The Indian stock market has been volatile. Many new investors are worried. But, stopping or withdrawing your investments are not a solution. Markets may go down in the short-term, but your financial goals will always remain. Those goals need to be attained, irrespective of whether your portfolio is down 30% today.
Can your son’s higher education wait because your investments have faced short-term volatility? Will you stop your daughter’s marriage because your small-cap funds have lost money? Will you postpone your retirement to 70? As you can guess, the answers to these rhetorical questions are simple. Markets can be volatile, but your investments can always be in funds that have an extra shield.
RupeeIQ brings to you three time-tested equity funds that can be safe-haven but can still grow your wealth. Read on.
To begin our study, we looked at funds with low beta. For those who don’t know, beta is a number less than 1 or more than 1. It measures the risk relative to the market. So, a low beta fund helps an investor take more risk relative to the market. Merely selecting a fund with less than 1 beta is not easy. There are more than 145 funds with less than 1 beta.
So, we narrowed down our study to equity funds with a beta less than 0.8. Naturally, these are funds that are among the top tier in terms of low beta. So, the list of 145 was shortened to 20 funds. Next, we looked at funds with at least five years of track record. Next, using your proprietary filters, risk metric analysis and the fund’s ability to withstand downturns, we came to three funds. This small list of funds must be considered by all investors who are averse to risk and high volatility.
|Fund name||1 year||3 year||5 year||Since inception||Turnover %|
|Parag Parikh Long Term Equity||4.05||12.46||17.81||16.97||8|
|ICICI Prudential Value Discovery||2.23||738||20.68||20.57||107|
|Kotak India EQ Contra||3.59||11.32||15.01||12.6||44|
1. Parag Parikh Long Term Equity Fund – This is the only equity fund of PPFAS Mutual Fund. Managed by Rajeev Thakkar, this scheme is a go-anywhere-buy-anything fund. While it is small in size, don’t underestimate it. When markets do bad, the fund protects you. But when markets perform, the fund can still beat the market. In last one year, the Nifty 500 Total Returns Index has been flat, but the fund has generated 4% positive return. Its category peers on an average have dropped by 3.5%. The fund maintains its good record over three and five year periods. Parag Parikh Long Term Equity Fund is a serious contender for the number one spot in the multi-cap fund category.
2. ICICI Prudential Value Discovery Fund – With a below average risk grade, this mammoth Rs 16,500 crore fund is a gentle giant. With an over 14-year record and the fund-house deputy CIO Mrinal Singh as the fund manager, the value-oriented scheme is part of Indian market folklore. The fund boasts of low beta and low standard deviation. We are particularly impressed with its lower standard deviation, which is the lowest among all value-oriented funds. The lower the standard deviation, the lower the volatility. While it spent a quiet couple of years in 2015 and 2016, the fund does well during downturns. It is among the top three funds in the category consistently in YTD, six month and three month periods, when markets have cracked.
3. Kotak India EQ Contra Fund – Known as the erstwhile Kotak Classic Equity Fund, this scheme is 13 years old. It is extremely consistent and is among the top 5 funds in its category for different short-term and long-term periods. Practicing the value and hold strategy, Deepak Gupta uses contra approach to run the fund as per its mandate. Apart from risk metrics, the fund’s portfolio positioning is very interesting. For instance, while the entire fund world is gung-ho on financial services, the fund is hugely under-weight on the space. The fund holds some cash too, giving it both leeway to invest quickly as well as the ability to shield from market drops.
Investors can also look at Motilal Oswal Focused 25 Fund and Tata Equity PE Fund as backup options.
Disclaimer: Please note that investors are requested to consult their financial, tax and other advisors before taking any investment decision.