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As stated earlier, these schemes have the freedom to invest anywhere as per the fund manager’s opinion. For example, he or she might invest more in large-cap stocks. Or in a bull market he or she might invest more in mid-cap or small-cap stocks. Investors need to be extremely careful about this aspect. Investors should ensure that they choose a scheme that is in line with their risk tolerance. For example, some flexible cap schemes may be more conservative than others. It is up to you to identify the one that suits your temperament.
If you are planning to invest in flexible capitalization fundsBelow are our recommendations. We will closely monitor the performance of these schemes and report back to you on a monthly basis. Aditya Birla’s Sun Life Flexible Equity Fund has been in the third quartile for 17 months. UTI Flexible Capitalization Fund has been in the fourth quartile for 16 months. Canara Robeco Flexi Cap Fund has been in the third quartile for 15 months. PGIM India Flexi Cap Fund has been in the fourth quartile for seven months.
Read also | 14 equity investment funds offer single-digit returns in three monthsThe best flexible capitalization schemes to invest in September 2024
- Parag Parikh Flexible Cap Fund
- UTI Flexible Capitalization Fund
- PGIM India Flexi Cap Fund
- Aditya Birla’s Sun Life Flexible Equity Fund
- SBI Flexible Cap Fund
- Canara Robeco Flexi Cap Fund
Here is our methodology:
ETMutualFunds.com has used the following parameters to select the equity mutual fund schemes.
1. Moving average returns: Filmed daily for the past three years.
2. Consistency over the last three years: The Hurst exponent, H, is used to calculate the consistency of a fund. The exponent H is a measure of the randomness of a fund’s NAV series. Funds with a high H tend to exhibit low volatility compared to funds. The exponent H is a measure of the randomness of a fund’s NAV series. Funds with a high H tend to exhibit low volatility compared to funds with a low H.
i) When H = 0.5, the return series is said to be a geometric Brownian time series. This type of time series is difficult to forecast.
ii) When H is less than 0.5, the series is said to be mean-reverted.
iii) When H is greater than 0.5, the series is said to be persistent. The higher the value of H, the stronger the trend of the series.
3. Downside risk: For this measure we have only considered the negative returns contributed by the mutual fund.
X = Returns below zero
Y = Sum of all squares of X
Z = Y/number of days needed to calculate the relationship
Downside risk = square root of Z
4. Superior performance: It is measured by Jensen’s Alpha for the past three years. Jensen’s Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). A higher Alpha indicates that the portfolio’s performance has outperformed the returns predicted by the market.
Average returns generated by the MF Plan =
[RiskFreeRate+BetaoftheMFScheme*{(Averagereturnoftheindex-RiskFreeRate}[Tasalibrederiesgo+BetadelesquemaMF*{(RendimientopromediodelĂndice-Tasalibrederiesgo}[RiskFreeRate+BetaoftheMFScheme*{(Averagereturnoftheindex-RiskFreeRate}
5. Asset size: For equity funds, the asset size limit is Rs 50 crore.
(Disclaimer: Past performance is no guarantee of future performance.)
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