Top 5 Large cap Mutual Funds with consistent returns
The idea of this post is to select and rank large cap funds based on consistent return over long period of time. Selecting funds pose a real challenge as the number of funds in each category keeps on increasing. Also over different period of time there is huge variation in returns for Mutual Funds.
For example a fund with great 1 year or 3 year returns may not perform good over a 5 year or 10 year period . Therefore I laid down some criteria to pick the fund taking into consideration returns for all possible periods from 1 year to 10 year, with higher weight for long term returns. This way we can filter signal from the noise and also overcome our inherent biases.
The criteria and methodology is listed below.
Hence formula for weighed average returns
Weighed Average returns = (40*(10 year return) + 30*(5 year return) + 20*(3 year return) + 10*(1 year return) )/ 100
The results are interesting and we can see value research rating also agrees with us to some extent.
I have selected top 5 funds on the basis of weighed average returns and the following graph tells us the whole story. For comparison sake I have included the S&P BSE 200 index .
Stay tuned for Top 5 Multi cap funds in next post.
For example a fund with great 1 year or 3 year returns may not perform good over a 5 year or 10 year period . Therefore I laid down some criteria to pick the fund taking into consideration returns for all possible periods from 1 year to 10 year, with higher weight for long term returns. This way we can filter signal from the noise and also overcome our inherent biases.
The criteria and methodology is listed below.
- The fund should have at least 10 years of history.
- The data from value research is used which lists returns over 1-year, 3-year, 5-year and 10-year periods.
- The returns are as on date 24-Feb-2017.
- The weighed average return is calculated by assigning following weights based on duration of returns. Annual compounded returns are taken into consideration.
- For 10 year returns weight is 40 out of 100
- For 5 year returns weight is 30 out of 100
- For 3 year returns weight is 20 out of 100
- For 1 year returns weight is 10 out of 100
Hence formula for weighed average returns
Weighed Average returns = (40*(10 year return) + 30*(5 year return) + 20*(3 year return) + 10*(1 year return) )/ 100
The results are interesting and we can see value research rating also agrees with us to some extent.
I have selected top 5 funds on the basis of weighed average returns and the following graph tells us the whole story. For comparison sake I have included the S&P BSE 200 index .
- Quantum Long Term Equity Fund
- Birla Sun Life Frontline Equity Fund
- HDFC Top 200 Fund
- Birla Sun Life Top 100 Fund
- SBI Bluechip Fund
Stay tuned for Top 5 Multi cap funds in next post.
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