Taking into consideration the volatility of the market for the past year, the standard performance indices have not moved much. The corporate earnings seem to be static even though some select performers are seen in the market.
According to the expectations of investors and market experts, there is a scope for rising interest rates in India along with the ever-spiking inflation. Value investing is a strategy that one must follow, and it works well with long-term investing. The risk-reward for a value fund is highly advisable for a value fund.
One such fund in the value investing category is the Bandhan Sterling Value Fund. The risk appetite related to this fund is medium. The Bandhan mutual fund has been in the market for the past 15 years and has been performing as per the benchmarks for the long term. The fund's performance has been outstanding for the last 4-5 years.
The fund is a high-risk category investment. The asset under management for this fund is Rs. 5,145 crores. The expense ratio of the fund is 0.83%. The minimum lump sum amount that can be invested is Rs. 1000 and Rs. 100 for systematic investment plans.
Let us know some of the reasons why this fund can be a good option for investment in the long term.
Beating the average
Considering the rolling returns data for the past 10 years, the fund delivered a return of 14.1%. This states the fund has been an outperformer for all these years. Also, if we consider a rolling 5-year basis, the fund has outperformed its benchmark S&P BSE 500 TRI. This has been nearly 65 percent of the time. The S&P BSE 500 has an average of 12.7 for the same.
In the last 3 years, the fund has delivered a return of 45.6%. If we take the time frames of 3-5-7-10 years, the performance of the Bandhan mutual fund is in the top quartile. As a systematic investment plan investor, the return for the fund for the past 10 years has been 16.1%, which is one of the best in the market.
Multi-cap approach
The basic approach of the fund is multi-cap. The fund has been heavily tilted towards small-cap stocks. Value picking helps to distinguish the fund and improve its performance. Between the years 2019 and 2021, the fund has been heavily biased toward small-cap stocks only.
In the recent tenure of 18 months, the fund allocation has changed and it is investing in large-cap stocks. Over 49% of the portfolio allocation is towards large-cap stocks. This has made the fund stronger in the volatile markets. From the period between 2019 and 2020, the fund heavily invested in automobile industries, cement companies, banks, and financials. From 2021, the investment in consumer durables has increased.
As the markets peaked in 2021, the stakes towards banks also increased. The investment in pharma and software also increased as the stocks corrected sharply.
The fund's investment style reflects the value investing style it is following. So, the fund investors are either buying low or after major corrections to the stocks.
The diffused approach towards investing, in this case, is followed with nil stock accounting for even 5 percent of the total amount. Exposure to a particular sector, except for some top amounts, is generally in single digits. If increased, the fund's exposure to small and mid-cap stocks can get too risky.
To conclude
The Bandhan mutual fund is a good choice for a systematic investment plan for a period between 7-10 years. The long-term exposure rides out the market volatility.
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