How to use this report:
1. This report is useful to buy the funds on consistent performance leadership, sell the funds when they give signal of falling from such a leadership. It also gives a watchlist of underperforming funds showing sign of recovery, but not yet qualifying for buy.
The report summary is also useful on gauging market pulse ahead for regular stock investment and trading too.
2. Strategy: It is possible that one could aim to double the mutual fund returns over an year using this report than settling for average return concept using SIPs. Typically mutual fund returns on portfolio level are aimed at 12-15% per annum, this report attempts to help targeting 25-30% instead, but by not going for SIP, rather churn the portfolio to contain performance leaders as the market zigs and zags. In such an approach, the holding period of a fund may fall to three months usually, even one month in some exceptional market moves. The price to pay in this approach is higher short term gains due to short term churn outs. But the superior return indicated above towards doubling annual yield has accounted for such an overhead.
3. This report is also useful for the stock traders and investors. This report gives insight at the level of summary and associated comments. Also, by identifying the bull and bear trends in the funds, one gets better pulse of the market for stock investment and trading. When someone notices a particular fund type in bearish mode or bullish mode here, but if one of the underlying stock shows different behavior, it is an alert to investigate this anomaly either as a spurious behavior or not.
Buy list:
This report highlights the top 50 mutual funds across all the fund types, for the periods 1 week, 1 month and 1year. Also, it marks the funds within these lists with green color if they are having above average return for all the timelines from 1M thru 1Y, highlighting consistency of performance leadership. For the new funds, it will not give green color just for having superior return for 1W and 1M, rather settles for Yellow, waiting for it to show superior performance beyond 1M.
It marks the funds missing above average returns just for one timeline in yellow color. While giving yellow color, even if one of the 1W and 1M timeline is not above average, then both are considered as above average, which is to give some concession for very short term, giving the benefit of doubt, and not get spooked by the volatility very short term.
So, while considering the funds with yellow color, one should look for funds with average returns at shorter timelines as more favorable than the ones other way, meaning above average returns in later timelines but missing the boat in the shorter timelines.
Sell list:
The report highlights bottom 50 mutual funds for 1 W and 1M timelines. It highlights those funds having above average return in these lists for the year (meaning performance leaders within the recent losers) and having below average return for the 1W and 1M timeline. If below average for only one timeline across 1W and 1M, they are marked with lighter red, but if both of them below average, then marked darker red. The funds marked in red are the one to be sold before they lose further performance ahead. The money released from such sales can be used to buy the new performance leaders marked in green or yellow.
Why the funds with below average return are not marked in red if the annual average is below average?:
This is because the focus is to alert the bearish reversal sign only than including those who continue to remain in such a state across various weeks. It is understood that all the funds with below average annual return within the list are bearish and have return erosion risk by continuing to hold.
Watchlist:
When it comes to the annual bottom 50 list, it is used for bullish recovery signs. The funds which have above average return for both the 1W and 1M are considered as bullish recovery signs and are marked in grey. One should not buy these funds just for such recovery signs, but keep in mind to anticipate whether they will eventually appear in the buy list or fizzle out thru coming weeks.
The report for this week:
Report Summary:
This week:
Last week:
Summary Statements:
The funds were bullish overall. However the intensity of bullishness was lesser than the last week for all the fund types.
In case of commodity funds, the bullishness is significant enough to dominate the Top 50 lists in all timelines. Interesting thing is that though the weekly return is bit subdued, the returns for the month and year improved when compared to the last week. This is because the laggards within the Top 50 did better than the last week.
Since a reputed global brokerage like JP Morgan already recommended to ensure 20% allocation to precious metals, one should adjust their investment portfolio accordingly. The commodity funds in the Top 50 lists come handy for such, one could also consider commodity ETF funds for the same.
Concern:
The US market volatility is influencing emerging markets on a daily basis. Though the gold and silver prices remain bullish for next two years, there can be short term corrections, which should be leveraged for more accumulation than selling out.
India is going thru the 2nd quarter results announcements. A definite trend will be confirmed beyond Oct 20. It is anticipated that the results will be better than quarter 1, any deviation to this anticipation will have dampening effect on fund performances.
Net FII money flow out of India has ended through this week, but it can resume if there is havoc in the US market leading to margin calls, and money invested in India becomes handy to meet such dire needs. Until we see a reversal in FII net inflow into Indian equity, we will not see the historic overheating of mutual funds in the short term. Until then, the commodity funds will dominate the buy list except for short term correction periods.
When the commodity funds correct short term, it becomes a window of opportunity for other fund types to pop into the top 50 list for the week and month. Such a possibility has not happened through last two months, which means any correction so far is too short lived for days within a week only. In November, it is anticipated that commodity correction may persist beyond a week or more. Let us see.
Opportunity:
The commodity funds remain to be the once in life time opportunity. They have been so for the last two years, but the investment industry is thumping the chest on this only since last two months due to remarkable returns. One should not worry about short term corrections on commodity funds, the long term superior return possibilities are bright for next two years in spite of overheating.
1. Combined Funds Top 50
1.1. Combined Funds Top 50 Summary:
The Top 50 lists continue to be dominated by commodity funds. Therefore the annual return of all Top 50 lists are superior and closer to each other.
Though weekly average of weekly top 50 diminished from the last week, the monthly average of monthly top 50 and annual average of annual top 50 surged further. This is because, usually there is a divergence of superior performance between gold and silver across weeks. This week, while the performance leaders were less dominant than the last week, but the weekly laggards made better progress for the month and year, meaning the gap between the leaders and laggards narrowed within the Top 50 list through the week.
1.2. Combined Top 50
Green and Amber color marked mutual funds in the list: Since the focus is not only looking for the performance leaders, but also consistent above average performance across all the timelines, the funds are marked in Green or Amber to easily recognize consistency of performance among the leaders.
Green:
If the returns for all the available timelines from 1W thru 1Y is above the average within the list. The fund can not be marked green even with this rule if the returns are not available beyond a month, in which case the fund is marked as amber only.
Amber:
If the returns for all the available timelines from 1W thru 1Y is above the average within the list except for one timeline. For this exception, if any of the weekly and monthly returns are above average, then both timelines are considered to have above average
1.2.1. Combined Weekly Top 50
1.2.2. Combined Monthly Top 50
1.2.3. Combined Annual Top 50
Bearish reversal signs:
Both the weekly and monthly bottom 50 lists are leveraged to identify potential bearish reversal indications of the funds. This is done by marking above average annual return in bold and below average returns for the week and month. The funds with both weekly and monthly below average, but annual above average are marked in darker red, while the funds with only one of the weekly and monthly below averages but with above average annual return are marked in light red.
Bullish reversal signs:
Annual bottom 50 funds list is used to recognize potential bullish reversal. Any fund with above average return for both the week and the month in the list is marked as grey indicating potential bullish reversal.
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Disclaimer:
- This is not a solicitation for mutual fund investment nor an advice. It is only an insight to help investment decisions based on the free MF performance data downloaded from Value Research. Investment decisions are only yours to make.
- Mutual fund investments are subjected to market risk. Read the prospectus of a mutual fund for all the risk information associated prior to investment.
- The author can not be responsible for the omissions or errors in the data from Value Research or the data processing errors if any by the author.
- All your investment decisions need to be based on your decision finally, with no blame to anyone else later.
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