Mutual funds are the fastest-emerging and the safest investment option for the long-term creation of wealth. From longer-term perspective, it is advisable to create a portfolio of MFs using a top down approach, which includes first arriving at an optimal asset allocation based on one’s risk tolerance, and then selecting funds to match one’s risk reward investment plan. For the first-time investors who want to get exposure to the Indian equity markets, it would be advisable to invest through a Systematic Investment Plan (SIP) rather than making lump sum investments. SIP investment would ensure that even if the market corrects in the short term, the effect of rupee cost averaging will reduce the overall entry valuation of the MF portfolio as the investments would be made at regular intervals
Below is a list of mutual funds which have consistently provided superlative returns and do stand out as better investment choices. The time horizon that is recommended for these funds is between 5 and 7 years. Some of the schemes do consist of mid cap and small cap funds which are more riskier than their counterparts. However, the risk reward is attractive and they are ideal candidates for a portfolio of diversified mutual funds:
|1 Year||3 Years||5 Years|
|SBI Blue Chip Fund||Large Cap Fund||39.037||11,360.65||28.8||13.8||18.3|
|Birla Sun Life Top 100 Fund||Large Cap Fund||59.184||2,480.75||29.6||11.5||17.4|
|Birla Sun Life Frontline Equity Fund||Large Cap Fund||224.020||14,203.54||29.6||12.1||17.1|
|Reliance Tax Saver||ELSS||69.863||8,405.84||44.8||14.1||22.7|
|HDFC Balanced Fund||Balanced Fund||152.600||12,231.78||26.5||12.9||18.6|
|ICICI Prudential balanced Fund||Balanced Fund||131.530||15,709.33||23.4||13.2||18.3|
|SBI Magnum Multicap fund||Diversified Fund||49.187||2,269.99||35.4||16.7||20.9|
|Franklin India Smaller Companies Fund||Small & Midcap Fund||64.217||4,898.91||41.3||20.0||29.8|
|Mirae Asset Emerging Bluechip Fund||Small & Midcap Fund||53.925||3,669.34||47.8||24.3||30.7|
|L&T Emerging Businesses Fund||Small & Midcap Fund||29.716||1,224.23||66.6||27.9||–|
1. SBI Bluechip Fund
SBI Bluechip Fund is Five Star-rated fund, investing in blue chip companies like Infosys, Sun Pharma, Reliance Industries, Maruti Suzuki etc. The fund manager of SBI Bluechip Fund has 6 years of experience. The expense ratio of the fund is low.
2. Birla Sun Life Top 100 Fund
Birla Sun Life Top 100 Fund has invested in 73 shares. Major stock holdings of this fund are in Infosys, HDFC bank, Larsen & Toubro and ICICI bank. All these blue chip stocks are performing very well and are expected to perform well in the future.
3. Aditya Birla Sun Life Frontline Equity
This large cap fund is one of the most consistent performers. The portfolio of the fund is heavyweight on the financial sector and it has helped it in getting good returns.
4. Reliance Tax Saver Fund
Reliance Tax Saver Fund is an open ended ELSS. The fund seeks to maintain balance between large-cap and mid-cap companies. This fund looks to invest in companies with high growth potential over the next 2 to 3 years. There’s also an allocation to the MNCs and high conviction mid-cap companies.
5. HDFC Balanced Fund
This fund remains a long-term performer in the category. HDFC Balanced Fund remains a good consistent performer in the category, especially for the first time investors.
6. ICICI Prudential Balanced Fund
This is one of the best diversified funds. This fund beats all its peers and has provided 18% annualized returns in the last 5 years compared to the balanced fund category in the similar period.
7. SBI Magnum Multicap Fund
Among the multicap schemes, SBI Magnum Multicap has distinguished itself as a steady performer with a reasonably good performance record.
8. Franklin India Smaller Companies
Small cap funds tend to be highly volatile, but this fund has managed to have standard deviation lower than the category by 2% in both 3 years and 5 years. It invests in low capital intensive business having high growth potential.
9. Mirae Asset Emerging Bluechip Fund
This fund has beaten all its peers and provided 31% annualized returns in 5 years. This midcap fund has performed in various market cycles, making this as a unique fund.
10. L&T Emerging Businesses Fund
The fund invests in emerging businesses, typically in early stages of development, which have the potential to become future giants and deliver higher alpha.
(By Rahul Agarwal, Director, Wealth Discovery. Although due care has been exercised by the writer while selecting these funds, readers are advised to consult their financial adviser before investing in any of these funds)