The awards recognize funds and fund groups which have delivered superior performance in one- and three-year period. Since, the awards are annual in nature, there is emphasis on funds’ one-year performance. In addition, funds must also have delivered strong risk-adjusted return for the three-year period, given our emphasis on the funds’ long-term performance. The methodology, therefore, rewards funds which registered superior performance in 2009 and also delivered strong risk-adjusted return during the three-year period with importance on funds’ ability to limit downside risk.
2009 proved to be robust year for Indian stock markets and equity funds. The signs of global economic recovery, higher domestic economic growth and stable political environment boosted equities, helping investors to recoup some of their losses incurred in 2008. We noticed that some of the funds those did well were often those who took higher risk.
For the year 2009, we announced nine category awards and two fund house awards.
2009 Morningstar Category Awards Winners
The awards are given to funds for their strong performance in one-year period and also superior risk-adjusted performance in three-year period in their Morningstar categories or groupings of Morningstar categories. Further, only those funds that have outperformed their category peers in two out the last three calendar years are considered. Since, the weights are assigned on funds’ rank in a category, funds shortlisted based on their lowest score are finally reviewed on qualitative parameters.
In Equity category, we announced awards in three categories - India Large Cap, India Small/Mid Cap and India ELSS.
The winner in India Large Cap category is UTI Opportunities. The fund delivered strong outperformance during the three-year period by registering 19.9% return, as against its category average of 10.5%. Its performance in 2009 was noteworthy too. It posted 97.6% return, as compared to peers’ average of 79.1%. Its higher returns and lower risk, relative to its peers, helped it to register the best score in this category.
The winner in India Small/Mid Cap category is Birla Sun Life Mid Cap A. This fund stood above the competition in terms of its consistent performance in one and three-year period. It registered 17.6% return during the three year period, relative to its category, which posted 8.1% return. The fund, however, took higher risk as compared to its peers, during the three-year period.
The best fund award in India ELSS category is given to Fidelity Tax Advantage. This fund took lesser risk than its peers which helped it to achieve better risk-adjusted return. The fund registered strong outperformance during the three-year period as it delivered 13.9% return, as compared to its category average of 9.7%. The fund not only had strong 2009, but also fell less than its peers in 2008 meltdown, protecting investor’s capital, relatively.
In asset allocation category, we announced awards in two categories - India Moderate Allocation and India Conservative Allocation.
The India Moderate Allocation category award is won by Reliance Regular Savings - Balanced - Growth. This fund stood at first position during the three-year period. It posted 18.9% return, an outperformance of around 8% over its peers. The fund showed consistent outperformance across the three calendar years. However, the fund’s risk was higher than its category peers, during the three-year period.
The best fund award in India Conservative Allocation category is given to HDFC MF Monthly Income Plan - Long Term Plan - Growth. This fund performed well on return parameter. It ranked at second position, during the one and three-year period. However, the fund’s risk was higher than its category peers, which is due to its higher equity allocation, compared to its peers.
In debt category, we announced awards in four categories - India Ultrashort Term Bond, India Short Term Bond, India Intermediate/Long Bond and India Intermediate/Long Government.
The winner in India Ultrashort Term Bond category is Fortis Money Plus Fund - Growth. The fund’s higher returns and lower risk helped it to score well above its peers. The fund registered 8.04% return, as compared to its peers, which delivered 6.5% return, during the three year period. The fund’s risk was lower than its other peers, which benefited it to achieve the best score in the category.
The best fund award in India Short Term Bond category goes to HDFC High Interest Fund Short Term Plan - Growth. This fund scored well on return and risk parameters. It featured among top 10 on return parameter in one and three-year period, depicting consistent performance in short as well as long term. In addition, the fund’s risk was significantly lower than its category peers, helping to post the best score.
The winner in India Intermediate/Long Term Bond category is Fortis Flexi Debt Fund - Growth. This fund’s consistent performance across trailing periods and calendar years stood above than its competition. During the three-year period, the fund posted 11.4% return, as compared to category average of 8.2% return. The fund manager also managed to keep risk lower than its competition.
The winner in India Intermediate/Long Term Government category is Canara Robeco Gilt PGS - Growth. The fund delivered consistent performance in one and three-year period. While, in one year period, it stood at 14 position, in three-year period, it stood at third position. The fund’s risk was lower than its peers, resulting in better risk-adjusted score.
Morningstar Fund House Awards
We announced fund house awards in the following categories: Equity fund house and Debt fund house.
We scored fund houses by taking an average of their three-year Morningstar ratings for all the open-ended funds they run that are available for sale in the Indian market. Using the three-year rating ensures that we are looking at a meaningful length of time. Fund houses with at least 10 retail funds with Morningstar Ratings were considered for the award exercise.
The Equity Fund House award is bagged by HDFC Mutual Fund for its superior performance across its equity schemes during the three-year period ended December 31, 2009. The fund house registered the highest score, given the higher risk-adjusted return across its 14 funds considered for the award purpose.
Within the Debt Fund House category, ICICI Prudential Mutual Fund received the award for the second consecutive year owing to strong performance across its debt schemes during the three-year period. The fund house had 15 debt funds rated by Morningstar during the three-year period.