Mutual fund recommendations: 14.6% category average returns in a year; pick highly diversified equity funds
Equity funds with the most diversified portfolios
How markets are placed
The benchmark BSE Sensex lost over 1,637 points in October 2023, which was the highest monthly absolute loss in 2023. Though the markets have made some recovery in November due to falling crude oil prices and softening of US bond yields, they are expected to stay volatile over the next few months.
A Prabhudas Lilladher Diwali Picks report expects the next few months to be volatile due to the El Nino impact on inflation, global volatility in commodities and interest rates. “The strong resilience of the US economy, despite high inflation, is likely to keep policy rates high, which can impact FPI inflow in the near term,” it states.
Equity fund concentration
ET Wealth tried to study the concentration of equity diversified funds, in terms of their respective average concentration of AUM in the top five stocks and sectors, over the last year.
The latest data is for September 2023. The funds holding at least 40 stocks Equity funds with a wider spread across stocks and sectors could prove effective amid rising volatility. Pick highly diversified equity funds in their latest monthly portfolios were included, and 146 funds were selected.
A wide range was observed in the 12-month average concentration of AUM in the top five stocks and top five sectors. For stocks, the range of concentration was between 10% and 40%. For sectors, the range varied between 37% and 68%.
To identify funds with better diversification, the average concentration (in both stocks and sectors) of each fund was compared with the category average. There are 60 funds with respective 12-month average concentration lower than the category averages. Such funds deployed a lower proportion
. Read more on economictimes.indiatimes.com
