Wow!
Every forecast takes a number from today and multiplies it by a story about tomorrow.
Author: Naveen
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Forecasting
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Five years with Franklin India Prima Fund
Five years ago I decided to start investing in mid cap mutual fund. There were quite a few of them available for me to choose. Thus, I employed a complex pseudo-random selection algorithm, predominantly utilized by juveniles who, in a display of basic decision-making, chant a seemingly nonsensical yet rhythmically precise incantation. This chant, rich in assonance and consonance, serves as a pretext for arbitrarily designating a mutual fund as the best one, and is often accompanied by the unspoken implication that the outcome is somehow imbued with a semblance of extensive research, despite the process being fundamentally whimsical and capricious.
My algorithm pointed to Franklin India Prima Fund which was one of the oldest with the fund starting way back in 1993. Initially I used to invest only lumpsum amount as when I had surplus. But starting Aug-2021 I decided to start an SIP in the fund. During the market crash of COVID-19, I continuously invested in the fund accumulating units at a lower price.
While the XIRR of 32% appears impressive, a comparison with the Nifty Midcap 50 returns reveals that the fund has consistently underperformed since I began investing in it.
Investment through the years
Returns
Profit
XIRR
How does Franklin India Prima Fund stack up against its competitors?
In the above sections I have demonstrated my investment pattern in the Franklin India Prima Fund and compared its performance against the Nifty Midcap 50 over a period of 5 years. But how does it fare against its competitors? Let’s find out.
I analysed CRISIL’s Mutual Fund Ranking and compared my returns to each of the mid-cap mutual funds. Here’s how I conducted my calculations:
- I included only those funds that were established before my first investment in the Franklin India Prima Fund. Therefore, you won’t find fund ITI Mid Cap Fund in the list, as it was launched after my first investment in the Franklin India Prima Fund.
- For the competitor funds, I used the same investment amount and dates as those for my investment in Franklin India Prima Fund. This approach allowed me to answer the question, “What if I had invested in ABC Midcap Fund?”
The table below illustrates the profit percentages I would have earned from the Franklin India Prima Fund and its competitors. It’s clear that I would have been significantly better off investing in the Motilal Oswal Midcap Fund. However, this doesn’t capture the journey each fund took to reach their current positions.
Fund Profit Percent (as of 01-Aug-2024) CRISIL MF Ranking (as of 30-Jun-2024) Aditya Birla Sun Life Midcap Fund 89.9% 4 Axis Midcap Fund 82.8% 3 Baroda BNP Paribas Mid Cap Fund 99.1% 3 DSP Midcap Fund 79.1% 5 Edelweiss Mid Cap Fund 116.7% 2 Franklin India Prima Fund 93.4% 3 HDFC Mid-Cap Opportunities Fund 111.7% 2 HSBC Mid Cap Fund 98.8% 3 ICICI Prudential MidCap Fund 100.5% 2 Invesco India Mid Cap Fund 101.4% 3 Kotak Emerging Equity Fund 103.7% 3 LIC MF Midcap Fund 94.4% 2 Mahindra Manulife Mid Cap Fund 118.3% 1 Motilal Oswal Midcap Fund 136.9% 1 Nippon India Growth Fund 113.5% 2 PGIM India Midcap Opportunities Fund 88.8% 5 SBI Magnum Midcap Fund 95.8% 3 Sundaram Mid Cap 99.9% 3 Tata Mid Cap Growth Fund 100.5% 3 UTI Mid Cap Fund 91.5% 4 The below line chart demonstrates the performance of various mid cap mutual funds over the past five years. Notably, the PGIM India Midcap Opportunities Fund outperformed all other mid cap funds—that too by a significant margin—until April 2023. However, the fund’s performance has declined since then.
Another effective way to analyze mid cap mutual fund performance is through a bar chart race. The below visualization highlights the dominance of the PGIM India Midcap Opportunities Fund until April 2023. Since then, several other funds have overtaken it. As for the Franklin India Prima Fund, it has consistently ranked among the bottom five!
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Seven years as shareholder of Pidilite Industries
Pidilite remains a key investment in my portfolio. However, after nearly six years of outperforming the index, my luck ran out in October 2023. Both the Nifty Next 50 and Nifty 500 surpassed my returns from Pidilite. Although Pidilite’s XIRR of 18.4% is impressive, it pales in comparison to the Nifty Next 50’s 30.1% XIRR. Additionally, the dividends yield at cost remain meager at less than one percent.
Investment through the years
Returns
Profit
XIRR
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Seven years as shareholder of Marico
In the seventh year of my investment journey with Marico, beating index continues to be an elusive dream. And with the recent run up in the Nifty Next 50 index since last one year, I think it might be even more elusive now.
While Marico’s XIRR at 17% looks good, the XIRR of 22.9% and 28% of Nifty 500 and Nifty Next 50 index respectively looks better. And with LTCG revised to 12.5%, any additional return will mean more post-tax return.
Investment through the years
Returns
Profit Percent
XIRR
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Nine years as shareholder of HDFC Bank
It has been nine years since I started investing in HDFC Bank, and I still can’t call myself a long-term investor. Why? Because in the fiscal year 2023-24, I invested more than I had in the previous eight fiscal years. Why such a significant increase? Well, my earnings were higher, and HDFC Bank was going through a slump. I decided to take a risk by investing during that slump.
Consider this: My investment during the first five fiscal years amounts to less than 10% of my entire investment in HDFC Bank. If—and that’s a big if—my earnings increase in the future, this percentage will decrease further.
After outperforming Nifty 50 and Nifty 500 during the initial years, my returns have taken a nosedive primarily due to the merger of HDFC and HDFC Bank. The merger seems to have added a lot of concerns for HDFC Bank. Concerns which I simply can’t wrap my head around because they are too technical for me.
Investment through the years
Returns
Profit Percent
XIRR
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Seven years as shareholder of Divi’s Laboratories
My investment in Divi’s Laboratories has been my biggest missed opportunity. Six years back—still new to equity investing—I was looking for Pharma stocks to invest. During that research—not sure if I should call it research, but let’s go with it—I came across Divi’s Laboratories. I made a small investment in it and forgot about it. In the next 3.5 years the stock went up 5 times! And I did not make a single new investment during that time! Every time I thought “it can’t go up any further than that”. Boy was I wrong. So, so wrong!
Since FY 2020-21, I have slowly started increasing my investments in Divi’s Laboratories. But the stock—on the other hand—has been volatile. During April’23 the stock went on a downward spiral and my XIRR went to -20%. What happened at that time? Finshots has an explanation for that.
Over the last fiscal year Divi’s Laboratories has slowly recovered and is now beating Nifty 50 by a razor thin margin. Yay! Hopefully this recovery continues.
Investment through the years
Returns
Profit Percent
XIRR
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Five years with DSP ELSS Tax Saver Fund
My investment in DSP Tax Saver started as a tool for saving taxes. After government announced new income tax regime, I knew that the tax benefits of Section 80C would soon go away. I was about to pause my investments in DSP Tax Saver but looking at its performance I did not. Looking back, I’m happy with that I decided to continue.
For me, the fund has been outperforming its benchmark—Nifty 500—since the last 3 years; something which my other funds have struggled to do consistently. And due to its continued outperformance I have been increasing my SIPs every year in this fund.
Investment through the years
Returns
Profit
XIRR
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Five years as shareholder of Dabur
Over the last five years I have steadily increased by investment in Dabur. The stock—on the other hand—has gone sideways, zig-zagging between positive and negative sides of zero; never truly rising up and—thankfully—never crashing drastically.
There is really nothing to write about here apart from my anxiety about holding a stock for long term.
Investment through the years
Returns
Profit
XIRR
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Five years with Aditya Birla Sun Life MNC Fund
I started investing in Aditya Birla Sun Life MNC fund after consulting my mutual fund advisor in March 2019. The initial years of investment were quite impressive, yielding good returns and boosting my confidence in this particular fund. This positive performance prompted me to initiate another SIP via the direct route, hoping to maximize my gains.
However, things took a turn for the worse starting in October 2021. The fund began to underperform consistently. I monitored the fund’s performance closely, hoping for a recovery, but the disappointing trend persisted. This underperformance led me to rethink my investment strategy.
In April 2023, I decided to pause my SIP in the Aditya Birla Sun Life MNC fund. Consequently, I shifted my money to other funds that were performing reasonably well, such as the DSP Tax Saver Fund. This fund had shown consistent performance over a period, which made it a more attractive option for my investment portfolio.
Since last one year the fund performance has improved significantly. Get this, Apr 2023 my XIRR was 0% and Apr 2024 my XIRR is 14%.
With this improvement in performance, the fund has closed the gap against its benchmark, the Nifty MNC index, which shows that the strategies implemented might be aligning well with market trends. However, while the gap has been reduced, the fund still lags behind the Nifty MNC index.
Investment through the years
Returns
Profit
XIRR
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Five years with Axis Bluechip Fund
My journey with Axis Bluechip Fund completed five years and it was the year where I decided to call it a pause on the investment. Its continued underperformance against its benchmark S&P BSE 100 was the primary reason to take a pause. And to some extent the Axis front running case was also responsible for my decision.
Is this a regular or a direct plan? It’s both. I started with a regular plan with help of MFD and then from Sep-2022 I started investing in the direct plan as well. The charts below are for both of them combined. Regular plan holds 76% of my investment while the direct plan holds the remaining 24%.
Did I beat the benchmark S&P BSE 100? No. Since last three years, my investment has underperformed the S&P BSE 100.
Am I going to continue investing in it? No, I am pausing further investments.
Did I make any lumpsum purchases in-between? No
Investment through the years
Returns
Profit Percent
XIRR
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