The top performers’ list in July includes small & midcap, thematic, smallcap, midcap and sector strategies as markets closed higher for the second successive month

The Nifty touched a fresh high of nearly 25,000 before ending 4% up MoM at 24,951 in Jul’24. Notwithstanding the noise around Union Budget 2024, the index closed higher for the second successive month and recorded the second-best MoM returns in the last seven months. Midcaps and smallcaps again outperformed largecaps in Jul'24, continuing the broader trend in the calendar year 2024. 

The 4.68% average return notched up by the over 400 Portfolio Management Service (PMS) approaches tracked by PMSBazaar beat the Nifty 50 TRI benchmark's 4% up move and S&P BSE 500 TRI’s 4.44% gain. The alpha charge was led by Small Cap (6.19%) with the highest category average returns, followed by Thematic (5.83%), Large & Midcap (5.67%), Midcap (5.43%), Small & Midcap (5.28%), Multicap (4.49%) and Large Cap (4.29%) strategies. Broadly, all categories beat the benchmarks in July 2024. 

Overall, out of 408 PMS approaches, 235 (58%) of them have beaten the Nifty 50 TRI and thus maintain the winning trend seen in previous months. If you benchmark them with S&P BSE 500 TRI, then too a respectable 50% outperformed. 

The top-10 PMS performers’ list in July was dominated by approaches from small cap (3) and mid cap (3), followed by sector, small & mid cap and thematic. This shows these segments of the market likely experienced strong growth during the month, as investors may have favoured these companies due to their potential for higher returns, although they also come with greater volatility.

Top 10 PMS Strategies of July 2024

The top 10 schemes have delivered strong performances in July compared to the equity benchmark index – Nifty 50 TRI (4%). In fact, the top 10 winning approaches clocked 10-24% returns in July, thus generating 600-2,000 basis points of alpha over Nifty 50 TRI. 

Money Grow Asset Small Midcap emerged as the best overall performing PMS in July, with the approach delivering 24.4% returns. The investment approach of this 7-month-old small & mid cap PMS is based on generating returns by investing in participating instruments of companies where the fund manager has confidence in the opportunity in the sector/sub-sector, in the vision and governance of the management, and expects a 15-25% CAGR growth in the underlying business over the next 5-7 years. Notably, the strategy was the 2nd best performer in June.

July’s 2nd best and 3rd best performing PMSes belong to Wallfort PMS and Advisory Services. Its Diversified Fund clocked 14.45% in July, while Ameya Fund gained 13.1% this month. Both the PMS approaches fall into mid cap category. The Diversified Fund's investment approach centres around investing in companies that have strong tailwinds for growth with diversification in all growing sectors, have a quality franchise and are available at a reasonable valuation. Ameya Fund's stated objective is to generate absolute returns across market cycles by investing in undervalued equities, thereby showing value investing principles.

The performance of the top 10 strategies and their comparison with Nifty 50 TRI for the month are given below.

Category-wise performance of PMS players

With July, just like June, being a month of the sustained up move, mid caps and small caps outshined large caps. FIIs turned buyers for the second consecutive month - USD 3.3 billion - in Jul’24. DII inflows were healthy at USD 2.8 billion in Jul’24. 

In a risk-on market, portfolios tilted towards relatively higher risk and reaped higher rewards. Small Cap PMSes were the best, followed by Thematic, Large & Mid Cap, Mid Cap, Small & Mid Cap, Multi Cap and Large Cap approaches.

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

Small cap category 

July 2024 witnessed small cap category outshine the overall market, rising 6.19%. Out of 23 PMS schemes tracked in this category, 16 outperformed S&P BSE 500 TRI (4.44%) and 17 outsmarted Nifty 50 TRI (4.%). So, a majority of the approaches in the category gave more return than the markets and generated alpha for investors.

With an 11.4% gain in July, Dynamic Equities’ Emerging strategy clocked the best gains in the category. Dynamic Equities is a little-known PMS provider from Kolkata, but the performance of its offerings is making heads turn.  

In second place was Equitree Capital Advisors’ Emerging Opportunities PMS with an attractive 10.61% gain in July, after clocking a 16.72% return in June. This small and micro cap focused approach targets firms under-researched by the markets and/or are under-owned by institutional investors.

Ranked 3rd in the Small Cap PMS category was ithought Financial Consulting’s VRDDHI with 10.09%. The strategy’s philosophy is to be selective with portfolio companies, paying attention to entry valuations, and deploying capital in phases.

Following are the top performers in small cap category:

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

Thematic category

Continuing the June trend, July saw markets rise further. This month saw thematic investing perform well, with the category coming in the 2nd position among the niches tracked by PMSBazaar. 

With an average return of 5.83%, the thematic category, which includes approaches focussed on digital, life sciences, lenders, MNCs etc, beat Nifty 50 TRI. Out of the 16 thematic PMS offerings, all 16 posted positive returns. Overall, the outperformance hit rate against Nifty 50 TRI was over 62% as ten offerings outshone the market. 

Valcreate Investment Managers's Lifesciences and Specialty Opportunities bagged the 1st spot with a whopping 12.13% return in July. This thematic portfolio invests in 10-20 stocks, primarily in Pharma, Healthcare, and Chemicals, with no sectoral limits.

In the second rank was Green Portfolio’s Super 30 Dynamic with a 9.43% gain this month. Clearly, it's a high-risk, high-reward approach that targets turnaround businesses with the potential for significant medium to long-term gains, paid off in July.

In the 3rd slot was InCred Asset Management’s Healthcare Portfolio with a 9.32% return. This PMS approach primarily targets the Indian healthcare sector with a focus on balancing risk and return. 

Top 3 PMS approaches: Thematic category

Large & Mid Cap category

After a stable show in volatile May, the Large & Mid Cap category performed decently in June and continued the trend in July. The category as a whole posted a 5.67% return, which handily beats benchmarks Nifty 50 TRI and S&P BSE 500 TRI. Out of 14 approaches assessed in July, 12 delivered strong performances and beat Nifty 50 TRI (4%).

Leading the pack was Kolkata-based Dynamic Equities’ Bluechip PMS with 8.62%, a good 300 bps more than the category average. The PMS firm aims to focus on high alpha at substantially lower risk, with a focus on long-term quality and growth.  

At a close second place, was True Beacon Investment Advisors EqFactorQuant (EFQ) with 8.05% return. This was the second straight month when True Beacon EFQ was 2nd in this space. 

At 3rd place in the large & midcap category was Torus Oro Portfolio Management’s All Weather Portfolio with 7.90% rise. Torus Oro All Weather follows a rule-based investment strategy designed for all market conditions. 

Following are the top performers in large & mid cap category:

Mid Cap category

In July, the performance of 25 mid cap PMS approaches was strong, resulting in an average return of 5.43%. 

With a majority of approaches demonstrating notable performances, 16 outperformed Nifty 50 TRI benchmark while 15 outshined S&P BSE 500 TRI benchmark.

Among the best Mid Cap performers in July are Wallfort PMS and Advisory Services' Diversified Fund (up 14.45%) and Ameya Fund (up 13.10%). These two investment approaches are also among the overall top-3 across more than 400 tracked by PMSBazaar. They beat the Mid Cap category by a big margin of 800-900 bps.

In the 3rd place was Asit C Mehta Investment Interrmediates’ ACE – Midcap with a whopping 10.62% return in July. This strategy is essentially a multi-asset portfolio offering stability and growth through diversified assets and scientific investing.

Following are the top performers in the midcap category: 

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

Small & Mid Cap category

The Small & Mid Cap PMS category with 36 offerings generated an average return of 5.28% in July, comprehensively beating Nifty 50 TRI and S&P BSE 500 TRI gains. In fact, about 58% of the schemes generated alpha. 

Leading the category yet again in July, after June, is Money Grow Asset Small Midcap with a stunning 24.4% gain. This performance has also earned it the overall 1st slot in the overall tracked PMS universe for the month as mentioned before.  

In second place was Composite Investments' Emerging Star Fund with a 10.03% gain, This strategy aims for long-term capital growth by investing in promising small and mid-cap companies. The "flywheel" investment style focuses on companies with sustainable growth potential, while the "less is more" philosophy prioritises risk reduction. 

The 3-year-old Badjate Stock Shares Aggressive strategy, yet again, earned a top-3 slot in this category with a 9.10% gain in July. The offering aims to generate higher alpha by investing in high beta stocks and the manager seeks to invest in stocks that have the capability of generating returns in the short-mid term horizon. 

Following are the top performers in small and midcap category:

Multicap category

The largest space in the PMS universe, Multicap strategies currently stand at 180 and thereby account for ~45% of the tracked offerings. This crucial segment posted an average 4.49% return in July, edging past S&P BSE 500 TRI and Nifty 50 TRI. 

In essence, 103 schemes i.e. 57% beat Nifty 50 TRI. Compared with the S&P BSE 500 TRI, the outperformance hit rate stood at a respectable 52%. 

The tilt towards mid cap and small cap stocks helps the cause of the Multi Cap PMS category. The diversified nature of portfolio construction of Multicap PMSes means that during volatile times, large caps shield but during risk-on periods, the mid and small caps help lock in neat gains. 

With numerous schemes vying for the top spots, the competition for the top three positions is always fierce. The number 1 multi cap PMS offering in July was Ambit Global Private Client’s Alpha Growth with a 9.88% gain. This small and midcap focussed portfolio aims to deliver alpha by investing in high-growth companies at reasonable valuations, with a GARP approach and a long-tail strategy.

Closely following in the 2nd rank was Axis Securities’s Kaizen PMS with a 9.45% gain in July. This is a quality and growth-focussed investment approach targeting the manufacturing theme across 11 sectors. 

Kaizen was very closely followed by Motilal Oswal AMC’s Multifactor Equity at 3rd slot with 9.30% rise. The approach aims to invest in companies demonstrating strong performance across various investment factors like quality, value, momentum, and low volatility. 

Below is a table highlighting the top performers of multi cap category:

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

Large cap category 

Given its sharper focus, the Large Cap PMS space is much more concentrated since it aims to play in a single market capitalisation band. Like in June, July saw the prevalence of risk-on sentiment. Naturally, Large Cap PMS approaches were performed but this wasn’t an exceptional month by any standard. 

Posting a category return of 4.29% for Jul’24, the Large Cap PMS universe on the whole did beat Nifty 50 TRI (4%), but outshining S&P BSE 500 TRI (4.44%) proved a tough ask. Nevertheless, some Large Cap PMSes out of the 25 tracked by PMSBazaar churned out notable performances. About half of the 25 approaches delivered alpha.

In July 2024, Tulsian PMS secured the numero uno spot among Large Cap PMSes with a performance of 9.55%. This large-cap focussed approach aims for long-term wealth creation through a diversified basket of 10-15 fundamentally strong stocks, using a core-satellite approach.

At the 2nd spot in the Large Cap space was Legend by Concept Investwell, with a 7.93% return. This low-volatility strategy aims to provide long-term capital growth by investing mainly in large-cap stocks from the top 100 BSE-listed companies.

Karma Capital Advisors’ Magnolia took the third position with a 6.17% up move in July. The strategy aims for long-term superior returns by investing primarily in large-cap stocks, using a bottom-up GARP strategy.

The top 3 performers under this category are: 

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

Bottom line 

The Q1 FY25 corporate earnings results have met expectations, primarily driven by strong performances from major companies. The BFSI and Automobile sectors have been the primary growth drivers. The recently presented Union Budget 2024-25, while lacking significant consumption-boosting measures, reaffirms the government's commitment to long-term macro stability and fiscal deficit consolidation. This focus, coupled with India's strong economic growth prospects, stable currency, and moderating inflation, is expected to sustain positive market sentiments. Nifty-50 valuations are near their long-term average. With cautious optimism in the equity market, portfolios with selective focus on companies with strong fundamentals and growth potential will continue to perform.

India's combination of significant market size and robust growth presents a promising outlook for the long term. The re-election of the Modi government ensures policy continuity, which is likely to accelerate economic progress. The government's focus on infrastructure development, capital expenditure, and manufacturing will play a crucial role in driving this growth.