Twenty five years is a long, long time. Staying invested in a mutual fund (MF) for a little over 9,100 days is not easy. It shows serious commitment and discipline. Even if you do a monthly SIP (Systematic Investment Plan), 25 years would mean 300 SIP instalments. Unfortunately, there are very few investors who stick around in a fund for that long. In fact, close to two-third of the industry’s equity MF assets are less than two years old.
As the Indian MF industry matures, funds are narrating their coming-of-age stories. The latest ones to join the 25-year old club are Franklin India Prima Fund and Franklin India Bluechip Fund, both launched in December of 1993. There are at least nine equity schemes that are already 25-year old.
RupeeIQ takes a closer look at some of these funds as we stroll down the memory lane.
UTI Mastershare Fund was launched in 1986. That makes it India’s first equity oriented fund. It invests in leading businesses of large market capitalisation following Growth at Reasonable Price (GARP) investment style. The fund takes a top down view for sector active weights and then uses bottom up approach for stock selection, according to UTI MF.
Did you know the fund has an impeccable track record? Yes, it has given uninterrupted dividend distribution every year since inception, regardless of bear and bull phases of equity market! The 32-year old fund is currently managed by Swati Kulkarni. She is managing the scheme since November 2006. The fund has generated 17.72% CAGR since inception. In the last 10 years, the fund has given 15.85% CAGR, which is lower than Nifty 100 TRI return of 17.01% in the same period (ended Dec. 4, 2018). The Rs 5,400-crore fund follows a buy and hold strategy, as evident from its mere 13% portfolio turnover. In its current portfolio, its top bets are on HDFC Bank, ICICI Bank, Infosys, TCS, ITC, Tech Mahindra, L&T, IndusInd Bank, Kotak Mahindra Bank and Axis Bank.
Franklin India Bluechip Fund is another fund that has completed 25 years since its launch in December 1993. As a largecap fund, the Rs 7,500-crore scheme predominantly invests in companies that run large and established businesses, have a long track record, and enjoy leadership in their respective industries.
The fund has declared a dividend every year for the last 20 years. Since inception, the fund has generated 20.45% CAGR. This means Rs 1 lakh invested at inception would have become Rs 1.03 crore by now. Over the last 10 years, the fund has delivered lower risk than its category while delivering returns that are better than average. The fund has a moderate portfolio turnover, which means it does not change its holdings much and seeks to buy-and-hold. Anand Radhakrishnan, and Roshi Jain have managed the scheme in recent times beautifully.
Radhakrishnan has been overseeing the fund since April 2007 and has stuck to quality focus and value investing. The fund is known to pick up beaten-down stocks that may be out of favour. So, it’s best that investors come to the fund with five years or more. Its current portfolio includes HDFC Bank, L&T, Bharti Airtel, Axis Bank, HCL Tech., Infosys, ICICI Bank, M&M, Dr Reddy’s and Kotak Mahindra Bank.
The SBI Magnum Equity ESG Fund is the erstwhile SBI Magnum Equity Fund, which was launched in January 1991. This was an interesting time to launch. Not many have forgotten the 1991 Indian economic crisis when the Indian foreign exchange reserves could barely finance three weeks’ worth of imports while the government came close to defaulting on its financial obligations. The crisis, however, led to the liberalisation of the Indian economy.
The Magnum Equity Fund has now become SBI Magnum ESG Fund. The Rs 1962-crore scheme aims to do active management of investments in a diversified basket of companies following Environmental, Social and Governance (ESG) criteria. It goes by a comprehensive check list across parameters from Governance, Social & Environmental aspects of the company’s management of its affairs. The fund manager overlays ‘ESG Framework’ in order to delve deeper into a company’s management practices, culture and risk profile.
Active weights of a security are determined by the ESG scores. A positive score will enable a positive active weight, and vice-versa. The 27-year old fund is being currently managed by Ruchit Mehta since May 2018. Since inception, the fund has clocked 15% CAGR. In the last 10 years, it has gained 17.53%. The ESG fund’s top holdings include RIL, HDFC Bank, Infosys, TCS, ICICI Bank, Kotak Mahindra Bank, L&T, M&M, Bajaj Finance and Axis Bank.
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The Canara Robeco Equity Tax Saver Fund was launched in March 1993. This fund was earlier called Canequity Tax. Since it is an ELSS, the Canara Robeco Equity Tax Saver offers you the twin advantage of growth potential from investing in equities, as well as tax savings under Sec 80C. The three-year lock in period aids the potential for your money to grow, as the fund has the flexibility to invest in large and medium-size companies that have strong fundamentals
The Rs 822-crore scheme has seen a spate of fund manager changes over the years. In 2008, the scheme was managed by Anand Shah. Then, over the years Yogesh Patil, Soumendra Nath Lahiri, Krishna Sanghavi, Ravi Gopalakrishnan and now Cheenu Gupta (along with Sanghavi) oversee the fund. The fund manager churn hasn’t impacted the scheme’s returns with its delivering 14.38% since inception.
In the last 10 years, the fund with its nearly 19% CAGR beat Nifty 100 TRI’s 17% CAGR. However, the fund’s 1, 3 and 5 year alpha generation capabilities are under cloud due to lacklustre performance. It appears to have heavily changed its portfolio in last few months as evidenced from turnover of 182%. This fund is close to 26 years old.
How the nine funds stack up
|Fund name||Launch Year||Returns (%) CAGR since inception||Current value of investment
of Rs 10,000 since inception
|Canara Robeco Equity Tax Saver||March 1993||14.5||3,20,605|
|Franklin India Bluechip||December 1993||20.45||10,33,489|
|Franklin India Prima||December 1993||19.67||8,80,405|
|LIC MF Multicap||April 1993||5.83||42,608|
|SBI Large & Midcap||February 1993||14.21||3,03,515|
|SBI Magnum Equity ESG||January 1991||14.2||4,03,763|
|SBI Magnum Taxgain||March 1993||15.6||4,09,375|
|UTI Equity||May 1992||11.92||1,97,082|
|UTI Mastershare||October 1986||14.45||7,58,381|
|Data as on October 31, 2018|
Franklin India Prima Fund was launched in December of 1993 as Kothari Pioneer Prima Fund. Franklin MF took over Kothari Pioneer in 2002. Over the 25 years of its existence, the midcap fund has generated quite good returns. Investors with the fund since inception have gotten close to 19.8% CAGR. Over the last 10 years, the fund has given 23.47% CAGR as against Nifty Midcap 150 TRI’s 22% CAGR.
The scheme is the third biggest among midcap category. The fund focuses on investing predominantly in mid-cap companies which tend to exhibit higher growth rates than well-established large sized companies, as per the fund-house. It aims to identify companies at an early stage of the business life cycle as they have a greater potential for growth. The fund has consistently declared a dividend every year for the last 20 years. The scheme is currently managed by Janakiraman Rengaraju, Hari Shyamsunder & Srikesh Karunakaran Nair. The fund’s current top holdings include Finolex Cables, HDFC Bank, Apollo Tyres, City Union Bank, Voltas, Kansai Nerolac, SKF India, Info Edge, GSK Consumer Health and Kotak Mahindra Bank.
LIC MF Multicap Fund is the erstwhile LIC MF Equity. It was launched in April of 1993. The Rs 255-crore fund, over the years, has failed to grab investors’ attention. It sports a paltry return of less than 6% CAGR since inception, which is pedestrian by any standards. It has underperformed Nifty 500 TRI across 1, 3, 5 and 10-year time periods. It’s a backbencher among the category it operates in. A sustained poor show may be the reason why such an old fund remains less than Rs 300 crore in asset size.
The scheme is currently managed by Yogesh Patil (managing since October 1, 2018). While the fund preaches about its steady and disciplined approach to investing, consciously avoiding crowded trades and ability to maintain contrarian positions and not allow near-term market movements to influence decisions, so far its performance has not been up to the mark given its rich LIC brand name and legacy. One can only hope the fund realises its true potential in the next 25 years.
Disclaimer: Please note that investors are requested to consult their financial, tax and other advisors before taking any investment decision.