IDFC Multicap Fund – Direct Plan – Growth


Overall analysis 

1-yr rolling excess returns of the fund is constant. Overall, this fund has good TE, it is moderately active. IR is declining and moving towards passiveness. The fund gave the maximum return in comparison to its peers as it above median. It has negative risk and positive returns which means the fund is taking least risk to generate returns.

Performance analysis

Rolling returns – 1 year rolling excess returns 

Snail trail – 1 year rolling excess over 19 months

Tracking error – 1 year rolling over 19 months

Information ratio – 1 year rolling over 19 months

Rolling returns in quartiles

The rolling return chart shows excess 1Y-year rolling return 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 return chart shows that the fund lies between upper quartile and maximum, returns are constant with an average of 6.02% & it is performing better than median. Returns touching the high of 6.48% & decreasing from February 2023, from May 2023 to June 2023 it has declined 1.48%. 

Rolling risk/return (Snail-trail) 

The rolling risk/return chart shows excess 1-year annualized returns relative to the index. The top left quadrant would indicate higher returns with lower volatility than index.

The snail trail chart shows that the fund took less (negative) risk all the time to generate positive relative return since inception. This fund has shown 1-year rolling excess risk/return, touching 6.48% per annum, taking negative risk i.e., -0.575%.

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 1-3% range considered to be low TE, 3-6% range considered to be moderately active and anything higher than 6% is high TE. Funds with TE of less than 2% can be considered to be closet indexers.

Tracking error chart shows that the fund’s overall TE is above 3%, from march 2023 to April 2023 TE has strengthened. This fund seems to be moderately 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. 

Information ratio of this fund has been declining throughout the months. It increased from December 2022 to Jan 2023 i.e., from 1.5 to 1.6 & further it declined to 0.91.

Prepared by – Hemanth Reddy, August 2023

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