Canara Rob Bluechip
Kotak Mid Cap
Nippon Small Cap
What’s common among these top performers?
They don’t always beat markets during rallies.
But they are great at defending losses.
This is true for all champion funds.
A🧵on what helps TOP funds deliver chart-beating returns.
Kotak Mid Cap
Nippon Small Cap
What’s common among these top performers?
They don’t always beat markets during rallies.
But they are great at defending losses.
This is true for all champion funds.
A🧵on what helps TOP funds deliver chart-beating returns.
Let’s start with the list of our top funds.
We found them by looking for consistent top performers (based on rolling returns) across the Large, Mid, and Small Cap categories.
From each category, we selected the top 3 funds.
We found them by looking for consistent top performers (based on rolling returns) across the Large, Mid, and Small Cap categories.
From each category, we selected the top 3 funds.
Next, we examined how funds did each month over 10 years till Dec 2023.
Then, we created 2 key metrics:
Upside ratio: % of months a fund beat its benchmark when it was positive.
Downside ratio: % of months a fund beat its benchmark when it was negative.
Results surprised us.
Then, we created 2 key metrics:
Upside ratio: % of months a fund beat its benchmark when it was positive.
Downside ratio: % of months a fund beat its benchmark when it was negative.
Results surprised us.
Top performers in each category did better during tough times than good times.
This is common across all the 3 categories.
This is common across all the 3 categories.
If you look at funds across categories, the upside capture ratio broadly ranges between 35-50%.
But still, these funds managed to be among the top performers consistently.
Why?
Because they protected their losses better during turbulent times.
But still, these funds managed to be among the top performers consistently.
Why?
Because they protected their losses better during turbulent times.
We also extended our analysis to bottom performers in these 3 categories.
The idea was to check if these underperformers struggle because they aren’t great at limiting their losses.
Here’s what we found 👇
The idea was to check if these underperformers struggle because they aren’t great at limiting their losses.
Here’s what we found 👇
Unlike the top funds, the bottom performers couldn’t hold ground during market crashes.
Take, for example, the Franklin India Prima Fund.
It has an outstanding upside ratio of 93%.
Yet, it is among the bottom 3 because its downside ratio is only 5%.
Take, for example, the Franklin India Prima Fund.
It has an outstanding upside ratio of 93%.
Yet, it is among the bottom 3 because its downside ratio is only 5%.
Takeaway?
Funds that do well only during the upside may not make it to the top.
For funds to be among top performers, they must do well during tough times.
That’s the secret of their excellence.
Funds that do well only during the upside may not make it to the top.
For funds to be among top performers, they must do well during tough times.
That’s the secret of their excellence.
An important disclaimer⚠️
This is by no means a recommendation list.
While picking a fund, you should look beyond returns.
So, take this study as a starting point for your own research.
Do your due diligence before you invest in any scheme.
This is by no means a recommendation list.
While picking a fund, you should look beyond returns.
So, take this study as a starting point for your own research.
Do your due diligence before you invest in any scheme.
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