Please note: This weekly report will be discontinued after this edition. This is primarily because I am exiting from mutual fund investments and will use only ETFs to replace them. This journey of two years served me well in many ways. Personally I could break the glass ceiling that mutual fund invstments need external advisory. I found this quantitative report being the best advisor for me, and I benefitted from it. I also benefitted from these efforts to guage Indain equity market pulse better, which I would use other research approaches to fill such void. I chose the path of a trader than investor, because starting small was the initial excuse. The market being not conducive for investments to beat the trading returns in the last 14 months put the nail on the coffin on my investment dreams. The fact that now a days I get more gains in trading surpassing investment benchmarks and I enjoy trading as a video game has helped me to let the investment dream to slide away further. Any investments in future, will happen through Index level or sector level or commodity level ETFs.
I also benefitted from this regime in many ways. First, I could be creative and implement a heuristic approach to get the necessary insight on a weekly basis. It also bound me to a minimum level of discipline and focus which invoked better professional focus in my journey. Discipline of having to enumerate summary, projecting opportunities and concerns aligned me better with the discipline of learning home work in the background, mainly watching related such insight videos on the YouTube daily for hours. This discipline alone has helped me to integrate all aspects right from the global cues, macro economy, geo politics down to the local market dynamics better and seek a strategic and tactical equation that serves trading on a daily and short term basis.
Now I am confident that I can walk better ahead without this regime as a handicap support, as I plan to expand my professional focus further ahead to embrace new complexities and refinements in my trading approach. I need to promote myself to a "trading terminal" kind of professional discipline sooner, so I have let go amatuer based opporutinity seeking thru report like this. Something needs to give before seeking something newer, as the personal constraints will prevail on time, energy, focus and priorities.
I may still attempt this report once a while, mainly to quench my curiosity, or for the sake of nostalgia, in which case such reports will be published in this blog.
I do encourage someone with analytical mindset to pursue this report themselves, of course with their own twist in design and format. The site I used to download the data is given below (Use short term returns view, not the snapshot view. One needs to download data separately for equity, debt, hybrid and commodity if needing to get separate summary for each category, as I did.):
Side observation: The number of mutual funds to download increased from 1300+ level to cross 2,000+ funds level recently. This gives the indirect indication of organic growth of Indian mutual funds industry in the last two years.
Thank you. Thank you ValueResearch.
(If you are new to this report, please read section "2. How to use this report" first.)
The report for this week:
Report Summary:
This Week:
Last Week:
Summary Statements:
The mutual funds of all types except for commodity funds corrected thru the week. The hope of Santa ralley further vanished thru the week. This is primarily due to the interest rate hike in Japan coming up, which will suck major portion of the remainin 10 Trillion USD borrowing of Yen to be returned to Japan, which will create such a suck up vacuum in the global liquidity. Since the big boys use such easy funds for the emerging market investments, these markets will suffer from this temporary liquidity loss. One major reason for the Indian market to underperform in the recent past is this reason.
Concern:
The Japanese Yen carry trade rollover will shake the global markets short term. The US Fed liquidity measure of 40 billion USD will not compare against 10 trillion USD shortfall resulting (It is estimated that half of 20 trillion USD is already returned to Japanese yen sources) in short term negative sentiment, which could engulf the projected Santa rally till Dec end.
The US is going thru acceleration de-dollarisation around mounting debt crisis. But the US will retaliate with many a measure, which will take time to bring normalcy in its markets ahead. Eventually, the new money pumped by US Fed will help the equities to go up, which may happen from January onwards. But such a positive window will be better utilised to reduce losses in booking equity investments.
The Oracle result last week reconfirmed the fear of AI buble in the US market. Therefore, there will be flight for quality in the US equity market. The stocks with ovrvaluation will seek much lower valuations ahead.
Coming March or so, there is a projection of US equity melt down due to stagflation (Recession combined with hyper inflation).
Though rest of the world including India is ramping up on de-dollarisation, the US developments will hurt other markets including India more than they hurt the US market short term.
The US is negotiating hard with India, as a result the trade agreements could be delayed till March ahead. The decling India exports will continue to suffer till then.
Why Defence funds fell out of favor recently: For two reasons. 1. The US blocked all possibilities of new defence market opening for India in Africa and Europe. 2. The crash of Tejas in Dubai Air Show was a significant sentiment loss for the potential buyers.
Opportunity:
Commodity funds will appreciate further as there is universal flight for Gold and Silver, more for Silver now as the supply shortage in the Silver is high.
The global silver exchanges ar tightening the nose on traders to keep the market sustainable, therefore there will be short term corrections, only leading to violent explosions of prices. This will continue like a pattern with prices on a gradual upward trajectory, but with violent volatility leading to 30-50% loss before making a 100% gain type. So, those leveraging will be wiped out, but a loyal investor staying put will make significant gains.
Silver is expected to hit USD 75 per ounce by Dec end, 100 before March end, 150 before June end. But it may correct from the current 64 level to 58 level very short term in the next two weeks, which will be kind of last buying opportunitiy.
Gold too will fluctuate with less violent volatility. Gold is projected to hit USD 5000 per ounce by March end. But, if the US decides to do accounting adjustments leveraging current gold market value, the Gold may explode further in value, even seeking USD 8,000 level by the same timeline.
Copper is also advancing, as Silver is the new Gold, and Copper is the new Silver. But, the Indian commodity funds do not use copper so far. Copper too will correct in weeks ahead, mimicking the moves of Silver.
1. Combined Funds Top 50
1.1. Combined Funds Top 50 and Bottom 50 Summary:
Top 50 summary:
The funds advnaced with lesser intensity both on weekly average of weekly top 50 and monthly average of monthly top 50. This is primarily due to the correction that came on Friday night on commodity funds who are totally dominating the rally of Top 50 funds. But the annual average of annual top 50 further expanded to above 80% annual return on average due to 2 consistent weeks of rally in commodities.
Bottom 50 summary:
Bottom 50 averages remain depressing. The equities are still underperforming. When we browse thru the bottom 50 lists across the week, month and year, we can see the following sectors still significantly underperforming: Defence, Tourism, Technology, Smallcap, Midcap, Multicap, Felxicap, Momentum, Realty, Infrastructure....
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.
2. 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 combines all mutual fund types, and then seeks top 50 and bottom 50 funds. Therefore, best or worst performing funds are chosen across all fund types (equity, debt, hybrid and commodity).
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 as less as three months usually, even one month in some exceptional market moves. The price to pay in this approach is higher short term gain tax due to short term churn outs and also may be nominal exit load charges. 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 as yellow, if missing above average returns just for one timeline. 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.
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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.
