For the second successive month, key equity indices did not push ahead strongly. February saw the Nifty 50 TRI record 1.32% returns, while the BSE 500 TRI gave 1.66% returns. In the Alternative Investment space, out of 351 PMS Investment approaches, 128 PMSes outperformed the Nifty TRI, while 107 PMSes delivered more than the BSE 500 TRI.

In February, FIIs continued to be net sellers and they sold to the tune of Rs 15,963 crore during the month in the cash market. However, DIIs continued to buy and support the markets with their net purchases of Rs 25,379 crore.

The average return from the 351 PMS strategies was 0.49% in February. The top performers’ list in the month was dominated by multi cap strategies, with seven in 10 coming from the segment.

Top 10 PMS Strategies of February 2024

The following are the top 10 funds from the 351 PMS strategies tracked and analysed by PMS Bazaar. 

The top 10 schemes delivered robust performances in February with all recording mid to high single-digit returns. These funds gave 3-6 percentage points more than even the BSE 500 TRI during the month.

Taking the first position in the chart of top performers in the month was the Debt Equity Hybrid PMS fund from Atlas Integrated Finance with 7.68% returns. 

The second spot was taken by the All Weather Portfolio of Torus Oro Portfolio Management with 6.19% returns in February. This fund is designed for all market conditions and invests across stocks, bonds and commodities for diversification. 

Coming third was the India NextPortfolio from HSBC Asset Management India with 5.44% returns during the month. This scheme invests in themes where the future India growth story lies, including glocal (blend of global and local) companies, digitisation and consumption.

The performance of the top 10 strategies and their comparison with Nifty and BSE 500 for the month are given below. 

Category-wise performance of PMS players

During the month, large caps stood out. The category gave 2.06% on average in February, the best among the lot. This was followed by the large & midcap segment with 1.9% average returns in the month. Multi-caps came third with 0.83% returns in February.

All the other categories recorded negative average returns during the month. While thematic funds dipped only mildly and recorded -0.03% in February, small caps had a steep decline of -2.23%. Small & midcap as well as the midcap categories also had a rough run in the month.

The performance of the strategies is depicted below in the chart.

Small caps

February turned out to be a testing period for small cap strategies. During the month, the category gave -2.23% on average.

Of the 18 small cap PMS approaches, one fund outperformed the BSE 500 TRI and two gave higher returns than the Nifty 50 TRI in February.

The Special Situations Portfolio of 03 Securities was the category topper with 2.58% returns in the month. This fund invests in small cap stocks where there is a visible business turnaround and high growth potential.

Vrddhi from ithought Financial Consulting came second with 1.57% returns in February. The fund selects stocks with market leadership characteristics, low debt, strong cashflows with growth drivers and strong governance standards. 

The Super Value Aggressive fund from Right Horizons took the third spot with 1.17% returns in the month.

The performance of the category in February with respect to the BSE 500 TRI and Nifty 50 TRI is depicted in the graph below.

Small & Mid caps

The small and midcaps segment gave -0.79% returns on average during the month. 

Taking the first place in the category was Future Stars from Magadh Capital Advisors with 4.05% returns in February. This strategy looks to invest in good companies at fair prices and hold them for long periods. 

The second place was taken by Roha Asset Managers’ Emerging Champions Portfolio with 3.02% returns during the month. This fund invests in stocks that may benefit from the India growth theme. The focus is on quality management, strong business, accounting and governance, apart from a margin of safety on valuations.

Grabbing the third spot was the Midcap PMS fund from Atlas Integrated Finance with a 1.7% return in February.

Mid caps

Midcap strategies also experienced a tough outing in February. The category gave -0.55% on average during the month. Of the 21 strategies tracked, five funds managed to beat the Nifty 50 TRI and the BSE 500 TRI. 

The Deep Value IV fund from Centrum PMS took the top spot in the category with 2.04% returns. 

Emkay Asset Managers’ Pearls strategy came second in February with 1.9% returns. This fund invests in 15-20 mid and small cap stocks at low valuations with the potential to deliver superior returns in the long run.

Taking a close third position was the Multibagger (Deep Value I) strategy from Centrum PMS with 1.87% returns during the month. 

Large and Mid caps

This category was a reasonably robust performer during the month with 1.9% returns delivered on average by the 15 large and midcap funds in February.

Torus Oro Portfolio Management’s All Weather Portfolio was the best performer in the category with 6.19% returns in the month. 

Taking the second spot was the Large & Midcap strategy of Care Portfolio Managers with 5.15% in February. This fund invests in 18-20 stocks from the top 250 companies by market cap. The strategy will follow a model portfolio concept of investing.

The third position was taken by True Beacon Investment Advisors’ EqFactorQuant with 3.55% during the month. The fund looks to deliver alpha relative to the Nifty 200.

Large caps

The Large Cap category was the best performer in February. The 22 funds in the category delivered 2.06% on average during the month. As many as 15 funds outperformed the Nifty 50 TRI, and 13 beat the BSE 500 TRI. 

The India Business Leader strategy from Right Horizons came on top with 4.88% returns during the month. This fund manages a portfolio having 60% weight from the Nifty and the balance from broader indices to generate a higher alpha.

Taking the second spot in the category was Magnolia from Karma Capital Advisors with 4.1%  in the month. This fund follows a growth at a reasonable style of selecting stocks.

ICICI Prudential AMC’s Large Cap strategy came third in February with 3.62% returns.

In the chart below, the performance of the large-cap category average against the returns of the Nifty 50 TRI and BSE 500 TRI in February is depicted.

Multi caps

The segment that has the highest number of funds gave 0.83% on average during February. Of the 163 strategies tracked, 50 outperformed the BSE 500 TRI during the month and 61 did better than the Nifty TRI. 

Atlas Integrated Finance’s Debt Equity Hybrid PMS fund was the best performer with 7.68% returns in February.

Taking the second position with 5.31% returns during the month was the Multi strategy of Quest Investment Advisors. The fund invests in a blend of value and growth stocks.

AlphaGrep Investment Management’s AlphaMine Systematic India Equity came third in the month with 5.22% returns. The fund takes a quantitative approach to investing.

In the chart below, the performance of the multicap category average against the returns of the Nifty 50 TRI and BSE 500 TRI in February is depicted.

Thematic 

The thematic category had a flat month with the category giving -0.03% on average. Some of the funds in the category did well in February. 

HSBC Asset Management India’s India Next Portfolio came first with 5.44% returns in the month.

Taking the second spot was the 5TX5T strategy of Narnolia Financial Services with 2.68% returns in February. The strategy invests in companies that are part of the Nifty Mid-Small Cap 400 Index. This fund looks to invest in companies with high-quality moat and growth prospects.

The Thematic Opportunities Portfolio from O3 Securities took the third position in the category with 2.13% returns in the month.

Summary and outlook 

The anxiety around the interim union budget got out of the way in February. There were no negatives in the Budget. A few key positives included greater allocation to infrastructure for FY25 and a definitive path to fiscal consolidation, which led to a sharp bond market rally leading to yields cooling down substantially.

India’s GDP grew at a healthy 8.4% in the October-December quarter, sending all-round cheer for markets and other stakeholders. The third quarter corporate results season ended during the month as a mixed bag with sectors such as automobiles, power, and capital goods doing well, while IT and FMCG results weren’t to the market’s liking. As the election season gets underway and the model code of conduct kicks in, government announcements would dwindle for the next two months. With SEBI-mandated stress tests on mid and small cap funds, there is anxiety among investors. Gold has touched its all-time high levels amidst all this uncertainty. The US Federal Reserve is not yet committing to timelines on interest rate cuts.

Markets may thus remain rangebound and occasionally volatile for the immediate future till the election season is behind us and global macroeconomic clues indicate more positive cues.