By increasing exposure to stocks from the Financial sector in the first half of the year and then focusing on Energy, Telecom and Infrastructure in the latter half of the year.
These are the sectors that the top-performing equity mutual funds of 2017 put their money in.
But instead of analysing whether the top equity funds were right or wrong in their choice of sectors from a fundamental point-of-view, we thought it would be more interesting to see whether it was possible to beat the markets in 2017 by acting on this publicly available information.
We identified one sector/theme where the top-performing equity funds increased their exposure in a month and then checked whether the same sector/theme outperformed the market in the subsequent month or not. For example, the first set of bars in the following chart shows that the top funds increased exposure to banking stocks in December 2016 and in the subsequent month, that is in January 2017, the smallcase Banking Tracker outperformed Nifty. Our Banking Tracker generated 9.97% returns as against the 6.14% return generated by Nifty.
We used different sector trackers or corresponding smallcases to calculate returns generated by the sector/theme. As you can see, 9 out of 12 times, the sectors/themes picked by the top equity funds were able to beat Nifty in the subsequent month.
If you want to follow this investment strategy of investing in sectors and themes that the top equity funds are increasing exposure to, then we have an easy solution for you–the MF Stars smallcase.
Every month, the MF Stars smallcase selects stocks where the top-performing equity funds have increased their exposure. So, if you want to invest along with the best mutual funds while ensuring you save 1.5% of your invested amount every year that is deducted as expense ratio, the MF Stars smallcase can help you. You can invest, monitor and apply the rebalancing changes in just 2 clicks with the smallcase!
The numbers also speak in favour of the smallcase.
|Avg Equity MF||7.27%||33.71%||39.94%|
Returns as on 1 January 2018
Fund category returns source: Value Research
As you can see, MF Stars is the most cost-effective way to benefit from the expertise of more than one fund manager. Happy investing!