Edelweiss Mutual Fund CEO Radhika Gupta recently said that chasing the number 1 mutual fund scheme for investment is pointless. Explaining her investment strategy, Gupta said consistency matters much more in any market conditions rather than chasing the best funds.
Taking to social media platform X, formerly Twitter, Gupta wrote: “It is pointless trying to invest in the #1 fund because #1 changes very fast. Sorting by top returns isn’t an investment strategy. Consistency matters much more.”
She added: “Many research reports have shown data that proves this first line. Again and again. Thanks @FundsIndia for doing so too. Yet websites continue to rank by best discrete returns (not rolling returns which measure consistency). Every AMC knows if their scheme ranks 1, they will get a rush of money, which will come on the back of unrealistic expectations. Welcome to the perils of creating the “Sorting Investor”.”
Gupta’s comments came in response to a post shared by CA Abhishek Murarka, a wealth manager at Angel One Wealth, where he mentioned a report that published the top ranking mutual funds. Muraka discussed how market volatility changes the mutual fund rankings from time to time.
The report authored by Arun Kumar from FundsIndia focused on the significant volatility observed in mutual fund rankings. It mentioned that the mutual fund which held the top position from 2018 to 2020 has now plummeted to the 190th position. Likewise, the second-ranked fund from the same period has also experienced a decline, now sitting at the 192nd position. Interestingly, the mutual fund that claimed the top spot in 2021 was previously positioned at 160th place in the previous cycle.
Last week, Gupta shared her tips on investment in the variety of index fund options available in the market.
On a social media post, Radhika advised picking up the “Large and Midcap 250 Index” as the sole fund to consider for those looking to simplify their investments.
She said the Large and Midcap 250 Index Fund was her choice for investors seeking a broad coverage of the Indian economy. “Covers the broad Indian economy with reasonable allocation to large and midcaps,” she wrote, explaining the fund’s balanced exposure to both large and mid-sized companies.
The Nifty LargeMidcap 250 is a stock market index that tracks the performance of 100 large-cap and 150 mid-cap companies listed on the National Stock Exchange (NSE). Large-cap companies are represented by the Nifty 100 index, while mid-cap companies are represented by the Nifty Midcap 150 index within this portfolio.
The index maintains an equal aggregate weightage of 50% for both large-cap and mid-cap stocks, which is adjusted quarterly. Additionally, the index undergoes a reconstitution process semi-annually in alignment with the Nifty 100 and Nifty Midcap 150 indices.