Here are twenty mutual funds (out of 144) that have consistently outperformed Nifty Next 50 total returns index. I did the short-listing using the same criterion followed in the freefincal equity mutual fund consistency screener. Readers may recall a List of Equity Mutual Funds with most consistent performance (Feb 2019) published with the respective category benchmarks based on this screener.
In this post, I compare ELSS, Large and mid cap, mid cap, small cap and value oriented funds with Nifty Next 50 TRI. This as we have seen before is one hard benchmark to beat as it has a concentrated mix of large and mid cap stocks (although officially considered as a large cap index). As discussed earlier: Nifty Next 50 is NOT a large cap index, it is a more mid-cap like fund.
Articles on Nifty Next 50
- What is the best way to invest in Nifty Next 50 Index?
- Eight ways to combine Nifty Next 50 with active funds
- Combine Nifty & Nifty Next 50 funds to create large, mid cap index portfolios
- Can I start Index investing with 50% Nifty 50 and 50% Nifty Next 50?
- Are Nifty Smart Beta (strategic) Indices better than the Nifty Next 50?
Criterion used for short listing
We expect a fund to beat Nifty Next 50 Total Returns Index over 3,4 and 5-year periods. Since we consider every possible 3,4 and 5 year periods from Jan 2013 to Feb 2019, we expect 70% or higher outperformance. This means, if we compare 100 index and fund returns, the fund must have beat the index at least 70% of the time.
Twenty mutual funds that have outperformed Nifty Next 50 Index
| Category | Fund |
| EQ-ELSS | Quant Tax Plan-Growth Option-Direct Plan |
| EQ-L&MC | Mirae Asset Emerging Bluechip Fund – Direct Plan – Growth |
| EQ-L&MC | Principal Emerging Bluechip Fund – Direct Plan – Growth Option |
| EQ-L&MC | Canara Robeco Emerging Equities-Direct Plan-Growth Option |
| EQ-MC | Kotak Emerging Equity Scheme – Growth – Direct |
| EQ-MC | HDFC Mid Cap Opportunities Fund -Direct Plan – Growth Option |
| EQ-MC | L&T Mid Cap Fund-Direct Plan-Growth |
| EQ-MC | Sundaram Mid Cap Fund – Direct Plan |
| EQ-MC | DSP BlackRock Midcap Fund – Direct Plan – Growth |
| EQ-MLC | Quant High Yield Equity Plan – Growth Option-Direct Plan |
| EQ-SC | DSP BlackRock Small Cap Fund – Direct Plan – Growth |
| EQ-SC | SBI Small Cap Fund – Direct Plan – Growth |
| EQ-SC | HSBC Small Cap Equity Fund – Growth Direct |
| EQ-SC | Reliance Small Cap Fund – Direct Plan Growth Plan – Growth Option |
| EQ-SC | Franklin India Smaller Companies Fund – Direct – Growth |
| EQ-SC | Aditya Birla Sun Life Small Cap Fund – Growth – Direct Plan |
| EQ-SC | Kotak Small Cap |
| EQ-VAL | L&T India Value Fund-Direct Plan-Growth |
| EQ-VAL | Tata Equity P/E Fund -Direct Plan Growth |
| EQ-VAL | Invesco India Contra Fund – Direct Plan – Growth |
Funds (from above 20) with poor downside protection
If you want your actively managed fund to beat Nifty Next 50, consistent downside protection may have to be sacrificed. You cannot consistenly expect your fund to beat NN50 during months when NN50 falls (-ve return). However funds with consistently poor downside protection is a problem.
Sundaram Mid Cap Fund – Direct Plan (read review here) has consistently les than 50% downside protection consistency. The following funds have < 50% downside protection over 3Y.
| Invesco India Contra Fund – Direct Plan – Growth |
| DSP BlackRock Midcap Fund – Direct Plan – Growth |
| Kotak Small Cap |
Funds (from above 20) with 70% or more downside protection
These ten funds (or I should say only these ten) funds have 70% + return outperformance and 70%+ downside protection wrt NN50 TRI
| EQ-L&MC | Mirae Asset Emerging Bluechip Fund – Direct Plan – Growth |
| EQ-L&MC | Principal Emerging Bluechip Fund – Direct Plan – Growth Option |
| EQ-MC | Kotak Emerging Equity Scheme – Growth – Direct |
| EQ-SC | DSP BlackRock Small Cap Fund – Direct Plan – Growth |
| EQ-SC | SBI Small Cap Fund – Direct Plan – Growth |
| EQ-SC | HSBC Small Cap Equity Fund – Growth Direct |
| EQ-SC | Reliance Small Cap Fund – Direct Plan Growth Plan – Growth Option |
| EQ-MLC | Quant High Yield Equity Plan – Growth Option-Direct Plan |
| EQ-SC | Franklin India Smaller Companies Fund – Direct – Growth |
| EQ-ELSS | Quant Tax Plan-Growth Option-Direct Plan |
Download the full data set
Summary
Nifty Next 50 TRI should be a benchmark for mid-cap and small cap fund investors as it is readily available as an index fund. If your mid cap or small cap fund has a poor track record wrt NN50, and you do not care about downside protection you can consider switching to NN50, If you like volatility managed better, then an aggressive hybrid fund would be a better choice: Why Aggressive Hybrid (balanced) Mutual Funds score over diversified funds
Before you make changes, use the Freefincal Robo Advisory Software Template, create an automated plan for investing and then consider my Handpicked Mutual Funds January 2019 (PlumbLine)
Check out the latest from freefincal on YouTube
Subscribe and join the freefincal Youtube community!
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via: Feedburner
- We are also on Google PlusandPinterest
Do check out my books
You Can Be Rich Too with Goal-Based Investing
My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create customg solutions for your lifestye!Get it now. It is also available in Kindle format.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearnerThe ultimate guide to travel by Pranav Surya
This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)Create a "from start to finish" financial plan with this free robo advisory software template
Free Apps for your Android Phone
All calculators from our book, “You can be Rich Too” are now available on Google Play!Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)
Sir,
I have a couple of queries.
1) When you consider 70% outperformance, how much % higher returns did these funds achieve compared to NN50 index during that time.
2) The other funds that under performed or outperformed less than 70% times (say 60% times) what was the returns then? Outperformance could be by 10% for the 50% times but underperformance could only be by 1%. It still is a good deal.
I think direct plans will show better returns going forward due to dramatic reduction in expenses in the last 6 months. I have seen funds expenses have halved which will mean additional returns and good chance that more funds will make the 70% outperformance cutoff.