Indian market recorded negative returns in May but over 20 Portfolio Management Schemes (PMS) managed to outperform the index in the same period and gave positive returns, data from PMSBazaar.com showed.
As many as 22 schemes tracked by PMSBazaar.com, an online portal for comparing portfolio management services (PMSes) gave positive returns, while 96 outperformed the Nifty50 in the same period, and as many as 29 schemes underperformed the benchmark index in the month of May.
PMSes cater to wealthy investors with portfolio sizes exceeding Rs 50 lakh. The professional fee structure is also different from a regular mutual fund (MFs).
The top five schemes which have outperformed Nifty50 in May are ICICI Prudential’s Large Cap Portfolio which has a return of 3.6 percent, followed by Kotak’s Pharma fund that gained 3.4 percent, data showed.
ICICI Prudential’s Contra Portfolio, which is a multi-cap scheme, gave a return of 3.2 percent, Credent Asset Management’s Growth Portfolio which is also a multi-cap theme gave a return of 1.8 percent, and Nine Rivers Capital’s Aurum Small Cap Opportunities Fund closed with gains of 1.6 percent, according to PMSBazaar.com data.
A close look at the top holdings of these funds can give investors where top fund managers of wealth are betting their money on. The list should only be considered as a reference to shortlist stocks for their own portfolio and not buy recommendations.
There are as many as 21 unique stocks in the portfolio of top 5 PMS schemes that have outperformed Nifty50 in May, including some marquee names from the large-cap space while from the mid & smallcap segment some of the stocks are top industry leaders.
ICICI Prudential PMS which is a large-cap portfolio scheme invests in large companies with high conviction. The top holding of the fund include names like Reliance Industries, Wipro, Ambuja Cements, Kotak Mahindra Bank, and Marico.
Kotak Pharma Fund which is a thematic fund has been a consistent performer. The fund is focused on stocks in pharma and healthcare-related companies. Top five holding of this fund include names like Sun Pharma, Dr. Reddy’s, Aurobindo Pharma, Lupin, and Divi’s Laboratories.
ICICI Prudential AMC’s Contra Fund includes names like RIL, Kotak Mahindra Bank, Marico, Ambuja Cements, and Wipro, etc. among others.
What should investors do?
Stocks picked by portfolio fund managers are largely based on the theme of their portfolio and also the risk profile. Hence, investors should avoid blindly copying them, suggest experts.Investors should use the list to shortlist stocks for their portfolios. But, a thorough due diligence process should be followed in case someone wants to get into stocks with a longer/time frame, suggest experts.
“Looking at what fund managers bought and sold can act as a reference for retail investors. But, investing in stocks should be a very thorough exercise to include fundamentally strong companies,” Amit Singh, Head, Investica told Moneycontrol.
“As a thumb rule, investors should stay away from companies with higher debt, corporate governance issues, and higher % of pledged promoter holding. A stock portfolio should be well-diversified amongst different sectors to limit the downside risk, he said.
Entering a good quality stock at an expensive valuation can result in losses as the share price corrects to come at its fair value. Hence, the ideal strategy is to buy quality stocks at reasonable valuations.
Paras Bothra, President of Equity Research, Ashika Stock Broking said that one could follow somebody's investment style, but the investment decisions should always be based on company financials and cash flows and relevant return ratios and most importantly confidence in the management.In these challenging times, companies run by strong management and having strong business models will overcome quickly, he said.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.