75% of PMS fund managers failed to beat Nifty in Dec; even biggies falter

75% of PMS fund managers failed to beat Nifty in Dec; even biggies falter

NEW DELHI: Majority of the fund managers, who manage money for the rich, failed to beat Nifty returns in December, even as the Indian equity benchmarks continued to hit fresh record highs through the month, propelled by foreign fund flows.

Among the underperformers were schemes run by the fund houses of Shankar Sharma (First Global), Sameer Arora (Helios), Bharat Shah (ASK), 2POINT2 Capital, Motilal Oswal, IIFL, Emkay and Axis, among many others, data from PMS Bazaar showed.

Out of 130-odd largecap and multicap schemes analysed, nearly 100 gave lower returns than that of Nifty. Midcap-focused funds were relatively better off, as only 10 out of 19 schemes underperformed the relevant benchmark, while smallcap-focussed schemes fared worse, with 10 out of 13 lagging their benchmark.

In December, all segments of the market saw buying and the indices rose in tandem. Nifty rose 7.8 per cent for the month, Nifty Midcap 5.70 per cent, BSE500 Index 7.7 per cent and BSE Smallcap Index 7.20 per cent.

Among the notable outperformers were Negen Capital’s Small Cap Emerging Strategy, which delivered the most at 12.83 per cent in December. It was followed by Basant Maheshwari Wealth Advisers’ Rs 254 crore equity fund that gained 11.51 per cent. Fund composition data was not readily available for both the schemes.

Credent Asset’s Growth Portfolio advanced 10.94 per cent. It was heavy on financial services and IT and held stocks like PFC, HCL Technologies and Mphasis. It is also sitting on 34 per cent cash, data from the PMS-AIF World showed.

After stocks staged a solid runup, many analysts have been advising investors to book profit and sit on cash to be deployed when the market corrects.

Among other outperformers were schemes run by Stallion Asset’s Core Fund, Concept Investwell’s Legend, TCG Advisory’s Multicap Fund, Sageone’ Core, Asit C Mehta’s Ace Multicap, Ambit’s Coffee Can and Marcellus’ Consistent Compounders, which delivering 9-11 per cent.

Consistent Compounders, run by Saurabh Mukherjea, is heavily invested in proven names from the financial services, home building materials and pharma & healthcare sectors, and has Asian Paints, HDFC Bank and Bajaj Finance among its key holdings.

Saurabh Mukherjea, who runs this fund, said it makes sense to invest in quality names only if you want to play the economic recovery card right and avoid little-known names that have bad balance sheets.

“It obviously makes sense to invest in companies that benefit from the early stages of an economic recovery. People should be careful about investing in quality — by all means play the high quality financials, play good auto companies to benefit from the recovery, but do not get suckered into low quality smallcaps, do not get suckered into broken balance sheet financials or broken balance sheet companies from the power, infrastructure, real estate sectors,” he said.

However, two other schemes run by Marcellus — Kings of Capital focused on the financial sector, and Little Champs focused on smallcaps – underperformed the benchmarks by good margins.

All benchmark indices have started January on a good note. The midcap and lagecap indices are at all-time highs. Smallcaps are also rising in tandem. Some analysts believe this trend may continue throughout the year.

“We expect the broadbased rally of 2020 to continue well into 2021, as a strong across-the-board earnings revival is on the cards. We continue to believe that 2021 will be the year of midcaps and smallcaps,” said analyst at Axis Securities.

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