These solid equity mutual funds clocked over 40 per cent CAGR in three years; should you invest?
Equity mutual fund is one of the best ways of generating wealth over the long term. These solid equity mutual funds clocked 40 per cent CAGR in three years. Should you invest? Let’s find out.
An indirect approach to gain exposure to the stock market is through investment in equity mutual funds. A mutual fund is basically a pool of money gathered from investors and invested in various asset classes by a specialised fund manager. It is essential to evaluate a mutual fund's prior performance before investing your hard-earned money because not all of them can outperform their benchmark indices.
Even while past performance does not guarantee a similar level of performance in the future, it is nevertheless vital to be aware of. In that line, here is a list of the top three solid equity mutual funds that have given a profitable return of more than 40 per cent Compounded Annual Growth Rate (CAGR) over the previous three years.
Quant Small Cap Fund
Quant Small Cap Fund is a small cap investment managed by Quant Money Managers Ltd that invests in stocks of businesses ranked 251st and above in terms of whole market capitalisation, making it a riskier fund with substantial drawdowns. The fund has the greatest weightage (12.72 per cent) in construction and engineering businesses, which was even higher in September 2022, at 19.41 per cent.
Thanks to recent multibagger gains in the small-cap category following the pandemic, the fund's three-year CAGR is an unparalleled 57.28 per cent. With a 0.62 per cent expense ratio, it has an AUM of Rs 2,355 crore. This fund's benchmark index is the Nifty Smallcap 250 Total Returns Index (TRI)
Quant Infrastructure Fund
Quant Infrastructure Fund, another fund from Quant Money Managers, is a thematic fund that focuses on the infrastructure sector, with a tiny AUM of Rs 778 crore. Ambuja Cements (9.28 per cent), Reliance Industries (8.87 per cent) and Adani Ports and Special Economic Zone Ltd (8.68 per cent) are the top three most heavily weighted firms in the portfolio.
PSU banks have the biggest exposure in the portfolio, which is one of the reasons why the fund's returns have increased in the recent six months. The past three-year CAGR is a rewarding 44.66 per cent, with a 0.64 per cent expense ratio. It is a growth fund with the Nifty Infrastructure TRI as its benchmark index.
ICICI Prudential Commodities Fund
The ICICI Prudential Commodities Fund is a thematic fund that invests in commodity-based companies. Iron and steel companies had the biggest weightage (31.12 per cent) in the fund as of November 2022, with construction and engineering stocks coming in second with 30.07 per cent weightage.
When it comes to individual equities, its top three holdings are JSW Steel, UltraTech Cement, and Ambuja Cements. The fund has a minuscule AUM of Rs 738 crore and a three-year CAGR of 44.1 per cent. The expense ratio is a little higher than average, at 1.07 per cent, but this is justified by the fund's performance. The fund's benchmark index is the Nifty Commodities TRI.