INF966L01614
Overall analysis
1-yr rolling excess returns of the fund has raised, currently generating maximum returns compared to its benchmark, while the snail trail shows that the fund had generated maximum returns by taking (-) risk. TE states that the fund is highly active, But it has a drawback of negative IR.
Performance analysis
Rolling returns – 3 year rolling returns over 7 years
Snail trail – 3 years rolling returns over 7 years
Tracking error – 1 years rolling tracking error
Information ratio – 1 year rolling information ratio
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.
Overall, fund performance is impressive. It has generated the highest excess return of 16.55%, currently it is following the maximum (green) line, although returns have dropped to 8.75% in the past recent month (june2023). It has outdone its peers by achieving maximum returns, yes, the fund also faced a negative returns stage for a specific time span- as shown in above charts, but it overcame it.
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.
3 years rolling excess risk/return shows that the fund took least negative risk to generate an adequate return. During December 2022, taking the (-) risk of -0.2% it generated maximum returns of a stunning 16.5%. As shown in the chart the Risk & return indicator has spent most of its time in the top left quadrant- which shows the fund has generated sufficient returns as compared to the risk taken.
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.
The fund has 1-year rolling tracking error of 6.21% as of June 2023, fund is ideal to active, it has the highest 1-year tracking error of 13.9%..
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.
Active funds should have an IR of higher than 1, ideally higher than 1.3, but this fund has an IR of (-0.08) which is a bad sign for a fund. This fund has a good record of information ratio in the past, so it may be capable of being more active and skillful.
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 centroid indicator of this fund lies towards the top right corner of the stock style chart- which indicates that; the portfolio of this fund has weightage over large cap- growth as well as blended category stocks while its peers have only growth securities in its portfolio basket. Ownership zone indicator says that; the fund has picks around all the caps (small, mid & large) with blended, Growth & also value category stocks, but has less involvement in small cap securities. While the multi-cap funds indicator states that its peers have channelised its funds only into mid- large, growth & blended types of stocks.
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.
Morningstar’s factor profile chart demonstrates that yield/returns is as low as its category average & has declined accordingly-(5yr historical range indicator), The fund has shown a very wide range, between low to high for the momentum, volatility & liquidity of stocks held in portfolio over the past 5 years. Stocks held were sometimes of high quality as well as low, but currently as of May 31 2023 it has the same quality & growth style picks as its category average.
Prepared by – Hemanth Reddy, August 2023
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