Gold and Silver rated funds of 2021

The Analyst Rating is a forward-looking, qualitative rating that sets forth Morningstar’s fundamental assessment of a fund’s merits. It takes the form of Gold, Silver, Bronze, Neutral, and Negative, with the highest ratings going to funds the analysts’ research leads them to conclude will outperform over a market cycle, and Neutral and Negative ratings to those they lack conviction in.

The top ratings of Gold and Silver indicate that our analysts expect the rated investment vehicle to produce positive alpha relative to its Morningstar Category index over the long term, meaning a period of at least five years. Read the detailed methodology here.

Mirae Asset Emerging Bluechip Fund is the only fund in equity category which got a gold analyst rating in 2021 while six funds were assigned silver rating. The funds shown below are regular plans.

Gold Rated Fund  

Mirae Asset Emerging Bluechip Fund

  • Category: Large and Mid Cap
  • Star Rating: 5 stars
  • Fund Manager: Neelesh Surana (Since July 2010) & Ankit Jain (Since January 2019)
  • Investment Style: Large Growth
  • Equity Holdings: 67
  • % Assets in top 10 Holdings: 37
  • Top 3 holdings: ICICI Bank, HDFC Bank, Infosys
  • Return: -5.42% (2018), 14.72% (2019), 22.40% (2020), 21.81% (Since inception, as of December 24, 2021.)
  • Analyst Report: August 2021
  • Morningstar Pillars: Process (High), People (High), Parent (Average)
  • Morningstar Analyst: Nehal Meshram

Analyst View

The manager's distinctive stock-picking ability and skilled execution are the defining factors of Mirae Asset Emerging Bluechip Fund. Its long record of excellence, the tenure and depth of its management team, and its adherence to a research-intensive process hold our conviction in its prospects, hence we have assigned a Morningstar Analyst Rating of Gold to all its share classes.

The investment philosophy centres around high-quality businesses with good credentials. The team combines fundamental analysis with quantitative screens, seeking firms with high earnings growth potential, strong balance sheets, and high cash flow. The team also looks for price value gap in stock selection and considers such metrics as P/E, P/B, and EV/EBITDA. The team further filters and invests in companies that generate EBITDA/cash flows of around 100 crores. It avoids smaller companies as the idea is not to buy in at an early stage but to invest in evolving mid-caps that have the potential to become large-caps.

Silver Rated Funds

DSP Mid Cap Fund

  • Category: Mid Cap
  • Star Rating: 5 stars
  • Fund Manager: Vinit Sambre (Since July 2012), Resham Jain (Since March 2018) & Jay Kothari (Since March 2018)
  • Investment Style: Mid Growth
  • Equity Holdings: 51
  • % Assets in top 10 Holdings: 32
  • Top 3 holdings: Supreme Industries, Manappuram Finance, Ipca Laboratories
  • Return: -10.15% (2018),  9.21% (2019), 23.64% (2020), 15.55% (Since inception, as of December 24, 2021.)
  • Report: August 2021
  • Morningstar Pillars: Process (Above Average), People (Above Average), Parent (Above Average)
  • Morningstar Analyst: Himanshu Srivastava 

Analyst View

Vinit Sambre took independent charge of this fund in July 2015 after its erstwhile manager Apoorva Shah moved to the fund house’s offshore division. He is a seasoned analyst and the dedicated small/mid-cap specialist with the fund house. He also has more than a decade of portfolio management experience, largely in the mid- and small-cap space, under his belt. Therefore, the fund’s strategy allows him to play to his strength.

Vinit Sambre combines absolute and relative valuation measures when picking stocks in the small/mid-cap space. He scouts for companies that have sustainable competitive advantages over their peers and dominant market shares in their industries. He also tracks company management decisions to see how they pan out. This is followed by meetings with the company’s management. Subsequently, he invests only when he is comfortable with the management’s assumptions, forecasts and its capabilities.

HDFC Top 100 Fund

  • Category: Large Cap
  • Star Rating: 2 stars
  • Fund Manager: Prashant Jain (Since June 2003), Sankalp Baid (Since January 2021)
  • Investment Style:  Large Blend
  • Equity Holdings: 51
  • % Assets in top 10 Holdings: 56
  • Top 3 holdings: ICICI Bank, HDFC Bank, Reliance Industries Ltd
  • Return: 0.13% (2018), 7.70% (2019), 5.91% (2020), 19.12% (Since inception, as of December 24, 2021.)
  • Analyst Report: June 2021
  • Morningstar Pillars: Process (Above Average), People (High), Parent (Average)
  • Morningstar Analyst: Himanshu Srivastava

Analyst View

Manager Prashant Jain’s long-term approach to investing, which entails taking high-conviction bets and sticking to them if they underperform over the short term, has often yielded satisfactory results. Jain plies a research-driven approach with a focus on investing in reasonably priced, quality businesses. The execution has been noteworthy. Yet, on some occasions, the strategy has resulted in significant underperformance for the fund, such as in 2013 and 2015, and again in 2019 and 2020. Though it made a comeback every time it had hit a nadir, the risk in the strategy has also risen steadily.

The process is robust, with research at its core. Prashant Jain adopts a hands-on approach, to get an in-depth understanding of the business and find firms with robust business models, clean balance sheets, and competitive strengths. Though the bottom-up style is clearly integral to his investment style, the top down isn’t ignored either. Both relative and absolute valuation methods are used to pick stocks. The investment style can be described broadly as growth at a reasonable price. For this fund, Jain is clearly mindful of the benchmark index, the IISL Nifty 100, as he targets having “matched stock positions” of at least 60%. He also doesn’t shy away from taking underweight/overweight positions at sector level when he sees opportunities.

ICICI Prudential Multi Asset Fund

  • Category: Large Value
  • Star Rating: NA
  • Fund Manager: Sankaran Naren (Since February 2012), Ihab Dalwai (Since June 2017) and Anuj Tagra (Since May 2018)
  • Investment Style: Large Value
  • Equity Holdings: 58
  • % Assets in top 10 Holdings: 49
  • Top 3 holdings: NTPC, Bharti Airtel, ICICI Bank
  • Return: - 2.19% (2018), 7.73% (2019), 9.94% (2020), 21.30% (Since inception, as of December 24, 2021.)
  • Analyst Report: March 2021
  • Morningstar Pillars: Process (High), People (High), Parent (Average)
  • Morningstar Analyst: Nehal Meshram

Analyst View

ICICI Prudential Multi Asset Fund (erstwhile ICICI Prudential Dynamic) witnessed a change in Morningstar Category, from the flexi-cap to multi-asset category, consequent to the implementation of SEBI categorisation norms. The fund invests at least 10% across the three asset classes: equity, debt, and REITs/gold. On the face of it, the change looks significant, but the broad contours of the fund strategy remain the same. Hence, the fund continues to remain a credible investment option, with Sankaran Naren managing the strategy with his distinct skill of uncovering value opportunities with a judiciously applied investment process. The fund earns a Morningstar Analyst Rating of Silver.

The fund follows a disciplined investment process and an active portfolio management approach. Lead manager Sankaran Naren follows an aggressive contrarian strategy and is willing to buy companies that are in the midst of a short-term crisis or transitions but remain fundamentally sound. He continues to dynamically manage the equity and debt portion based on market valuation and maintains the gross equity level of 65%.

Taking cash calls is integral to the strategy, but in recent times the manager has not gone beyond 15%. He uses an in-house model based on the historical price/book value of the markets to determine the fair valuation. The model uses the deviation between its assessment of the fair valuation and the market present valuation to indicate the size of the cash call.

HDFC Short Term Debt Fund

  • Category: Short Duration
  • Star Rating: 5 stars
  • Fund Manager: Anil Bamboli (Since June 2010) and Sankalp Baid (Since January 2021)
  • Credit Quality: High
  • Interest Rate Sensitivity: Limited
  • Bond Holdings: 168
  • % Assets in top 10 Holdings: 17
  • Return: 7% (2018), 9.71% (2019), 10.96% (2020), 8.47% (since inception, as of December 24, 2021.)
  • Analyst Report: February 2021
  • Morningstar Pillars: Process (Above Average), People (High), Parent (Average)
  • Morningstar Analyst: Himanshu Srivastava

Analyst View

HDFC Short Term Debt benefits from seasoned manager Anil Bamboli's investment style, which focuses on keeping risks at bay. Bamboli's investment approach is reasonably simple and straightforward with an emphasis on safety and liquidity. The basic premise of the fund is to offer a true-label short-term fund to investors and to optimize returns without exposing them to extensive credit risk. In fact, this is the investment team's favourite playing ground. Over the years, the fixed-income team at HDFC Mutual Fund has established itself in managing low-duration and high-credit-quality strategies. Hence, the manager is playing to his strength.

Manager Anil Bamboli seeks to add value through security selection rather than taking duration bets as it is typically maintained within the fund's defined investment mandate. The investment approach relies on fundamental research. It entails combining qualitative aspects with quantitative analysis. The investment team prepares the coverage list with a strong focus on the company management and track record, financial strength of the promoter group, and corporate governance standards. Meetings with management are followed by rigorous quantitative analysis in which the focus is to get a measure of the company's creditworthiness. The team studies the company's cash flow and relevant ratios--leverage, coverage, and solvency. At this step, the team also draws on the expertise of their counterparts in the equity team.

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Source: Morningstar India Website