Edelweiss Small Cap Fund – Direct Plan 


Overall analysis

3-yr rolling excess returns is higher than the benchmark and has given higher returns compared to its peers and TE against benchmark is also active as it is above 4-6%. But the fund has dropped to below the first quartile over the past 1 year.

Performance analysis

Rolling returns in quartiles

The rolling return chart shows excess 3-year annualised returns in context of peer return quartiles. The blue line’s time above the third green median line indicates the fund’s better than median performance.

The rolling excess return chart shows that the blue line is above the third green median line. The fund is above 10% maximum time on the chart. The fund is performing better than the median performance since the start. 

Rolling risk/return (Snail-trail) 

The rolling risk/return chart shows excess 3-year annualised returns relative to the index. The top left quadrant would indicate higher returns with lower volatility than index.

This fund has shown impressive 3-year excess returns, touching 10% per annum and a significant time around the 8-9% pa, whilst higher than index volatility of 2-4% pa. However, the excess return came down to around 5.04% towards the end of June,2023

Tracking error

The tracking error chart shows how the fund ‘tracks’ against the index. The higher the TE, the more active the fund’s return has been, with the 2-4% range considered to be barely active, 4-6% range considered to be reasonably active and anything higher attributed to concentrated/focused funds. Funds with TE of less than 2% can be considered to be closet indexers.

The tracking error chart shows that funds had a good start with the 7-8% range and it has crossed 10% significant time on chart. Later it came down to 4-6% range in June 2023. The fund is said to be reasonably active. 

Information ratio

The information ratio is a measure of ‘risk-adjusted return’ as it’s the excess return per unit of excess volatility. Active funds should have IR of higher than 1, ideally higher than 1.3 at least to indicate skill. 

The information ratio chart shows that the fund IR is below 1 and in june 2023 it’s around 0.66, which clearly indicates that the fund is not ideal. The fund was above 2 at the start but later it decreased and all the way down to around -1.8 in may 2021. 

Portfolio analysis

Stock style chart

Morningstar’s stock style chart shows the ‘style’ of the stocks in the portfolio in terms of size and value/growth style. The centroid shows the weighted average while the zone circle shows how varied the stock styles are.

The stock style chart shows that the fund is typically a Mid cap growth fund. 

Factor profile chart

Morningstar’s factor profile shows the historical style analysis of the stocks in the portfolio in terms of size, value/growth style and other key factors. The blue circle shows the fund relative to the black dot for the category average.

Factor profile shows that the fund style is growth oriented, yield is very low compared to category average historical range, momentum has shown wide range in 5-yr historical range. Whereas volatility and liquidity is low and fund size is small.

Prepared by – Dhruvi Shah, August 2023


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