How mutual fund managers' stock picks of previous years have performed
Although the Most Wanted Stocks' portfolio fared well in 2014 and 2015, it too has not been immune to the wild gyrations of the goings on in the equity market since then. Here is a look at how the portfolio has performed every year since its incep...
Gateway Distriparks and McLeod Russel have been a drag on the 2014 portfolio while Yes Bank has taken the sheen off the 2015 portfolio after a sharp correction in its stock price following deterioration in its asset quality. Apollo Tyres and Redington have also disappointed.
Despite Voltas, PI Industries and Finolex Industries powering the 2016 portfolio, it has offered tepid return on an aggregate basis. CARE Ratings and Cholamandalam Finance have dragged the entire basket down. While CARE Ratings has fallen off the cliff in recent months, the latter has actually seen a rebound in stock price. After rising smartly for a few years, shares of Exide Industries and Schaeffler have given up most of the gains since last year.
2014: Outperforming the indices comfortably
KPIT Tech share price inclusive of Birlasoft post demerger.
2015: Surged ahead of markets by a wide margin
2016: Two scrips pull down overall portfolio return
2017: NBFC stocks weigh heavy on entire basket
2018: Two scrips take sheen off entire portfolio
The 2017 portfolio has been completely overwhelmed by the sharp value erosion in DHFL and Repco Home Finance. DHFL shares particularly have taken a sound beating after allegations of financial irregularities at the lender plagued by severe solvency issues. Repco Home Finance has not escaped the beat-down received by housing finance companies amid the liquidity squeeze and concerns over loans to stressed developers. City Union Bank remains the only standout performer from the 2017 basket.
Most of the stocks from last year’s basket have fared well, but the portfolio has been hurt by steep cut in Sterlite Technologies and Motherson Sumi. Broadband infrastructure provider Sterlite has lost nearly two-third of its value despite recording a 60% top line growth and 68% jump in profits in the fiscal year 2019. Auto components supplier Motherson has seen its value erode amid a spillover effect from a sharp consumption slowdown in both domestic and global automobile industry.
How mutual funds treated stocks
Previous year picks have their share of multibaggers and lemons, but funds increased their stake in the outperformers and threw out the losers.
- Mutual funds held 8.29 lakh shares of Vinati Organics in September 2014. This has shot up over 200% to 28.59 lakh now. The stock has given a CAGR of 37.09% in the past five years.
- MF holding in Bajaj Finserv increased from 83 lakh shares in September 2015 to 4.12 crore shares now. The stocks has registered a CAGR of 42.77% in the past four years.
- Curiously, fund holding in Mcleod Russell has not come down even though the stock has declined 97% since September 2014. From 84.7 lakh shares in September 2014, mutual funds now hold 1.39 crore shares.
- Similarly, fund holding in Gateway Distriparks has increased even though the stock has not done well in the past five years. From 1.65 crore shares held in September 2014, mutual funds now hold 1.94 crore shares.
- However, mutual funds have not been so merciful in case of other underperforming stocks. They have ruthlessly exited stocks such as DHFL, Yes Bank and even Aurobindo Pharma following corporate governance issues.
Returns for 2014, 2015, 2016 and 2017 are annualised. Returns are inclusive of dividends. Data as on 24 Oct. Compiled by: ETIG Database