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4 things to note for mutual fund investors in volatile markets

Volatile Markets : 4 Things To Note For Mutual Fund Investors

Mutual Fund Investors Should Not Do These 4 Things in Current Volatile Markets Scenario


Indian stock market is currently going through a correction phase. In this article, we will discuss the 4 things to note for mutual fund investors in current volatile markets in order to generate higher returns.

Volatile Markets : 4 Things To Note For Mutual Fund Investors

Lets discuss the which are those 4 things to note for mutual fund investors in current volatile markets.

4 Things To Note For Mutual Fund Investors in Volatile Markets
Volatile Markets : 4 Things To Note For Mutual Fund Investors

1.Do Not Focus Too Much on Current Market Scenario

  • Indian stock market has entered a correction since last couple of weeks due to lack of measures in the budget 2019 to stimulate the economy. Also, taxation on the super rich has adversely affected the foreign investments and soured the market mood.
  • The Indian equity markets is going through a slow down due to both internal and external factors. Following are some of the factors/reasons behind the slowdown.
    1. Internal factors : NBFC crisis, Slowdown in auto sales, consumption and manufacturing
    2. External factors : US China trade, Brexit, uncertainty in crude oil prices, overall slowdown in global economic activity
  • Thus, you should not take your investment decisions in this kind of current scenario in the stock market. You should always remind yourself one important thing that you are investing in the stocks to achieve your long-term financial goals.
  • So, you should not focus on or worry too much for the short-term volatility and sentiment in the current market scenario.
BSE Sensex Falling Trend  (from 15th July 2019 to 9th August 2019)
BSE Sensex Falling Trend (from 15th July 2019 to 9th August 2019)
Source :

2.Do Not Stop Your SIPs

  • SIP route helps you average your purchase price and helps you with better returns with relatively lower risks. This rule applies for all Equity SIPs.
  • When market sentiments start becoming a bit panic or unshielded, most of the investors start worrying about their regular investments SIPs and raising a question on continuing their SIP investments. But, stopping your SIPs would not be a smart move.
  • The investors who would continue with the SIP investments during the market slump would gain by buying more units of the same fund. It helps them to buy stocks at a discount. Hence those investors who stick to their SIP investments would gain significantly through a lower average price of holdings.
  • So, you should not stop your SIPs in current market scenario in order to get the advantage of stock purchases at the discount.

3.Do Not Change Your Original Investment Allocation

  • Most of the investors tend to change their investments in times of market volatility. 
  • The BSE Sensex is trading lower compared to the 1-year-ago and 3-months-ago levels, while it is flat compared to its level 6 months ago.
    • In the past one year, small cap and mid cap funds have offered negative returns of almost -16% and -12%, respectively.
    • Thus, many investors tend switch to large cap funds to be safer if mid cap and small cap funds are not showing the expected performance. But that is not a right move.
  • Keep on altering the original investment allocation would affect your investments and can hamper your long-term returns.
  • Don’t think about changing allocations, moving to safer schemes etc. The best thing to do is to do nothing, in such uncertain, volatile market conditions. So, Stick to your asset allocation.
Mutual Fund Reviews By Invest Yadnya

4. Don’t Be Too Excited

  • Many smart investors make strategic allocations in a falling market to maximize wealth. Such tactical allocations will definitely helps you to buy more in a sluggish market.
  • An aggressive investor is prepared to take higher risk in anticipation of higher returns. Many times, you tend to go overloaded in the sentiment of becoming too excited in falling markets.
  • However, you should allocate your surplus funds to make strategic investments only after thinking it through. Allocate only the part you do not need in a short term.
  • Don’t be too excited for profit booking by going overloaded in sluggish markets. The market may not move as per your expectation and you might incur losses in the process.
Value Funds vs Multicap Funds

Value Funds Vs Multicap Funds

Comparative Analysis of Value vs Multicap Mutual Funds


In this article, we are going to do a comparative analysis of Value Funds Vs Multicap Funds, based on the parameters such as market capitalization, sector allocation, returns (calendar returns, trailing returns, rolling returns) and risk ratios etc.

Value Category : Value category funds follows value investing strategy for stock picking and it may or may not follow multicap approach for stock selection. Basically, value stocks are the stocks which are traded at relatively low price as compared to peers and they have low PE.

Multicap Category : Multicap category funds can invest across market capitalizations as there is no specific mandate as such but minimum 65% investment has to be equity. Multicap category mostly have growth oriented stocks. It can have value stocks as well.

Value Funds Vs Multicap Funds

In order to select between value fund and multicap fund, we have given comparison of category average in terms of market capitalization, sector allocation, returns – calendar, trailing, rolling and risk measures – alpha, beta, standard deviation and PE.

Following is the list of multicap and value funds which we have considered for comparison.

Value Funds Vs Multicap Funds
Value Funds Vs Multicap Funds

Market Capitalization

Value Vs Multicap Funds : Market Capitalization
Market Capitalization

Both the categories have almost same allocation in midcap and cash, difference is in allocation in large and small cap. Multicap category has higher allocation in large cap and lower in small cap as compared to value category. Value category’s high allocation in small cap is due to the approach it follows. Multicap category is more inclined towards large cap. Value category funds are more aggressive from that perspective. They have more mid and small cap allocation as compared to multicap.

Sector Allocation

Value Vs Multicap Funds :Sector Allocation
Sector Allocation

It is interesting to know that both the categories are very bullish on financial sector. Multicap has significantly increased its allocation in financial sector from 24% to 34% in last 5 years. Value category has also significantly increased its financial sector allocation. There is slight or no change in allocation in construction and FMCG sector. Value category has increased its allocation in energy sector while multicap has decreased and both have decreased in technology sector. Overall, there is not much difference in sector allocation.


Types of mutual fund returns is as follows :

Calendar Returns

  Value Vs Multicap Funds : Calendar Returns
Value Vs Multicap Funds : Calendar Returns

Calendar returns are nothing but the absolute returns calculated from 1st Jan to 31st Dec.  It shows if the fund is able to contain losses better than the index. There is not much difference between calendar year returns of multicap and value category in most of the years. Till 2016, both the categories have beaten benchmark. In 2017, Multicap category was beaten by both value category as well as benchmark. In last 11 years, 2018 was the worst year for both categories. Overall, they have performed consistently and very similarly.

Trailing Returns

 Value Vs Multicap Funds : Trailing Returns
Value Vs Multicap Funds : Trailing Returns

In last 1 year, multicap category has done much better than the value category because of more allocation in large cap. Value category could not perform well because of its aggressive investment across market capitalizations. Small  and mid-cap space has not done well in last one year. In 3, 5 and 10 years, there is hardly any difference from the returns perspective. Both have outperformed the benchmark in long term.

Rolling Returns

  Value Vs Multicap Funds : Rolling Returns
Value Vs Multicap Funds : Rolling Returns

Rolling returns of the fund show consistency of fund’s performance. Again, there is not much difference in rolling returns. Value category returns are slightly better than multicap.

Risk Ratios

 Value Vs Multicap Funds : Risk Ratios
Risk Ratios

From the value of standard deviation and beta, we can see that there is no difference in risk profile. Both the categories take similar risk . Beta of less than 1 indicated that both are less volatile than the market. Alpha of multicap category is more because of greater allocation in large cap stocks. Value category has lower PE as expected. PE of benchmark is between that of multicap and value.


  • Currently, very little difference between value and multicap category in terms of risk and returns. One reason could be that many of the value funds currently do not follow pure play value strategy.
  • Even some multicap funds can have or do have value strategy. So, when planning to buy a multicap fund, you should consider both multicap and value category.

Mutual Fund Returns

Types of Mutual Fund Returns – Trailing, Calendar, Rolling & SIP

Ways To Measure The Mutual Fund Performance?


There is a lot of confusion in investors over which Returns are more appropriate to evaluate the returns earned by the mutual fund investment. In this article we have discussed the appropriate types of mutual fund returns and how they are used.

Performance of Mutual Funds :Types of Mutual Fund Returns

The returns on any investment is measured as the total of its capital appreciation over time and any other income generated divided by the initial amount of investment. This simple calculation is termed as Total Returns. We have reviewed our funds returns through 4 different parameters, namely:

  1. Trailing Returns
  2. Calendar Returns
  3. Rolling Returns
  4. SIP Returns
Types of Mutual Fund Returns
Types of Mutual Fund Returns

1.Trailing Returns

  • Trailing returns are the most popular measure to assess performance of your Fund in the past. They are point-to-point returns. Trailing returns look backwards from a specific date for a funds annualized returns over a specific period of time.
  • Trailing Returns are defined in 2 categories : 1.Regular and 2.Direct
  • These returns are calculated for 1/3/5/10 years for Regular category and 1/3/5 years for Direct category. The backward point from which Trailing returns are calculated is usually from the latest NAV available.
  • For Example, returns are calculated from a specific date of the most recent year say 31-Jan-2019 to any past date say 31-Jan-2018 (1 year trailing return), 31-Jan-2016 (3 year), 31-Jan-2014 (5 year), 31-Jan-2009 (10 year) etc.
Trailing Returns

Above graph shows the Trailing Returns for Aditya Birla SunLife Frontline Equity fund as compared to the Benchmark and Large cap funds Category. It shows if the fund has overperformed or underperformed when compared to its benchmark and category.

2.Calendar Returns

  • Calendar Returns are nothing but absolute returns. E.g. 1st January to 31st December of each Calendar year. Calendar returns tells us how a fund performs in Market Rises and Market falls in various years. It shows if the fund is able to contain the losses better than the Index it follows and how good returns a fund can generate in the market rallies.
  • Calendar Returns are calculated for last 10 years starting from 2008. NAV as on last working day of the year is considered for calculating the returns.
  • Returns are calculated from last working day of Dec month of the immediately preceding year to the last working day of Dec month of the year under consideration.
  • For Example, period to calculate returns for 2017 is 30-Dec-2016 to 29-Dec-2017
Calendar Year Returns
Calendar Year Returns

Above graph shows the Calendar Returns for Aditya Birla SunLife Frontline Equity fund as compared to the Benchmark and Large cap funds Category. It shows if the fund has overperformed or underperformed when compared to its benchmark and category.

3.Rolling Returns

  • Rolling returns give a picture of how a fund’s returns have improved constantly and not just over the latest month or quarter-end. Thus, Rolling Return of a fund is the indicator of the consistency in the performance improvement of that fund. So, rolling return is considered to be a more reliable parameter in the mutual fund performance analysis.
  • It shows that you made equivalent return of an average amount in a year in last X years period. In this return all the extreme highs and lows are included from a period of last X years showing you the minimum and maximum returns that you may earn.
  • Rolling returns is a type of annualized return. Rolling returns calculate CAGR in an overlapping fashion. i.e. the average annualized returns are taken for a period on every day/week/month and are taken till the last day of the period.
Calculation of Rolling Return
  • Let us say we have to calculate 3 year rolling return for the period from 2008 to 2018. Then, we will start calculating performance from 1st Jan 2008 to 1st Jan 2011. Next analysis will be from 2nd Jan 2008 to 2nd Jan 2011 and so on till the latest data. This is how daily rolling returns are calculated for 3 years time period.
  • Similarly, 5 year rolling return will be calculated from 1st Jan 2008 till 1st Jan 2013. The total period in consideration for required data for Yadnya’s analysis is 10 years (2008-2018). In our analysis, we use monthly rolling returns (not daily rolling returns)
Rolling Return Calcualtion
Rolling Return Calcualtion
  • The Probability is calculated using mean and standard deviation. Standard deviation is a measure of how much returns can deviate from the average return.
  • In our analysis for rolling return calculation we rolled on monthly basis for last 3/5/7 years. We are comparing rolling return of fund with its rolling standard deviation. And this standard deviation is computed from monthly return and then annualized.
  • Here we can take an example of a fund’s rolling return comparison in last 3/5/7 years.
Rolling Returns
Rolling Returns
  • For Example, We can recognize that in ABSL Frontline Equity Fund gave lowest return of 11.5% and highest return was 20.8% in 7 years Rolling returns. And the probable low return is 12.4% and probable high return is 16.2%.Rolling return performance of the fund is consistently above category average in all observation periods – 3, 5 & 7 for both lowest & highest returns.
  1. Mean – standard deviation = probable low return
  2. Mean + standard deviation = probable highest return
  • Our rolling return analysis also shows that how in shorter duration ( 3 years), you may incur low or negative returns depending on time period but as the duration of rolling return increases (5/7 years), likelihood of low returns also reduces significantly.
  • In above example, lowest return of the Large cap category average is -0.6% in 3 years whereas it is 9.0% in 5 years which shows the whole category has never given less than 9.0% return if the investor has invested for 5 or more years.

4.SIP Returns

  • Systematic Investment Plan is a mode of regular investments in mutual funds. SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc).
  • A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future.
  • You are allocated certain number of units based on the ongoing market rate (called NAV or net asset value) for the day. Every time you invest money, additional units of the scheme are purchased at the market rate and added to your account. Hence, units are bought at different rates and investors benefit from Rupee-Cost Averaging and the Power of Compounding.
Process of SIP Calculation- How to Calculate SIP Returns?

For the detailed process of SIP Calculation, Refer our article: What is Systematic Investment Plan [SIP]?

Example : SIP Performance of Aditya Birla Sun Life Frontline Equity Fund

SIP returns of the Aditya Birla Sun Life Frontline Equity fund is below average and benchmark in 1 & 3 years and near average in long term.


What Is Dividend for Mutual Fund?

Mutual Fund Dividend Explained with Example


In this article, we will discuss what is dividend for Mutual Fund. The mutual fund houses profit includes both dividends received from companies and profit which they earn from improving markets. Mutual Fund hounses distribute this profit to their unit holders.

Meaning of Dividend for Mutual FUnds

  • Meaning of dividend is different in stocks and Mutual Funds.
  • In stocks, dividend is a portion of company’s earnings which is paid to shareholders whereas in Mutual Funds, dividend is the gains of the fund scheme which is distributed to the investor.
  • Mutual Fund dividend doesn’t just mean the stock dividend they have got from their investment, it can also be given from capital gain which they have earned on their investments.
  • Frequency of paying dividend depends upon fund, it may be anytime during the year. They are no set frequency; Equity funds may not give any dividend in a year or give multiple times.
What is Dividend for Mutual Fund?
What Is Dividend for Mutual Fund?

Types of Options in Mutual FUnds

Mostly large cap companies are more mature, so they tend to distribute their profit as dividend. But in case of small cap companies, they need to invest most of their profit in their growth that’s why their dividend is uncertain.

There are two type of option is available in mutual fund scheme for investor; –

A. Growth option – In this option investor will not received any dividend from fund. Dividend amount that received by fund from companies in which they invested, is reinvest in his portfolio. This reinvestment money directly increases the NAV (Net Asset Value) of growth option we don’t get regular income but whenever we sale our investment it realize higher return than compare to dividend option.

B. Dividend Option – In this option investor receives dividend from mutual fund. There are two type of option available.

i. Dividend Option – Under this option, the Mutual Fund Company declares Dividend and directly credits that dividend to the bank account of the Unit holder.

ii. Dividend Reinvestment option – Under this option, Dividend declared by the Mutual Fund Company is not credited to Bank Account, but it is reinvested in the respective Mutual Fund Scheme itself. Simply speaking, Fund houses purchase Additional Units from the amount of dividend received.

Example : Dividend Option of Mutual FUnd

For the analysis we are taking dividend option. We calculate dividends distributed by the fund as a % of NAV. And For calculation of dividend as a % of NAV we use the NAV as on the record date. Dividend distributed of fund is compare with its category average from inception of fund.

In this example, we have compared dividends distributed by Aditya Birla Sun Life Frontline Equity Fund with dividends distributed by Large Cap Category Average from its inception year. For detailed analysis of fund, Refer :

Top 10 fund houses

What Is Asset Under Management (AUM) of Mutual Fund?

AUM definition with example


In Mutual Funds, many investors sharing a common investment objective pool in their money. The sole intention of their investment is earning returns. This pooled money is known as the Asset under Management of the scheme. In this article we will discuss more about AUM.

AUM of the Indian Mutual Fund Industry has grown from ₹ 4.17 trillion (31st Mar, 2009) to ₹23.80 trillion (31st Mar, 2019). The growth is more than 5 ½ times in a span of 10 years.

What is Asset Under Management (AUM)?

  • Asset Under Management (AUM) is ‘the total market value of Assets or Capital that a Mutual Fund holds on behalf of its investors’.
  • It is an indicator of the size and success of the Fund House. Net assets of any scheme gives fair idea of confidence level of investors in the mutual fund scheme.
  • AUM generally rises when the fund has consistently delivered positive returns as they attract new investments. Likewise, if the fund starts hitting reds it can reduce the assets. Whenever an investor invests new funds or redeems his investments it has an effect on assets of the fund.
  • High Asset Under Management (AUM) is an indicator of investors confidence on the fund manager and the fund house. If the fund has had a glorious past it is more than enough to attract more investors to it.

AUM wise Top 10 Fund Houses

AUM Wise Top 10 Fund Houses
AUM Wise Top 10 Fund Houses


Lets observe the trend of ABSL Frontline Equity scheme’s AUM as compared to the average AUM of Large Cap Category. And also its AUM growth with the AUM growth of category whether positive or negative in the industry.

AUM of ABSL Frontline Equity Fund and Large Cap Funds Category Average
AUM of ABSL Frontline Equity Fund and Large Cap Funds Category Average
  1. Above graph shows the rise in AUM of Aditya Birla Sun Life Frontline Equity Fund as compared to the Large Cap funds category average on the Primary Axis (Left axis)
  2. The graph also shows the % growth at which the AUM has changed since Jan-08 when compared with % growth in AUM of Large Cap funds category on Secondary Axis (Right axis).
  3. ABSL Frontline Equity Fund is the largest Large Cap fund in the category. It has shown decent growth in AUM until in recent months the growth has been little lower than category average. For more detailed analysis of Aditya Birla Sun Life Frontline Equity Fund, Refer :
  4. Overall, a High AUM with good growths shows investor’s trust in fund’s management and performance 

AUM BASED TER (Total Expense ratio) by SEBI

  • Every fund house charge their investors through Expense Ratio. It is a management fee levied by fund house which is proportional to the fund size.
  • Generally it is observed that most funds who have higher AUM charge a lower Expense Ratio. Thereby increasing profits in the hands of investor. There are a few exceptions for this like ICICI
  • Note- In its press release dated 12th Sept 2018, SEBI has defined updated Total Expense Ratio slabs based on total AUM of fund houses. These slabs are as below:
Updated Total Expense Ratio Slabs by SEBI based on Total AUM of Fund Houses

Updated Total Expense Ratio Slabs by SEBI based on Total AUM of Fund Houses

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