Kotak Standard Multicap Fund



24958.63

-7.72

4.14

-4.78

9.46

12.1

1.73

SBI Focused Equity Fund



4984.06

-7.54

4.77

-3.42

9.46

11.47

2.11

Motilal Oswal Multicap 35 Fund



12413.26

-5.82

3.68

-8.46

8.53

15.08

1.76

SBI Magnum Multicap Fund



7465.19

-6.99

5.05

-4.12

8.15

11.97

2.13

Quant Active Fund



6.39

-9.8

1.17

-8.96

7.8

9.85

2.48

HDFC Retirement Savings Fund



710.97

-7.57

0.44

-6.07

7.41

—

2.34

Franklin India Focused Equity Fund



8182.84

-11.93

1.72

-4.97

6.67

9.67

1.8

Aditya Birla Sun Life Equity Fund



10694.26

-9.17

-0.24

-9.79

6.36

10.04

1.93

ICICI Prudential Multicap Fund



3939.96

-9.79

-1.1

-9.6

5.75

9.15

2.15

Kotak Equity Opportunities Fund Canara Robeco Emerging Equities Fund Principal Emerging Bluechip Fund

5.3 Baroda Large Cap

5.88

Axis Midcap Fund



2634.45

-3.35

1.09

-7.26

9.63

10.99

2.18

L&T Midcap Fund



4805.3

-10.59

-4.29

-16.78

6.18

11.63

2.01



5856.41

-6.97

-0.34

-9.75

5.52

11.7

1.99



4320.94

-8.3

-0.49

-10.75

5

12.16

2

Franklin India Prima Fund



6686.24

-8.53

-2.47

-11.59

4.15

10.81

1.82

HDFC Mid-Cap Opportunities Fund



20893.16

-10.75

-3.32

-16.04

3.49

9.91

1.71

4.49 Taurus Starshare (Multi Cap)

THE 3-YEAR RETURN OF MIRAE ASSET EMERGING BLUECHIP IS THE HIGHEST IN ITS CATEGORY.



2255.49

-7.43

2.78

-12.89

10.93

17.34

2.34



517.06

0.28

10.62

2.95

9.09

12.5

2.65

HDFC Small Cap Fund



7894.01

-15.23

-7.88

-17.25

7.74

11.01

1.85

L&T Emerging Businesses Fund

2.02



5611.4

-12.26

-7.76

-20.59

7.2

12.08

Reliance Small Cap Fund



7541.96

-14.97

-5.41

-20.58

6.72

11.49

2.03

Franklin India Smaller Companies Fund



6728.84

-14.83

-6.2

-19.26

0.21

8.38

1.78



811.32

-5.88

2.36

-6.55

10.67

9.66

2.48

3879.63

-8.88

-0.27

-11

9.41

11.18

2.01

Tata Equity PE Fund



5174.9

-6.21

1.36

-11.52

7.89

11.32

1.9

L&T India Value Fund



7715.53

-9.76

0.53

-11.78

6.43

11.26

1.87

Mirae Asset Tax Saver Fund



2207.96

-5.54

4.17

-3.46

13.56

—

1.9

-1.7 -0.78 PGIM India Midcap Opportunities

0.25 UTI Mid Cap Fund

0.41 Aditya Birla Sun Life Mid Cap

0.85 THE 3-YEAR RETURN OF AXIS MIDCAP FUND IS THE HIGHEST IN ITS CATEGORY.

Motilal Oswal Midcap 100 Exchange Traded

Axis Long Term Equity Fund



18952.64

-2.71

6.7

-4.64

10.29

11.93

1.76



30.1

-4.64

5.18

-4.88

9.75

10.61

—

Motilal Oswal Long Term Equity Fund



1339.11

-4.06

3.61

-9.45

9.3

—

2.15

Tata India Tax Savings Fund

9.8 Reliance ETF Junior BeES

15.08 Motilal Oswal Multicap 35 Fund

12.48 Axis Focused 25 Fund

12.1 Kotak Standard Multicap Fund

11.97 SBI Magnum Multicap Fund

11.72 Tata Retirement Savings Fund

9.63 Axis Midcap Fund

6.18 L&T Midcap Fund

5.88 Tata Midcap Growth Fund

5.77 Invesco India Mid Cap Fund

5.62 Reliance Growth Fund

SBI Small Cap Fund

9.09

-2.43 Union Small Cap Fund

-1.49 Aditya Birla Sun Life Small Cap Fund DSP Small Cap Fund

Axis Small Cap Fund

7.74 HDFC Small Cap Fund

7.2 L&T Emerging Businesses Fund

6.72 Reliance Small Cap Fund

Hybrid: Aggressive 5-year returns THE 3-YEAR RETURN OF MIRAE ASSET TAX SAVER FUND IS THE HIGHEST IN ITS CATEGORY.

1.65 JM Equity Hybrid Fund

5.31 LIC MF Equity Hybrid Fund



1807.2

-6.68

4.66

-4.54

8.46

12.12

2.13



837.23

-5.9

2.33

-9.86

8.06

10.23

2.42

Kotak Tax Saver



895.57

-8.23

3.04

-4.52

8.05

10.56

2.41

DSP Tax Saver Fund



5433.86

-6.06

5.64

-3.87

7.85

10.66

1.9

5.82

IDFC Tax Advantage (ELSS) Fund



1902.13

-12.99

-2.09

-13.63

7.08

9.23

2.02

Baroda Hybrid Equity Fund



8416.36

-9.59

-4.16

-14.39

6.92

10.75

2.04



9.53

-10.35

0.76

-10.6

5.41

12.49

2.48

Quant Tax Plan

10.03 JM Core 11 Fund

10.93

-7.52 Quant Small Cap Fund

Invesco India Tax Plan

Aditya Birla Sun Life Tax Relief 96

10.74 Axis Bluechip Fund

Equity: Small-cap 3-year returns

Sundaram Small Cap Fund

13.6%

EQUITY: TAX-SAVING

JM Tax Gain Fund

5.26 IDFC Focused Equity

-1.22 

Invesco India Contra Fund

4.76 Union Multi Cap

SBI Magnum Midcap Fund

EQUITY: VALUE-ORIENTED Kotak India EQ Contra Fund

4.73 HDFC Focused 30

-3.05

Axis Small Cap Fund

10.97 Quant Focused Fund

Equity: Mid-cap 3-year returns

EQUITY: SMALL-CAP SBI Small Cap Fund

Mirae Asset Large Cap Fund

Equity: Multi-cap 5-year returns 4.21

9.6%

EQUITY: MID-CAP

Kotak Emerging Equity Scheme

5.94 DSP Top 100 Equity

LIC MF Multicap Fund

EQUITY: MULTI-CAP

DSP Midcap Fund

IDFC Large Cap

THE 3-YEAR RETURN OF AXIS BLUECHIP IS THE HIGHEST IN ITS CATEGORY.

11.9%

EQUITY: LARGE- & MID-CAP Mirae Asset Emerging Bluechip Fund

5.18

13% 

11.79

3.51 Principal Nifty 100 Equal Weight

Expense Ratio (%)

EQUITY: LARGE-CAP Axis Bluechip Fund

Equity: Large-cap 5-year returns

Taurus Largecap Equity

RETURNS (%) 6-Month

LEADERS

5.53 PGIM India Hybrid Equity Fund

6.4 Shriram Hybrid Equity Fund

11.53 Tata Retirement Savings Fund

10.43 SBI Equity Hybrid Fund

9.75 Canara Robeco Equity Hybrid Fund

9.63 HDFC Hybrid Equity Fund

9.59 HDFC Children's Gift Fund

ANNUALISED RETURNS IN % AS ON 28 AUGUST 2019.

smart stats The Economic Times Wealth September 2-8, 2019

ETW FUNDS 100

Value Research Fund Rating

Net Assets (` Cr) 3-Month

RETURNS (%) 6-Month

1-Year

3-Year

5-Year

1

Expense Ratio

7%

HYBRID: EQUITY SAVINGS Kotak Equity Savings Fund - Regular Plan



2003.19

-0.81

2.48

1.93

7.04

—

2.16

Edelweiss Equity Savings Fund - Regular Plan



118.71

-0.73

3.21

1.29

6.92

—

1.74



5137.58

-3.21

2.33

0.88

6.92

7.58

1.93



1617.39

-0.36

4.43

5.94

6.62

—

1.35



2297.13

-4.4

3.85

-0.23

9.68

—

2.01



29407.69

-3.19

6.25

1.89

8.77

10.43

1.66



305.8

-5.7

2.08

-2.42

8.6

—

2.44

HDFC Equity Savings Fund ICICI Prudential Equity Savings Fund

THE 3-YEAR RETURN OF KOTAK EQUITY SAVINGS FUND IS THE HIGHEST IN ITS CATEGORY.

HYBRID: AGGRESSIVE (EQUITY-ORIENTED) Mirae Asset Hybrid Equity Fund - Regular Plan SBI Equity Hybrid Fund HDFC Retirement Savings Fund - Hybrid Equity Principal Hybrid Equity Fund



1600

-8.08

-1.91

-8.5

8.37

9.41

2.14

Tata Retirement Savings Fund - Moderate Plan



1048.85

-6.67

1.34

-8.19

8.37

11.53

2.27

HDFC Children's Gift Fund



2735.32

-4.59

1.82

-3.06

8.03

9.59

2.14

Canara Robeco Equity Hybrid Fund - Regular Plan



2298.03

-4.87

2.82

-1.76

7.93

9.75

2.15

HDFC Hybrid Equity Fund



21150.85

-5.9

2.78

-2.15

7.6

9.63

1.72

ICICI Prudential Equity & Debt Fund



24315.87

-7.5

1.14

-3.33

7.08

9.37

1.72



1642.45

0.08

4.04

6.15

7.93

9.63

1.96



67.25

0.04

4.16

4.58

6.48

—

2.14



20.13

-1.34

3.14

3.36

8.32

—

2.22

HDFC Retirement Savings Fund - Hybrid Debt Plan Indiabulls Savings Income Fund - Regular Plan Tata Retirement Savings Fund - Conservative Plan



130.98

-0.36

4.01

2.61

6.5

8.35

2.23

Aditya Birla Sun Life Regular Savings Fund



2059.74

-0.86

3.52

-0.11

5.04

9.03

1.82

SBI Magnum Children's Benefit Fund



62.28

-2.35

0.79

-1.5

8.3

10.45

2.26



2412.37

-3.22

-0.24

-1.61

5.2

7.58

1.79

UTI Regular Savings Fund - Regular Plan

Top 5 SIPs Top 5 equity schemes based on 10-year SIP returns Canara Robeco Emerging Equities Fund 17.31 Principal Emerging Bluechip Fund 14.88 SBI Focused Equity Fund 14.73 Mirae Asset Large Cap Fund 14.40 Franklin India Prima Fund 14.36 SIP: SYSTEMATIC INVESTMENT PLAN

HYBRID: CONSERVATIVE (DEBT-ORIENTED) ICICI Prudential Regular Savings Fund

25

6.2% THE 1-YEAR RETURN OF ICICI PRU REGULAR SAVINGS FUND IS THE HIGHEST IN ITS CATEGORY.

2

% ANNUALISED RETURNS AS ON 28 AUGUST 2019

Top 5 MIPs Top 5 MIP schemes based on 3-year SWP returns Indiabulls Savings Income Fund 8.11

DEBT: MEDIUM- TO LONG-TERM 

SBI Magnum Income Fund

1206

3.5

7.28

10.54

7.65

8.88

ICICI Prudential Regular Savings Fund

1.47

7.62

DEBT: MEDIUM-TERM

Baroda Conservative Hybrid Fund

SBI Magnum Medium Duration Fund



1752.79

3.37

6.76

10.59

8.82

9.4

1.09



1189.22

0.47

3.37

7.21

7.32

8.86

1.05



3613.81

1.65

3.28

7.07

8.04

8.6

1.7



311.98

1.84

3.88

6.52

6.83

—

1.61

Axis Strategic Bond Fund Franklin India Income Opportunities Fund UTI Medium Term Fund - Regular Plan

7.00 BNP Paribas Conservative Hybrid Fund 5.73

9.9%

DEBT: SHORT-TERM 

2053.61

2.98

5.81

9.89

7.51

8.2

0.9

HDFC Short Term Debt Fund



8172.68

2.92

5.51

9.67

7.75

8.42

0.4

Baroda Short Term Bond Fund



335.33

2.65

5.23

9.13

8.05

8.48

1.29

Indiabulls Short Term Fund - Regular Plan



104.14

1.27

3.92

7.88

7.09

7.97

1.48

Franklin India Short Term Income Plan - Retail Plan



13274.38

1.02

3

7.82

8.3

8.7

1.48



120.29

0.63

3.21

6.88

6.64

7.61

1.19



1083.34

5.45

10.18

14.46

8.33

9.62

1.65

Axis Short Term Fund

BNP Paribas Short Term Fund

THE 1-YEAR RETURN OF AXIS SHORT TERM FUND IS THE HIGHEST IN ITS CATEGORY.

DEBT: DYNAMIC BOND SBI Dynamic Bond Fund



40.87

4.35

8.38

13.6

8.65

9.83

1.28



736.57

3.75

7.45

12.82

8.5

9.32

1.08

PGIM India Dynamic Bond Fund Kotak Dynamic Bond Fund - Regular Plan Quantum Dynamic Bond Fund - Regular Plan



59.25

4.25

7.97

12.07

8.01

—

0.71

ICICI Prudential All Seasons Bond Fund



2791.26

3.1

6.65

10.15

7.94

9.99

1.3



3960.08

1.23

3.44

8.33

8.33

9.42

1.67

Franklin India Dynamic Accrual Fund

Canara Robeco Conservative Hybrid Fund 5.62 SWP: SYSTEMATIC WITHDRAWAL PLAN

3

% ANNUALISED RETURNS AS ON 28 AUGUST 2019

Small Cap cash holdings 21.88 17.25

9.23

DEBT: CORPORATE BOND 

12415.57

3.36

6.75

11.17

8.1

8.88

0.46



15967.81

2.9

5.82

10.49

7.97

8.8

0.39



951.37

3.53

5.82

10.4

8.54

9

0.89



2333.65

2.7

5.46

9.78

8.14

9.35

0.59



1142.79

1.77

4.14

8.17

7.31

8.03

0.71

HDFC Corporate Bond Fund Aditya Birla Sun Life Corporate Bond Fund Franklin India Corporate Debt Fund Kotak Corporate Bond Fund - Standard Plan Reliance Prime Debt Fund

Expense as on 31 July 2019 Returns as on 28 August 2019 Assets as on 31 July 2019 Rating as on 31 July 2019

Principal Small Cap Fund

All equity funds ranked on 3-year returns. Debt funds ranked on 1-year returns.

Tata Small IDBI Cap Fund Small Cap

Did not find your fund here? Methodology

EQUITIES (figures over the past one year)

The Top 100 includes only those funds that have a 5- or 4-star rating from Value Research. The rating is determined by subtracting a fund’s risk score from its return score. The result is assigned stars according to the following distribution:

Large-cap: Mostly invested in large-cap companies.

  Top 10%

Small-cap: Mostly invested in small-cap companies.

 Next 22.5%



 Middle 35%



 Next 22.5%



Multi-cap: Mostly invested in large- and mid-cap companies. Mid-cap: Mostly invested in mid-cap companies. Tax planning: Offer tax rebate under Section 80C.

(Not covered in ETW Funds 100 listing)

 Bottom 10%

Fixed-income funds less than 18 months old and equity funds less than three years old have been excluded. This ensures that all the funds have existed long enough to be tracked for consistency of performance. Given the focus on long-term investing, liquid funds, short-term funds and FMPs are not part of the list. For the same reason, we have considered only the growth option of funds that reinvest returns instead of offering dividends that increase the NAV of funds. Despite these rigorous filters, the list includes 2/3 funds of each category to maximise choice from the best funds. The fund categories are:

8.68

HSBC L&T Small Cap Emerging Equity Businesses % AS ON 31 JULY 2019

Log on to www.wealth.economictimes.com for an exhaustive list.



9.04

International: More than 65% of assets invested abroad. Income: Average maturity varies according to objective. Gilt: Medium- and long-term; invest in gilt securities. Equity-oriented: Average equity exposure more than 60%. Debt-oriented aggressive: Average equity exposure between 25-60%. Debt-oriented conservative: Average equity exposure less than 25%. Arbitrage: Seek arbitrage opportunities between equity and derivatives. Asset allocation: Invest fully in equity or debt as per market conditions.

FUND RAISER

35% Of the total industry equity AUM belonged to the top 10 largest* stocks of the Nifty-50 index in July 2019 *In terms of market cap

4

Debt: Short duration 0.73

0.77

0.79

0.48 0.40

HDFC IDFC All Short Seasons Term Debt Bond

L&T Short Term Bond

UTI Short IDFC Bond Term Fund Income Short Term Plan

% AS ON 31 JUL 2019 % EXPENSE RATIO IS CHARGED ANNUALLY. METHODOLOGY OF TOP 100 FUNDS ON WWW.WEALTH.ECONOMICTIMES.COM

loans and deposits 26

The Economic Times Wealth September 2-8, 2019

LOANS & DEPOSITS ET WEALTH collaborates with ETIG to provide a comprehensive ready reckoner of loans and fixed-income instruments. Don’t miss the information on investments for senior citizens and a simplified EMI calculator. Top five bank FDs TENURE: 1 YEAR IDFC First Bank

Interest rate (%) compounded qtrly

What `10,000 will grow to

8.00

10,824

Lakshmi Vilas Bank

7.75

10,798

RBL Bank

7.70

10,793

Indusind Bank

7.50

10,771

Bandhan Bank

7.35

10,756

TENURE: 2 YEARS

BANK MCLR

Top banks for 2 years BANK NAME

Marginal Cost of funds-based Lending Rate (MCLR) is the new benchmark lending rate designated by RBI and will replace the base rate for new borrowers.

MCLR (%)

WITH EFFECT FROM

State Bank Of India

8.35

10 August 2019

IOB

8.60

10 August 2019

Axis Bank

8.65

17 AUGUST 2019

HDFC Bank

8.70

8 August 2019

Kotak Mahindra Bank

8.80

16 August 2019

IDFC First Bank

8.00

11,717

AU Small Finance Bank

7.87

11,687

Lakshmi Vilas Bank

7.85

11,682

RBL Bank

7.75

11,659

Bandhan Bank

7.65

11,636

DCB Bank

8.00

12,682

AU Small Finance Bank

8.00

12,682

Lakshmi Vilas Bank

7.85

12,627

State Bank Of India

8.10

10 AUGUST 2019

State Bank Of India

8.45

10 August 2019

Bandhan Bank

7.65

12,552

Central Bank Of India

8.20

15 AUGUST 2019

Punjab National Bank

7.50

12,497

8.50

1 August 2019

IDFC First Bank

Punjab National Bank

8.20

1 August 2019

Axis Bank

8.70

17 August 2019

Allahabad Bank

8.25

14 August 2019

IOB

8.70

10 August 2019

Syndicate Bank

8.30

12 AUGUST 2019

Kotak Mahindra Bank

8.80

16 August 2019

TENURE: 3 YEARS

TENURE: 5 YEARS Lakshmi Vilas Bank

7.85

14,751

AU Small Finance Bank

7.77

14,693

DCB Bank

7.75

14,678

Bandhan Bank

7.65

14,607

RBL Bank

7.50

14,499

Top five senior citizen bank FDs

Top banks for 6 months BANK NAME

MCLR (%)

Top banks for 3 years

WITH EFFECT FROM

BANK NAME

Top banks for 1 year BANK NAME

MCLR (%)

WITH EFFECT FROM

BANK NAME

MCLR (%)

WITH EFFECT FROM

State Bank Of India

8.25

10 August 2019

Karur Vysya Bank

9.55

7 August 2019

Central Bank Of India

8.30

15 August 2019

City Union Bank

9.95

6 August 2018

Punjab National Bank

8.30

1 August 2019

Syndicate Bank

8.35

12 August 2019

Allahabad Bank

8.40

14 August 2019

What `10,000 will grow to

8.50

10,877

8.35

10,862

RBL Bank

8.20

10,846

Bandhan Bank

8.10

10,835

Indusind Bank

8.00

10,824

IDFC First Bank

8.50

11,832

Lakshmi Vilas Bank

8.45

11,820

Bandhan Bank

8.40

11,809

Your EMI for a loan of `1 lakh

AU Small Finance Bank

8.37

11,802

TENURE

RBL Bank

8.25

11,774

DCB Bank

8.50

12,870

AU Small Finance Bank

8.50

Lakshmi Vilas Bank

8.45

Bandhan Bank

8.40

12,832

IDFC First Bank

8.00

12,682

Lakshmi Vilas Bank

8.45

15,191

Bandhan Bank

8.40

15,154

AU Small Finance Bank

8.27

15,057

Senior Citizens' Savings Scheme

8.6

1,000

DCB Bank

8.25

15,043

Sukanya Samriddhi Yojana

8.4

RBL Bank

8.00

14,859 Public Provident Fund 5-year NSC VIII Issue

Lakshmi Vilas Bank

WITH EFFECT FROM

Top banks for 5 years

Interest rate (%) compounded qtrly

TENURE: 1 YEAR IDFC First Bank

MCLR (%)

FOR ANY CHANGES IN MCLR RATES, PLEASE E-MAIL US AT [email protected]

TENURE: 2 YEARS

5 YEARS

10 YEARS

15 YEARS

20 YEARS

25 YEARS

@ 8%

2,028

1,213

956

836

772

@ 10%

2,125

1,322

1,075

965

909

12,870

@ 12%

2,224

1,435

1,200

1,101

1,053

12,851

@ 15%

2,379

1,613

1,400

1,317

1,281

TENURE: 3 YEARS

TENURE: 5 YEARS

Top five tax-saving bank FDs Interest rate (%)

What `10,000 will grow to

7.85

14,751

AU Small Finance Bank

7.77

14,693

DCB Bank

7.75

14,678

IDFC First Bank

7.75

14,678

Bandhan Bank

7.65

14,607

TENURE: 5 YEARS AND ABOVE Lakshmi Vilas Bank

ALL DATA SOURCED FROM ECONOMIC TIMES INTELLIGENCE GROUP ([email protected])

FIGURES ARE IN `. USE THIS CALCULATOR TO CHECK YOUR LOAN AFFORDABILITY. FOR EXAMPLE, A `5 LAKH LOAN AT 12% FOR 10 YEARS WILL TRANSLATE INTO AN EMI OF `1,435 X 5 = `7,175

Post office deposits

Interest (%)

Minimum invt. (`)

Maximum investment (`)

Tax benefits

Features

15 lakh

5-year tenure, minimum age 60

80C

250

1.5 lakh per year

One account per girl child

80C

7.9

500

1.5 lakh per year

15-year tenure, tax-free returns

80C

7.9

100

No limit

No TDS

80C

6.9-7.7

200

No limit

Available in 1, 2, 3, 5 years

80C#

Post Office Monthly Income Scheme

7.6

1,500

Single 4.5 lakh

5-year tenure, monthly returns

Nil

Joint 9 lakh

5-year tenure, monthly returns

Nil

Kisan Vikas Patra

7.6

1,000

No limit

Can be encashed after 2.5 years

Nil

Recurring deposits

7.2

10

No limit

5-year tenure

Nil

Savings account

4.0

20

No limit

`10,000 interest tax free

Nil

Time deposit

Data as on 14 Aug 2019

# Benefit available only for 5-year deposit

pick of the week The Economic Times Wealth September 2-8, 2019

27

Coal India: At attractive valuations Despite other negatives, analysts are getting bullish due to the stock’s cheap valuations.

T

ing the quarter zoomed by 22% y-o-y. Ebitda stands for earnhe Coal India counter has been going downhill for ings before interest, tax, depreciation and amortisations. several years now and its price is quoting close to Coal India’s efforts of keeping costs under control by shutall-time lows. On an absolute basis, its share price ting down old mines and increasing productivity at mines crashed 48% over the past five years, compared that are under operations are also yielding results. to the Sensex gaining 39% during the same time. Analysts are getting bullish on this counter now mostly Uncontrolled stock supply by the government, in the form of because of its attractive valuations. For example, its endivestments, is the main reason for this disaster. terprise value / Ebitda ratio is now placed around 3 times, The recent deep cut, however, was because of the governsignificantly lower than its historical average of around 7 ment’s decision to allow 100% foreign direct investment times. Similarly, other valuation (FDI) in coal mining and related acratios like PE, PB etc are also lower tivities. As of now, FDI coal mining than its averages. More importantis allowed only for captive mining ly, its dividend yield of around 7% for power projects and Coal India is comparable to that of interest ofis the only commercial coal miner. 2 23 fered by many bank fixed deposits. That means this increased competiSell Buy With a cash pile of around `31,000 tion will have a long-term negative crore—around 25% of its market impact on Coal India. Analysts, capitalisation, Coal India is also however, say its impact will be lim4 maintaining high dividend rates. ited on Coal India due to several Hold reasons. First, there will be a three Select ion Methodolog y: We to five years gestation period before pick up the stock that has shown coal production starts because of maximum increase in “consensus the lengthy procedures involved for analyst rating” during the last 1 coal licence allocation, land acquisimonth. Consensus rating is artion, environment clearances, etc. Despite reporting flat volumes, Coal India’s net profits rived at by averaging all analyst Second, it will aim to restrict coal were higher than street expectations. This coupled with recommendations after attributimports, which jumped by 40% durattractive valuations make the company a ing weights to each of them (ie 5 ing the past one year. favourite of analysts. for strong buy, 4 for buy, 3 for hold, While Coal India continues to re2 for sell and 1 for strong sell) and port good numbers in other parameters, it disappointed on volumes. For example, its sales volany improvement in consensus analyst rating indicates that ume during the first quarter of 2019-20 remained nearly flat the analysts are getting more bullish on the stock. To make y-o-y and was down 6% q-o-q. However, Coal India is taking sure that we pick only companies with decent analyst coversteps to improve coal production and analysts are expecting age, this search will be restricted to stocks with at least 10 a small annualised volume growth of around 4% between analysts covering it. You can see similar consensus analyst 2018-19 and 2020-21. Despite the stagnant volume growth, its rating changes during the last one week in ETW 50 table. Ebitda and net profit were higher than street expectations —Narendra Nathan due to better realisations in coal price and its net profit dur-

Analysts’ views

Fundamentals CONSENSUS ESTIMATE

ACTUAL 2017-18

Revenue (` cr)

2018-19

2019-20

2020-21

81,081

92,896

1,02,021

1,06,804

Ebitda (` cr)

6,214

21,537

18,988

19,679

Net profit (` cr)

7,038

17,461

17,124

17,777

EPS (`)

11.34

28.14

27.73

28.80

Valuations

DIVIDEND YIELD (%)

PBV

PE

Coal India Ltd.

8.32

6.36

6.96

Vedanta Ltd.

0.65

7.33

13.88

NMDC Ltd

0.94

5.02

6.94

KIOCL

3.97

60.05

1.04

MOIL Ltd.

1.06

7.25

4.73

Latest brokerage calls

TARGET PRICE (`)

RECO DATE

RESEARCH HOUSE

ADVICE

29 Aug 19

J.P. Morgan

Overweight

255

16 Aug 19

JM Fin Inst Securities

Buy

340

16 Aug 19

IIFL

Buy

301

16 Aug 19

Kotak Securities

Buy

290

13 Aug 19

Jefferies

Buy

275

Relative performance

65.84 SENSEX 95.73

MARKET PRICE: `189 1 100

59.67 29 AUG 2018

ET METAL

COAL INDIA

29 AUG 2019

Coal India compared with ET Metal and Sensex. Stock price and index values normalised to a base of 100. Source: ETIG and Bloomberg.

WHAT EXPERTS ADVISE BUY

*STOCK PRICES AS ON 29 AUGUST RESEARCH HOUSE

ADVICE

SH Kelkar

Anand Rathi

Buy

Reliance Industries

Elara Capital

SBI UPL

STOCK

Info Edge Sanofi India

STOCK PRICE* (`)

1-YEAR TARGET PRICE (`)

POTENTIAL UPSIDE (%)

130

243

87

Operating margins improved in first quarter due to fall in raw material prices. Positive on SHK in medium to longer term basis because volatility witnessed in 2018-19 is seen subsiding in 2019-20.

Buy

1,242

1,713

38

Upgraded to buy because of higher valuation for Reliance Retail, expected value unlocking from JioFiber and higher profit because of oil-to-chemicals expansions.

Jefferies

Buy

275

370

35

Current pessimism unwarranted. With valuations below historical average, risk-reward ratio is attractive. SBI is expected to grow its market share, but at lower net interest margin (NIM).

J P Morgan

Overweight

558

700

25

Recently completed Arysta acquisition builds on UPL’s core strength as a post-patent player with their complementary crop protection portfolio and market presence supporting revenue growth.

J M Financial

Buy

2,001

2,500

25

Decision of few restaurants to opt out of aggregator platforms like Zomato (Info Edge’s subsidiary) is unlikely to impact valuation and recent correction in price provides a good buying opportunity.

ICICI Direct

Buy

5,978

7,500

25

Sanofi's power brands continue to grow. Sanofi is also a cash-rich company and has seen its core retun on equity (RoE) improving from 15.4% in 2014 to 23.4% in 2018.

RESEARCH HOUSE

ADVICE

Geojit Fin Services

Reduce

COMMENT

SELL STOCK

Dish TV

STOCK PRICE* (`)

22

1-YEAR TARGET PRICE (`)

POTENTIAL DOWNSIDE (%)

21

6

COMMENT

Profitability of Dish TV in first quarter was impacted by higher selling costs and taxes. 'Reduce' rating given due to weak quarterly numbers and uncertain outlook around new tariff regime.