Insights

Changes to FundsIndia’s Select Funds list

July 12, 2017 . Mutual Fund Research Desk

FundsIndia’s Select Funds is a list of consistent-performing funds that you can invest in today. Spread across categories, this list helps narrow down investment choices from the hundreds of funds that you would otherwise have to sift through. We review this list on a quarterly basis to ensure that good funds are not left out and to remove those funds where we believe the strategy may not fit the current market.

Note that funds that we removed from our list are not to be redeemed or exited unless we clearly state that. If you hold funds that we have removed, please continue to stay invested in them. Funds we take off our list are not poor. Their performance, based on metrics such as consistency, volatility, or returns have slipped compared to the category leaders. We may also remove a fund if we find another that has steadily been improving its performance and merits an inclusion, in order to keep the Select list compact. A fund that we remove can still be a good performer and continue to build long-term wealth.

Given the current stock market scenario, equity fund managers are split between a value-based approach and a growth-based one; some try to play both. This divergence reflects in performance. So remember this:

  • There can be a stark divergence in short-term fund performance within a category. That alone cannot be a reason to exit the fund. In an uncertain, jittery market, the effect of divergent management styles is more pronounced. Until trends get clearer, do not be moved into changing your funds citing near-term underperformance. As long as your fund beats the market, it is good to hold.
  • Where we believe that the fund performance is indeed not turning around, we will let you know in these quarterly reviews.

For debt funds, we have been flagging the increasing credit risk that funds across categories are taking, in order to deliver higher returns. Our call, therefore, is based on the extent to which each fund has taken credit risk and the category to which it belongs. Where we believe that such risk is unwarranted given the purpose of investment, or excessively high, we have ignored those funds. The funds in the list, therefore, will not be the highest-returning ones. But they all deliver returns higher than the category without compromising on the risk front.

As a FundsIndia investor, you would have received an email listing the changes and the reasoning for these changes. You can view the updated list by logging into your FundsIndia account, or by accessing this link after logging in: www.fundsindia.com/select-funds.

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