Invesco India Small Cap Fund – Direct  


Overall analysis 

1-yr rolling excess returns is 5% and TE range is above 6%; but the funds’ performance in the short run has been deteriorating. The fund had given a high excess return in comparison to its peers; but has dropped to below the first quartile over the past 1 year.The snail trail chart shows that fund has given higher returns of 8.97% with higher risk of -0.97% in March 2023. 

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 below the third green median line but in June,2023 the blue line crossed the third green line and the fund is better than the median performance. 

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 6% per annum and a significant time around the 4-6% pa, whilst lower than index volatility of 2-3% pa. However, the excess return came down to around -1% 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 the range is around 4-6% and from june 2020 to january 2021 the TE was above 10%. In June 2023 it was near 6.31%, which clearly says that the fund is very active and focused. 

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 IR was around 1-2 till October 2020 but later it decreased to 0.52 in June 2023.  In May 2020 IR touched 4 and later it decreased to -5.0% in march 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.

The 7 factors show growth oriented fund, yield compared to 5 years historical range is low, momentum and volatility factors have wide range in 5-yr historical range and liquidity is low.

Prepared by – Dhruvi Shah, August 2023


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