We have some empirical evidences that if someone invests six months immediately before the Lok Sabha election date, he reaps the handsome gains over next 18 months post the elections. Please find below the historical data confirming the same-
| 6 Months Prior to Parliament Election | Sensex Value | 12 Months After Parliament Election | Sensex Value | Time Period (Months) | Absolute Return |
|---|---|---|---|---|---|
| 30/05/1989 | 692.24 | 30/11/1990 | 1196.25 | 18 | 72.81% |
| 17/12/1990 | 1188.54 | 17/06/1992 | 3140.80 | 18 | 164.26% |
| 02/12/1995 | 3036.23 | 02/06/1997 | 3808.18 | 18 | 25.42% |
| 09/04/1999 | 3441.19 | 09/10/2000 | 4056.07 | 18 | 17.87% |
| 12/11/2003 | 5005.77 | 12/05/2005 | 6456.82 | 18 | 28.99% |
| 14/11/2008 | 9385.42 | 14/05/2010 | 16944.60 | 18 | 80.54% |
| 13/11/2013 | 20194.40 | 13/05/2015 | 27251.10 | 18 | 34.94% |
Our Strategy:-
There is a general psychology of the investors to wait for the Election to get over and investing thereafter. Looking at the above study of past trends of the Elections years, investors must start investing immediately to get the higher returns in next 18-24 months’ time horizon. Very significantly, instead of putting the lumpsum investment, one should opt for Systematic Transfer Plan (STP) preferably maximum in 3 to 6 installments to generate the better returns making best use of prevailing volatility in the Equity market.
Suggested Focused Equity schemes for STP:
ICICI Pru Bluechip Fund:
- A diversified Large-cap equity fund, managed in a Value / Contrarian style
- Fund generally has a well-diversified portfolio with a layer of volatility management using stock & index derivatives
- The fund manager follows a value style of investing and is open to investing in out of favor stocks or sectors that hold promise of visibility of earnings in the long term
- One of the most consistent performers in the large cap funds category, the fund tends to vary the sector allocation to generate alpha. An all-weather, true to the label Large Cap Diversified Equity fund
CAGR(%) 1Y 2Y 3Y 5Y Since Inc ICICI Pru Blue chip Fund -3.48% 8.21% 15.87% 14.58% 13.46% Peer Set average -1.68% 8.24% 14.44% 12.55% Scheme Quartile 2 2 1 2
Mirae Asset India Equity Fund:
- One of the most consistent diversified Equity funds in industry, managed by one of the most experienced equity fund managers, since 2008, with an impressive track record of outperformance
- It follows a flexible investment strategy across sectors, market caps, themes and style to deliver consistent performance
- The fund has been able to outperform the index consistently due to superior choice of stocks and active management of stock weights within the index or sector
- The fund's goal is to identify future growth trends at an early stage and focus on companies which have strong pricing power and are sector leaders
- The investment philosophy of the fund is built on three core principles: quality businesses with stable earnings, strong management and attractive valuation
- The fund manager’s focus on capital preservation has led to less volatility and lower drawdowns through the cycle
CAGR(%) 1Y 2Y 3Y 5Y Since Inc Mirae Asset India Equity Fund 1.74% 12.00% 19.73% 19.10% 15.50% Peer Set average -8.01% 5.29% 13.69% 15.79% Scheme Quartile 1 1 1 1
HDFC Small Cap Fund:
- A Small -Cap equity fund, managed by Chirag Setalvad
- Fund generally has a well-diversified portfolio of 70-75 stocks. Fund manager is actively picking stocks and does not mimic its benchmark. He combines both absolute and relative valuation parameters to pick up stocks at reasonable prices.
- The fund manager invests where ever he finds value (in line with his investment strategy) he likes to go about for it
- Target high quality small cap businesses which are undervalued and have a sustainable franchise
- Fund manager buys businesses which have a – 1. minimum RoE of 15-20%, 2. earnings growth of 16-17%, 3. P/E in the range of 15-18 and 4. a sound corporate governance practice
- Ability to identify tactical opportunities and active management of long term holdings have helped the fund generate significant alpha in the long term
CAGR(%) 1Y 2Y 3Y 5Y Since Inc HDFC Small Cap Fund -12.12% 12.28% 19.78% 19.33% 13.52% Peer Set average -21.22% -0.21% 10.82% 18.42% Scheme Quartile 1 1 1 3
Aditya Birla Focused Equity Fund:
- A Focused equity fund, managed by Mahesh Patil
- Fund have a concentrated large cap portfolio. Fund manager is actively picks stocks and does not mimic its benchmark
- The fund manager follows a value style of investing and is open to investing in out of favor stocks or sectors that hold promise of visibility of earnings in the long term
- Focused strategy allows the fund manager to allocate a higher proportion of the fund to high conviction stocks
- Fund is highly concentrated to few selected sectors, with top five sectors together accounting for 62% of its assets
- With a concentrated large-cap portfolio, fund could generate a greater alpha by focusing on fewer stock ideas with higher weights while building relative safety of large caps
- Concentration risk is mitigated by consciously investing in companies with high quality management and stable cash flows
CAGR(%) 1Y 2Y 3Y 5Y Since Inc Aditya Birla SL Focused Equity Fund -1.83% 5.24% 12.70% 14.66% 13.64% Peer Set average -4.23% 5.19% 12.13% 13.70% Scheme Quartile 2 2 3 3
Disclaimer:
Mutual Fund Investments are subject to market risks. Please read the documents carefully before investing.
