Best equity mutual fund managers 2020

Even the most seasoned mavens of the investing world will tell you that it is often difficult to make sense of what the market is up to. The events of the past six months are ample proof. A sharp cliff-edge drop has turned into a stunning lift-off— one which ignores all signs of a moribund economy in the wake of an unprecedented shutdown. The steep cut and equally sharp rebound in a span of months has been akin to a wild roller-coaster ride for market participants. Nobody could have predicted this trajectory.Yet, the gatekeepers at some of the country’s mass-market equity schemes have not broken a sweat. Battle-hardened and seasoned, the professional money managers have drawn on years of experience to calmly navigate people’s savings through the tempest. In this year’s ET Wealth-Morningstar Fund Manager Rankings, we put the spotlight on the captains deftly steering their ships through troubled waters. These fund managers take the prime slots for creating wealth for their investors while keeping risk at bay. Our study looks at the five-year track record of equity schemes and identifies the top achievers across three distinct categories on the basis of risk-adjusted returns. (see methodology below).These mutual fund managers are only acutely aware of the frequent disruptions in recent years—on account of demonetisation, introduction of GST, trade wars and more— and how these have reshaped business environment. So while the extent of the pandemic-led disruption has not been seen ever before, many already equipped their portfolios to handle large-scale disturbances. Read on to know how the professionals have managed to put a smile on investors’ faces despite some trying times.The top wealth creators of 2020Large capShreyash Devalkar, Axis Mutual FundNeelesh Surana & Gaurav Mishra, Mirae Asset Global InvestmentsNeelotpal Sahai, HSBC Mutual FundHarish Krishnan, Kotak Mutual FundSwati Kulkarni, UTI Mutual FundAlso read about each of these fund managers, their individual readings of the equity market and how each one has aligned his or her fund. They also talk about their view on the promising investment theme for the coming 3 -5 years.Multi capRajeev Thakkar, Parag Parikh Mutual FundNeelesh Surana, Mirae Asset Global Investments Atul Bhole, DSP, Mutual FundJinesh Gopani, Axis Mutual FundHarsha Upadhyaya, Kotak Mutual FundAlso read about each of these fund managers, their individual readings of the equity market and how each one has aligned his or her fund. They also talk about their view on the promising investment theme for the coming 3 -5 years.Small and mid capShreyash Devalkar, Axis Mutual FundR. Srinivasan, SBI Mutual FundVinit Sambre, DSP Mutual FundPankaj Tibrewal, Kotak Mutual FundAnupam Tiwari, Axis Mutual FundAlso read about each of these fund managers, their individual readings of the equity market and how each one has aligned his or her fund. They also talk about their view on the promising investment theme for the coming 3 -5 years.How we ranked the managersUniverse of fundsOur study is restricted to openended, actively managed, diversified equity funds segregated into three distinct categories—large cap, multi cap (includes ELSS and large & mid cap) and mid and small cap—as per Morningstar India classification. Schemes with a corpus of at least Rs 200 crore were considered. No index, thematic, sector or balanced funds were considered for evaluation.Time periodThe study is based on the performance of funds managed between 1 July 2015 and 30 June 2020.Experience and 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 a 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 Rs 500 crore, across all qualifying funds. Only primary fund manager is considered as a manager for the fund in this analysis.Risk and returnsAfter 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 abovementioned 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.Alpha improves in all barring large-capsActively managed funds have faced a lot of flak for underperformance relative to their benchmark index in recent years. We did a comparative analysis across fund categories from a year ago to check how funds have fared. Large-cap funds continue to disappoint. Only three large-cap funds managed to outperform their index for the five year period ending June 2020—repeating the performance of the previous two years. This may suggest that the underperformance in large-cap funds is not transient as previously believed. Multi-cap funds have put in a better showing compared to last year. Twelve out of 27 multi-cap funds outperformed their indices over the July 2015 to June 2020 period—translating into 44% outperforming funds compared to merely 21% a year ago. Outperformance has improved in most categories 77945439Mid-cap funds have also put in a much improved showing. This time, nine out of the 19 mid-cap funds have outperformed, compared to only six the year before. To put this into context, no mid-cap fund had managed to beat its index for the five year period ended June 2018. Within the small-cap category, the number of outperforming funds has also increased from eight out of 10 to 11 (out of 13) between the two periods.

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