Homing In On The Best

The Businessworld ranking of the best mutual funds is based on the absolute returns over a year ending 31 December 2012. The criterion was applied across 11 categories — five equity (large cap, large and mid cap, mid and small cap, multi-cap and tax planning schemes); two hybrid (equity-oriented and debt-oriented conservative schemes); and four debt (income, short-term, ultra short-term and liquid schemes). A 12th category, the long-term leader, was ranked based on five-year returns of systematic investment plans (SIP).

The categorisation based on average three-year allocation to large-cap stocks in equity diversified funds is: large cap (80 per cent or more); large and mid cap (60-80 per cent); multi-cap (40-60 per cent); and mid and small cap (less than 40 per cent). All Section 80C-compliant funds were included in the equity tax planning category. In hybrid funds, those with average equity allocation of 60 per cent and above in the past three years were taken as equity-oriented; and up to 25 per cent as debt-oriented conservative. For debt, income funds have been classified as per their stated objectives, and liquid funds on the dividend distribution tax. Ultra short-term funds have maturity of less than a year, and short-term funds, 1-4.5 years.

Only standard plan-growth options were considered. The monthly investment date for SIPs were taken as the 1st of every month. For the ratios, weekly returns were considered for a year and the risk-free rate was taken as 7.5 per cent. The funds have been benchmarked against their respective indices. The best asset management companies were adjudged based on the number of their schemes among the top 10 and top 5. Schemes suspended for further subscription with effect from 1 October 2012 and direct plans were not considered.

All data was provided by Accord Fintech’s Ace MF database.

(This story was published in Businessworld Issue Dated 11-02-2013)