You can always make loads of money if you make investments for the long term. Financial experts say that with equity risk perceptions shaped by shorter time-periods, investors must take a longer view when it comes to their investments. If your tenure is 7-10 years, there is almost an implicit assurance that you will do well if you put money in equity mutual funds with a good track-record and consistency in performance across market cycles. “The best part is that there are such vintage funds, which have proven their mettle over the years. They have been able to stick to their investment philosophy and style, and deliver superior risk-adjusted returns,” says Anil Rego, Founder and CEO of Right Horizons.
Let us have a look at 10 equity mutual funds that are good bets for this year and may make you rich sooner or later:
1. SBI Bluechip Fund: This is a large cap mutual fund which invests in the stocks of bluechip companies, suitable for long-term capital growth. Since 2006, this fund has given a high return grade while managing to keep risks low. Across 3-year, 5-year and 10-year period, this fund has beaten its benchmark by 3-6% on a CAGR basis. Also, the fund, managed by Sohini Andani, has one of the lowest expense ratios in its large-cap active fund catgeory.
2. ICICI Pru Focused Bluechip Fund: This over Rs 15,000-crore fund is a relatively new fund (less than 10-year old), but has shown great promise and performance. The fund has comfortably beaten its peers and the benchmark since inception. “It has a healthy return profile and is one of the rare true-blue large-cap focussed funds available in the marketplace. It is managed by veteran fund manager Sankar Naren, who is the chief investment officer of ICICI Pru AMC,” says Rego.
3. Franklin India Prima Fund: In the midcap space, this is one of the most popular schemes and not without reason. The scheme has over the years easily delivered great returns by investing predominantly in small and mid-sized companies which tend to exhibit higher growth rates than well-established large-sized peers. The fund, presently managed by R. Janakiraman, has consistently declared a dividend every year for the last 17 years. With a low portfolio turnover, this fund is an ideal 5-year or more bet for the buy-and-hold MF investor.
4. Kotak Emerging Equity Scheme: For investors looking for a relatively less volatile mid-cap offering, this is one of the best choices. “Straddling between modest exposure and high conviction bets, the fund, managed by Pankaj Tibrewal, has been able to sport a better risk-reward profile than most peers. Since launch, the fund has given 13.80% returns annually. If you want exposure to a mid-cap fund without the baggage of zig-zag returns, stick to this scheme for the long term,” says Rego.
5. Franklin India Smaller Companies Fund: Small-cap funds show great returns, but also contain higher risks. This fund is an outlier because across different time-periods, it has been able to strike a rare balance between risk and returns that is suited to retail investors. It has been a consistent outperformer and that can be attributed to its preference for businesses high on quality. With its portfolio heavily diversified, the fund’s risk profile is kept low, but that doesn’t compromise on returns front.
6. Tata Equity P/E Fund: For investors who want to adopt a multi-cap approach, this fund is a good option. Its value-conscious style of investing has already created a niche positioning. It has made a habit out of buying good companies at an attractive P/E ratio, but stays away from cheap stocks. As a result, it is an outperformer in rallying markets and has consistently featured in the top quartile of equity funds many times. It is a perfect fit for investors looking for a good long-term equity fund with a clear smart value approach.
7. Motilal Oswal MOSt Focused Multicap 35 Fund: Although much younger than many in its peer category, the fund has become a nearly Rs 10,000-crore scheme in just over 3 years. “Having generated twice as wealth compared to its benchmark in the 3-year period, the fund’s secret sauce lies in its conviction in paying a premium for quality stocks that have high growth prospects. Its concentrated portfolio strategy has worked well as its picks have shown blazing growth. Consider this fund from a 5-7 year perspective and use the SIP route,” says Rego.
8. HDFC Balanced Fund: This 17-year old fund with assets of over Rs 17,000 crore is among the biggest equity-oriented hybrid funds that one can find. It has emerged as a fund of choice for investors who seek stability in returns but are not afraid of dipping their feet in equity. With a stellar return track-record, this is among the safest funds for new investors to enter if they are looking for products with stable risk profile.
9. SBI Magnum Balanced Fund: If you want a great balanced fund with an extremely long track-record, this is the fund you should consider. “Having delivered 10-17% annual returns in 3, 5 and 10-year period, this nearly 22-year-old fund is in a league of its own. Healthy exposure to large cap and mid-cap companies in terms of equity and good exposure to government and AAA-rated securities on the debt side embellish the fund’s battle-hardened nature,” informs Rego.
10. ICICI Pru Balanced Advantage Fund: Instead of manually doing the asset allocation, some investors prefer funds that will do all the hard work by themselves. This fund allows you to benefit from an in-house asset allocation model that aims to buy low & sell high. It has managed to safeguard investors in times of volatility while giving them solid returns when markets rise. A signature product of its fund-house, the fund offers features like automatic withdrawal plan and monthly dividends.
(These mutual funds have been recommended by Anil Rego, Founder and CEO of Right Horizons. Although due care has been exercised by them while selecting these funds, readers are advised to consult their financial adviser before investing in any of these funds.)