Two ‘Gold’ rated flexi-cap mutual funds from Morningstar

By: | Updated: February 16, 2018 12:44 PM

With the stock markets turning choppy and top market voices cautioning that the markets will continue to remain volatile in the current year 2018, the investors may be looking at investing in mutual funds. We take a look at two Gold rated flexi-cap mutual funds from Morningstar.

Budget 2018: The finance minister has re-introduced long term capital gains (LTCG) tax for equity and equity-oriented mutual funds in the Budget.While mutual fund investments aren’t as safe as bank deposits, SEBI Chief Ajay Tyagi says that they are suitable for retail investors. (Image: Reuters)

With the stock markets turning choppy and top market voices cautioning that the markets will continue to remain volatile in the current year 2018, the investors may be looking for safer investment avenues, they may turn to mutual funds. While mutual fund investments aren’t as safe as bank deposits, SEBI Chief Ajay Tyagi says that they are suitable for retail investors. “Mutual funds investment is not any substitution for bank returns. If people are shifting from banks to mutual fund to that extent it is not an assured return but this is right way to come to if people want to come to capital markets,” SEBI Chairman Ajay Tyagi said. In its latest report, Morningstar has come up with an analysis of the performance 12 flexi cap funds in the last six months. While investors maybe looking which mutual funds to invest in, we take a look at two ‘Gold’ rated flexi cap mutual funds by Morningstar.

ICICI Prudential Dynamic Fund

This fund has an AUM of more than Rs 10,000 crore and invests into companies across market capitalizations ranging from construction to financials. Notably, the fund has a heavy exposure to ICICI Bank, NTPC and Infosys shares. Notably, Morningstar has upgraded the fund to ‘Gold’ from silver earlier. “ICICI Prudential Dynamic Growth remains a credible investment option with Sankaran Naren’s distinct skill of uncovering value opportunities with a judiciously applied investment process, making a strong case for an upgrade of its Morningstar Analyst Rating to Gold from Silver,” the firm said in its report. The fund has returned nearly 20% in the last one-year period. The fund has an expense ratio of 2.28% as on January 31, 2018.  “Its low expense ratio also helps. The fund remains a solid choice for investors seeking contrarian instincts and who are comfortable with the related volatility,” Morningstar said in its report.

Franklin India Prima Plus

This fund has an AUM of more than Rs 12,200 crore and invests into companies across market capitalizations in varied sectors from financials, construction, technology and communication. Notably, the fund has a heavy exposure to the shares of HDFC Bank, L&T, ICICI bank and Infosys. “The fund has all the ingredients to be investors’ preferred choice,” Morningstar notes. However, the firm says that the fund may exhibit above average volatility, given its investment style.  “The penchant for concentrated and contrarian bets can expose the fund to above-average volatility and result in a divergent showing versus the norm in the short term. Also, the quality bias and valuation-consciousness may hold the fund back when speculative fare is in favour. Clearly, investors must have an investment horizon spanning a market cycle,” says Morningstar. The fund had an expense ratio of 2.25% as on January 31, 2018, and returned more than 18% in the last one-year.

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