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A stock mutual fund is one of the best ways to generate wealth over the long term. These solid equity funds have achieved 40 percent CAGR in three years. Should you invest? Let’s find out.
An indirect approach to gaining exposure to the stock market is investing in mutual funds. A mutual fund is basically a pool of money that is collected from investors and invested in different asset classes by a specialized fund manager. It is essential that you evaluate the past performance of a mutual fund before investing your hard-earned money as not all of them can outperform their benchmark indices.
Even though past performance does not guarantee a similar level of performance in the future, it is still important to be aware of it. In this regard, here is a list of the top three mutual funds that have given profitable returns of more than 40 percent compound annual growth rate (CAGR) in the previous three years.
Quant Small Cap Fund
Quant Small Cap Fund is a small-cap investment managed by Quant Money Managers Ltd that invests in stocks of companies ranked 251 and above in terms of total market capitalization, making it a riskier fund with significant drawdowns. The fund has the largest share (12.72 percent) in construction and engineering, which was even higher in September 2022, with 19.41 percent.
Thanks to the recent multibagger gains in the small-cap category after the pandemic, the fund’s three-year CAGR is an unparalleled 57.28 percent. With an expense ratio of 0.62 percent, it has an AUM of Rs 2,355 crore. The reference index of this fund is the Nifty Smallcap 250 Total Returns Index (TRI).
Quantum Infrastructure Fund
Quant Infrastructure Fund, another fund from Quant Money Managers, is a thematic fund focusing on the infrastructure sector, with a small AUM of Rs 778 crore. Ambuja Cements (9.28 percent), Reliance Industries (8.87 percent) and Adani Ports and Special Economic Zone Ltd (8.68 percent) are the top three companies in the portfolio.
PSU banks have the largest exposure in the portfolio, which is one of the reasons why the fund’s returns have risen over the past six months. The trailing three-year CAGR is 44.66 percent, with an expense ratio of 0.64 percent. It is a growth fund with Nifti Infrastructure TRI as the benchmark index.
ICICI Prudential Commodities Fund
ICICI Prudential Commodities Fund is a thematic fund that invests in commodity based companies. Iron and steel companies had the largest share of the fund (31.12 percent) in November 2022, followed by construction and engineering stocks at 30.07 percent.
When it comes to individual stocks, his three biggest holdings are JSV Steel, UltraTech Cement and Ambuja Cements. The fund has a minuscule AUM of Rs 738 crore and a three-year CAGR of 44.1 percent. The expense ratio is slightly higher than the average, 1.07 percent, but this is justified by the performance of the fund. The reference index of the fund is Nifti Commodities TRI.
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