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Friday, March 18, 2016

Is the Fund Size Important for Selecting a Mutual Fund, Find out...!

Is the Fund Size Important for Selecting a Mutual Fund, Find out...!
By Mr.  B. Padmanaban, Fortuneplanners.com

When it comes to fund selection, the fund size plays a very important role; especially bigger fund is the real concern than the smaller one.

Five to 7 years before the fund who hits Rs. 5,000 Crore, whatever it has generated before will not be in a position to do the same after the size got bigger.

I have asked some of the fund manager personally and they told that it will not be a problem. If you compare with US fund size the entire MF size itself is the single fund in US, so on and so forth. But, whether the fund size will be a threat or not the history suggests that bigger fund size is the real concern. Below table captures the AUM growth of the funds.
 B. Padmanaban, Fortuneplanners.com

I just find out how the fund performed after hitting this Rs. 5000 Crore mark.
In 2009 year end SBI Magnum tax gain hits Rs. 5,264 Crore and in the last 6 years plus it has generated 9.41% whereas the best fund has generated 19.11% and worst fund has generated 7.58%. If you convert this into value Rs. 1 Lakh investment becomes Rs.  1.71 Lakh in SBI, whereas the best fund has given Rs. 2.85 Lakhs and worst Rs. 1.55 Lakhs.

Similarly, Reliance Growth Fund hits Rs. 6,631 Crore at the same period has delivered 8.78%, whereas the best Midcap fund has given 19.09% and this is the worst fund in that category.
Fund Name
Year End
Closing AUM (Cr)
Fund Return
Maximum
Minimum

SBI Magnum Tax Gain
2009
5264
9.41%
19.11%
7.58%


SBI Magnum Tax Gain
2010
6060
8.72%
17.08%
5.74%

SBI Magnum Tax Gain
2015
4719




Reliance Growth
2009
6631
8.78%
19.09%
8.78%

Reliance Growth
2010
8079
7.20%
20.31%
7.20%

Reliance Growth
2015
5431




HDFC Equity
2012
10555
8.95%
20.71%
7.15%

HDFC Equity
2015
17204




HDFC Top 200
2011
10537
13.54%
18.89%
11.85%

HDFC Top 200
2015
12673




Reliance Eq. Opp
2014
9771
-10.61%
8.02%
-10.61%

Reliance Eq. Opp
2015
11427




IPru Value Discovery
2014
7367
-3.74%
1.95%
-5.69%
IPru Value Discovery
2015
10664





As the year goes by and Large cap have a similar problem, when it touches Rs. 10,000 Crore.
HDFC Equity it touches Rs. 10,555 Crore on 2012 end has generated 8.95% whereas the best fund in the category generated 20.71% and worst fund is 7.15%.
Similarly HDFC Top 200 touches Rs. 10,537 Crore on 2011 end has generated 13.58% whereas best has generated 18.89% and worst is 11.85%.
Similarly, Reliance Equity opportunities touched Rs. 9,771 on 2014 end has generated -10.61% whereas best fund has generated 8.02% and this is the worst fund as well as in the category.
ICICI  Pru. Value Discovery has crossed Rs. 10,664 in the last one year it has not done well compared to the peer group.
This will be endless debate, and many will not agree, but the fact of the matter is when there is better fund which is not chased by many investor/advisor and also consistently doing well why someone needs to take a risk on this funds.
This is just for your understanding. We have to suggest good funds to our clients not the branded one or client wants...

B. Padmanaban, CFPCM
Certified Financial Planner
9884349173

Is the Fund Size Important for Selecting a Mutual Fund, Find out...! Reviewed by S. Chitra on March 18, 2016 Rating: 5 Is the Fund Size Important for Selecting a Mutual Fund, Find out...! By Mr.    B. Padmanaban , Fortuneplanners.com When it comes to ...

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