(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:
All types of mutual funds recovered thru this week. The recovery of commodity funds is very remarkable hinting a new bull run for short term, thanks to the short squeeze on gold and silver prices internationally. When the commodity funds prices fall, it is only another window of opportunity to buy them, as a general rule ahead. When compared to commodity funds returns, all other fund types fade in the background. But, it is hard for people to let go the historic attachment on equity funds, those who can let go, will ride the commodity fund trend ahead and become richer.
Concern:
Japan has been increasing interest rate, now it has hit a level (1.83% or so), it does not make sense to borrow it and invest elsewhere in the world (given bearish sentiments ahead). Therefore, there is a run as to exit existing investments and return the Japanese Yen. This run works like a margin call, as a result, the US equity is struggling to recover for the Christmas ralley, the Crypto market is getting hammerred, the Gold and Silver correction got unnecessarily extended. But since the western Gold and Silver exchanges ran out of physical gold / silver, the eastern markets are able to reflect the true demand, and as a result there is a short squeeze on the precious metals. This seasaw in the commodity market will continue, but the prices of precious metals will only be going up with 2 step forward 1 step backward dance.
When it comes to the Indian equity, the sideway sentiment will continue. The US India trade agreement will not happen for another month now, and it has lost its strategic value for now. Though India has an organic growth story ahead, the equity market ramps up only if the FII funds flow in, and there is no urgency for the same to come in big quantities for short term.
Opportunity:
Once the Japanese yen return squeeze settles down in one or two weeks, the US market will see the Santa Clause Ralley for the rest of the month. This will be the last opportunity for all equity investors to trim the position, as the US equity market is expected to correct significantly by March-May 2026, which will send global tremors in the equity market.
But, this is the age of commodity funds. The fair value of Gold today is approx. USD 24K per ounze, which is 5-6 times current value. This value is due to the global burgeoning debt, especially from the US and Japan. So, the prediction is that the Gold will seek this value eventually over the next four years. The story of Silver is something better. While it will catch up with the Gold, its relative value wrt to Gold will improve further. It used to be one hundredth of Gold, now it is approximately, one Seventieth. It will improve further towards one fifteenth over the next four years. Therefore, Silver is improving in its value beyond everyone's expectation.
It is adviced therefore, that one will invest in Silver for two quantities of cash, and the Gold for one quantity of cash.
Though there can be a correction in Gold and Silver price on alternate weeks, it will be mild and an opportunity to invest further.
Those ignoring global Gold and Silver opportunity for next four years will cry further deep and dry, compared to the opportunity lost in the last two years already.
India equity will also respond with the Santa Clause ralley for the second half of December with positive sentiment, which is a perfect opportunity to let go underperforming equity / equity funds, and divert the new cash into Gold and Silver funds ahead.
1. Combined Funds Top 50
1.1. Combined Funds Top 50 and Bottom 50 Summary:
Top 50 summary:
The weekly return average of weekly top 50, monthly return average of monthly top 50 and annual return average of annual top 50 improved significantly thru this period, mainly due to recovery of commodity funds. Commodity funds dominance in top 50 list will continue for next six months, with some exceptional weeks of mild corrections.
Bottom 50 summary:
Bottom 50 returns improved for the week and month, thanks to the broader equity recovery recently. But the annual bottom 50 returns sank further, as the gap between performer and underperformer expanded.
Looking at the bottom 50 list for the week and the month, defence, energy, power and realty, smallcap funds are still having bearish tendencies for now.
Looking at the annual bottom 50 list for the bullish recovery signs, it is sad that technology funds are still stuck in the annual bottom 50, and only going sideways with bullish recovery signal, but unable to get out of this infamous list. The small cap funds are also showing bullish recovery ahead, which is that upcoming Santa Clause ralley may kick out the small cap funds out of the bottom 50 lists.
Bottom line, with crazy price movements ahead with commodity funds, one who is fond of equity investments only will continue to cry with dry eyes, for the unfairness of the equity realities ahead.
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.
