If you are looking to invest in a thematic fund, you may consider MNC funds.
Though this theme has underperformed over the past year--the Nifty MNC index has given a return of -8.39 per cent compared to the Nifty 50’s 9.38 per cent return--the theme has a good long-term track record. The Nifty MNC index has given an annualised return of 11.84 per cent over the past five years while the funds in this category have given an average annualised return of 13.54 per cent over the same period.
Strengths of this category: The greatest advantage of investing in MNC funds is that you get to own quality companies in the fund portfolio. The management of MNCs tends to be professional. These companies also have sound corporate governance practices, with an emphasis on maximising shareholder value.
Many MNCs are market leaders in their categories, owing to their strong brands, technological leadership, and the strength of their intellectual property. The global parents of these companies have a large bouquet of innovative products, which they can introduce into the Indian market at a steady pace, as and when this market is ready for them. This gives MNCs an edge over their Indian rivals, which may not have a ready pipeline of innovative products.
MNCs also tend to be good at making capital allocation decisions. Many Indian promoters have a tendency to diversify into unrelated areas. Such diversifications often do not work, and they cause wastage of capital. MNCs, on the other hand, tend to stay sharply focused on their areas of core competence.
Instead of wasting their surplus capital on poor-quality diversifications, MNCs tend to pay out dividends to their shareholders. Hence, the dividend payout ratios of these companies tend to be high.
Finally, since the companies in this space are of a high quality, they tend to be resilient during economic and market downturns. As a result, the portfolios of these funds tend to decline less when the market environment turns adverse.
Esta historia es de la edición July 2019 de Investors India.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición July 2019 de Investors India.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor? Conectar
Why Should One Consider Investing In A Large Cap Fund?
An investor’s ability to create wealth in the longterm is directly linked to how well they create an all-weather investment portfolio.
Meeting Medical Costs with Health Insurance Plans
A medical emergency can occur at any time and to any person.
Water: The Elixir of Life
If there is magic on the Planet Earth, it is contained in water - Loran Eiseley.
The 100 Crore Wealth Legacy! A Vision
Generating 100 crores from modest investments is feasible with a long-term outlook, though market timing remains elusive.
Unleashing Potential: The Dynamics of AI in India
After attending the Microsoft AI Tour recently, I attended a few conferences and met with some government officials over the past few weeks during my macro tour.
The Growing Role of Philanthropy in Wealth Management: A Shift Towards Purpose-Driven Strategies
In recent years, India’s economic landscape has seen a notable shift with the rise of High-Net-Worth Individuals (HNWIs), who are reshaping the financial ecosystem.
Are You Drinking Too Much Coffee? If Yes, Then You Are Taking A Big Risk!
Coffee contains caffeine in maximum percentage:
LIC MUTUAL FUND
According to World Bank data, women represent 49.7% of the world population. In India, women represent 48.4% of the population but they contribute only around 18% of the GDP compared to 41% in China.
Maintain 15-20% exposure to US funds in your equity portfolio
2022 was a difficult year for stocks in the United States (US), particularly for the large tech companies known as FANG. Concerns about the Russia-Ukraine conflict, inflation, etc led to a significant drop in their values.
Systematic Investment Plan (Sip): Meaning, Benefits, How It Works
We all dream of buying a car, dream house, gadgets, etc. This all can come to reality if we have strong financial planning. One of the best options is to start investing in mutual funds through a SIP (Systematic Investment Plan).