Latest news with #ChiragMuni
Economic Times
a day ago
- Business
- Economic Times
Nippon India Taiwan Equity Fund tops return chart with 22% in May. Can the momentum sustain?
Short-term rallies tend to be volatile and unsustainable as they are often event-driven. Nippon India Taiwan Equity Fund emerged as the top performer among all equity funds — including sectoral and thematic — in May, delivering a return of 21.69%. This was out of a universe of approximately 558 funds during the period. Experts attribute this performance to a sharp rally in Taiwanese technology and semiconductor stocks, which benefited from strong global demand for electronics. Also Read | NFO Insight: Nippon Income Plus Arbitrage Active FoF opens. Is it time to add this emerging category to your portfolio? 'Over the past few months, international markets have experienced increased volatility, largely driven by country-specific events. In China, the announcement of a major stimulus package in late September 2024 sparked a sharp market rally. Similarly, in the U.S., post-election speculations, tariff wars, trade deals, etc. ,increased market activity,' Chirag Muni, Executive Director, Anand Rathi Wealth Limited, shared with to Chirag Muni, short-term rallies tend to be volatile and unsustainable as they are often event-driven. Over the long term, Indian markets have outperformed international funds, offering higher return potential and a broader range of investment categories."Indian markets offer easier access to data and are simpler to track, making them more suitable for investors. Given the complexity of global markets, well-diversified domestic funds remain the better choice for investors,' he added. Another expert highlights four key factors influencing a fund's performance: returns relative to the underlying index, currency movements, the performance of the Indian rupee against the U.S. dollar, and the fund manager's value addition. There is a high correlation of Taiwan stocks with the US Nasdaq Composite index as TAIEX's 50–60% weightage is in semiconductors and electronics (e.g., TSMC, Hon Hai), aligning closely with the Nasdaq's tech-heavy composition, he added. 'Both indices are highly sensitive to global chip demand and U.S. tech sentiment, amplifying their correlation. For the month of May, Nasdaq gained 9.56%, which led to accelerated gains in Taiwan-based technology companies in the portfolio,' Atul Shinghal, Founder and CEO, Scripbox, shared with ETMutualFunds. As per the last data available, Nippon India Taiwan Equity Fund had an AUM of Rs 276 crore as on April 30, 2025. Launched in December 2021, the scheme is managed by Kinjal primary investment objective of Nippon India Taiwan Equity Fund is to provide long-term capital appreciation to investors by primarily investing in equity and equity-related securities of companies listed on the recognised stock exchanges of Taiwan, and the secondary objective is to generate consistent returns by investing in debt and money market securities of were around 65 international funds in the mentioned time period, of which 11 offered double-digit returns, 52 offered single-digit returns, and only two gave negative returns. Also Read | Should you consider starting SIP or lumpsum in a momentum index fund right now? Invesco India - Invesco Global Consumer Trends FoF offered the second highest return of around 15.70%, followed by DSP US Flexible Equity FoF and Edelweiss US Technology Equity FOF, which gave 13.90% and 12.09% returns respectively in the double-digit performers, the last five were Nasdaq-based funds, which gave returns ranging from 10.25% to 11.47% in looking at the performance of these international funds, Chirag Muni advises that investors should avoid reacting to short-term trends and instead focus on fundamentals and long-term growth, as over the longer horizon, Indian markets have delivered stronger the other hand, Shinghal believes that the technology sector, as represented by the Nasdaq Composite Index, remains the main driver for the performance of Taiwanese Stocks, and the outlook for the technology sector remains positive in the long run as current and future innovations are either driven or enabled by this sector. In the current calendar year so far, international funds have offered up to 29% return with Edelweiss Europe Dynamic Equity Offshore Fund being the top performer with 29.12% return in 2025 so far. Mirae Asset Hang Seng TECH ETF FoF has given a 20.17% return in the current calendar year so far. In 2025 so far, Nippon India Taiwan Equity Fund has offered a negative return of 3.47%. Shinghal of Scripbox believes that global equities outside the U.S. and India are currently trading at more attractive valuations. Historically, non-U.S. markets have outperformed during periods of U.S. dollar weakness. 'Hence, International Funds (especially Non-US) should get allocation in an Investor's portfolio depending on risk appetite,' he the expert from Anand Rathi Wealth Limited firmly recommends not to invest in international funds, but if one looks for global diversification in the portfolio, can explore only upto 5 -10% of the overall portfolio, however it is important to look at the risk adjusted return potential of the respective country before investing. 'Investors can consider investing across the range of domestic diversified equity funds to get exposure across the range of categories and sectors to generate good alpha and returns in the long term,' Chirag should always consider their risk appetite, investment horizon and goals before making any investment decision. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and twitter handle
Time of India
20-05-2025
- Business
- Time of India
Is beating the benchmark enough? What the information ratio reveals
In a world increasingly leaning towards passive investing, how can you truly evaluate the value an active fund manager brings to the table? In this exclusive conversation, ET's Neha Vashishth speaks with Chirag Muni, who breaks down the Information Ratio—a lesser-known but powerful metric that goes beyond just returns and looks at how efficiently those returns are generated. Excerpts: by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Roteirizador Pathfind - O planejador de rotas mais completo do mercado Sistema TMS embarcador Saiba Mais Undo Q. Let's start with the basics—what exactly is the Information Ratio? Chirag Muni: The Information Ratio (IR) is a performance metric that measures a fund manager's ability to generate excess returns over a benchmark, adjusted for the volatility of those excess returns. It shows how effectively a manager delivers better risk-adjusted returns compared to the benchmark. A higher IR indicates more consistent and efficient outperformance, while a lower IR suggests the fund is underperforming relative to its benchmark. Live Events Let me give you a comparison: Suppose two large-cap fund managers both deliver a 15% return, beating their 12% benchmark by 3%. Now, if one of them took less risk than the other to achieve this, the Information Ratio will reflect that. The fund manager with the higher Information Ratio would be the preferred choice because he delivered the same return with less risk. This ratio highlights both consistency and efficiency in return generation. Q. How do you see the IR reshaping the way investors assess fund managers, especially in an era of passive investing? Chirag: Great question. There are two aspects here. First, should investors choose active or passive fund management? When we analysed mutual fund performance over the past five years—across categories like large-cap, flexi-cap, multi-cap, contra, etc.—we found that 60% to 100% of active funds beat the Nifty, and around 70% beat their own benchmarks, except in the large-cap category. So yes, if you choose the right fund, active strategies still offer superior excess returns. Passive funds can't outperform the benchmark—they just mirror it. Secondly, within active strategies, the Information Ratio helps you evaluate the quality of excess return. It allows you to choose fund managers who are not only outperforming but doing so with less risk. That's where this metric really becomes relevant. Q. How is Information Ratio different from other ratios? Chirag: Most investors use the Sharpe Ratio, which compares a fund's return to a risk-free rate like a 6.5% government bond, adjusted for volatility. But the Information Ratio compares the fund's return to its own benchmark, not to a risk-free asset. That makes it more relevant for mutual funds, because we're evaluating whether the manager added value over what the benchmark would have given. So, while Sharpe is useful, the Information Ratio gives a truer picture of a fund manager's active performance. Q. What's the ideal time frame to evaluate the Information Ratio? Chirag: Time frame is very important. Looking at short-term data can mislead you due to market noise and volatility. On the other hand, a very long-term period like 10 years might not reflect the current fund strategy or manager, as those could have changed. The ideal period is between three to five years. This allows you to evaluate consistent performance while accounting for a reasonably stable strategy and risk profile. Q. I noticed that multicap and contra funds often show a higher Information Ratio compared to large-cap or mid-cap funds over 3–5 years. Why is that? Chirag: Good observation. It's because of investment flexibility. In large-cap funds, 80% of the money must go to the top 100 stocks, leaving little room for creativity or deviation from the benchmark. That limits the potential to generate alpha or excess return. But in multicap, smallcap, flexicap, or contra funds, fund managers can explore beyond the benchmark and use different strategies. That freedom leads to higher alpha, and therefore, a better Information Ratio. Q. How should investors use Information Ratio in conjunction with other metrics like Alpha, Beta, or Sharpe Ratio when selecting funds? Chirag: You should never rely on any one ratio in isolation. Information Ratio shows how efficiently a fund manager has beaten the benchmark considering the risk taken. Alpha tells you how much excess return the fund generated. Beta indicates how sensitive the fund is to market movements—i.e., how volatile it is compared to the benchmark. Sharpe Ratio assesses return per unit of total risk, compared to a risk-free asset. Sortino Ratio focuses only on downside risk. The right approach is to combine all these and assess a fund from multiple angles—consistency, volatility, downside protection, and benchmark-beating ability. Q. How can one interpret whether an Information Ratio is good or not? Chirag: You don't need to calculate it yourself—it's already available in the fund fact sheets. You can simply compare the Information Ratio of a fund to the category average. For instance, in the focused fund category, ICICI Prudential Focused Fund has an Information Ratio of 0.9, while the category average is 0.07—a clear indication of superior risk-adjusted performance. In the smallcap space, Invesco India Smallcap Fund has a ratio of 0.5, compared to a 0.1 category average. So yes, the more positive the Information Ratio, the better. It means the fund manager is taking less risk for every unit of extra return. Q. What are some limitations of the Information Ratio? Are there risks to over-relying on it? Chirag: Absolutely. It's just one part of the puzzle. Choosing the right fund starts with knowing your market cap allocation, then shortlisting funds that consistently beat benchmarks, and only then applying tools like the Information Ratio. You can't make a decision solely based on this metric. A fund might have a good Information Ratio today but not fit your overall strategy or allocation. So, use it as a filter, not the final decision-maker. Q. Lastly, SEBI is pushing for greater fund disclosures and transparency. Should the Information Ratio be highlighted more prominently in fact sheets? Chirag: Definitely. Fact sheets are already loaded with data, but unless key metrics like the Information Ratio are better communicated and explained, investors won't benefit. If more people understand and look at the Information Ratio, they can hold their advisors accountable and make more informed, risk-conscious decisions. So yes, SEBI should definitely promote awareness and ensure standardized, visible reporting of such metrics.
