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Investor Should Invest In Such Fund Which Can At Least Give Better Returns Than Benchmark – Investment Tips: Invest in instruments that give better returns than the benchmark, outperforming the value theme

Sankaran Naren, a well-known fund manager in the mutual fund industry, says that any investor should invest in a fund that can at least give better returns than the benchmark. If the benchmark gives an annualized return of 6 per cent, then where you are investing, the return should be at least 8 per cent. This is the job of a fund manager.

If a fund manager does not give more than the benchmark returns to its investors, then investors should look for a good manager. There are many fund schemes in the market which are giving better returns than the benchmark. As a strategy, the value theme is proving to be better at the moment. Investors need to remember that value investing will do well over a long period of time for a patient investor. The scheme invests in those sectors which have the potential to grow in the long run. Value investing abroad is an established and well-explored concept and in India too, everyone looks for a value in anything.

Values ​​theme outperforms in 18 years

Data from Value Research shows that if one would have invested Rs 10 lakh in ICICI Prudential’s Value Discovery Fund in 2004, that amount has grown to Rs 2.5 crore today. That is, a return of 19.7 percent per annum. Whereas in its benchmark Nifty 50, the same amount is currently Rs 1.3 crore. That is, it has given a return of 15.6 percent. The scheme follows value investing methods. It invests in a diversified portfolio of stocks, which are cheap at attractive valuations.

Return of Value Discovery Fund on 10 thousand monthly SIP

5 years 3 year
amount invested Rs 6 lakh Rs 3.6 lakh
price at the end of july Rs 9.61 lakh Rs 5.34 lakh
return in percentage 18.97 27.59
Nifty 50 TRI (%) 14.62% 19.51 percent

Increased attractiveness in value investing

Nimesha Shah, MD, iPro Mutual Fund says, “Over the years, we have seen an increase in the attractiveness of Indian investors in value investing. Investors are now aware. Now it is important that investors follow it diligently. Our advice is to invest for a minimum tenure of 5 years. Long term investments give compounded returns.”

Higher returns than Nifty in Midcap

If we look at the schemes of midcap funds, they have also given higher returns than their benchmark. For example, Edelweiss Midcap Fund has given a return of 4.4x in 14 years. If someone had done SIP of 10 thousand rupees every month in this fund in 2007, then this amount has now become Rs 78.16 lakh. Whereas his original investment was Rs 17.60 lakh. That is, 18.43 percent annual return has been received. During the same period, the return of Nifty Midcap 150 Index TRI has been 16.87 per cent. In this, the value of SIP investment has been Rs 68.44 lakh.

Nifty 50 TRI returns only 12.78 per cent

If someone would have done SIP of 10 thousand rupees every month in Nifty 50 TRI since 2007, then that amount has become 48.44 lakh rupees. That is, the return of only 12.78 percent has been received. While Nifty 50 TRI has given a gain of 15.38 per cent in five years, Edelweiss Midcap has given gain of over 20 per cent. Birla Sunlife Midcap Fund has given a return of 25.1 per cent in five years.

Investment is based on market capitalization

Midcap equity funds invest in medium companies based on market capitalization. In terms of market capitalization, companies between 101 and 250 are included in the midcap. Midcap stocks give investors an opportunity to invest in better growth prospects than large caps. These are volatile and less risky than small cap stocks.

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