Wednesday, 22 August 2018

My Strong Mutual Fund Recommendations to Invest in India - 2018

Posted by RaviKumar Nama
(Published on 22-Aug-2018)

Investing in Mutual funds is a proved and best Investment option in India. Irrespective of Market turbulence, investing in Mutual funds through SIP approach for long-term, will nevel left you in losses but with good yieldings better than any other Investments. If your tenure is 7-10 years, there is almost an implicit assurance that you will do well if you put money in  good mutual funds with a good track-record and consistency in performance across market cycles. Based on the Investment criteria, Mutual funds are categorized as Large-cap, Large & Mid-cap, Small-cap, Multi-cap, ELSS/Tax Saving, Hybrid, Sector and Debt Funds. There are many more sub-categories, but I am not covering those sub level categories. We will see 3 Best Mutual funds for each criteria in this post. These are my strong Mutual Fund recommendations to Invest.

My Fund Selection Criteria:

  1. Consistence Performance from the last 5 years
  2. Large Fund Houses which are having diversified Mutual Fund portfolios
  3. Funds that are existing 5+ years
  4. Funds that are suitable for SIP, SWP and STP
  5. Value Research rating with 4-star or 5-star

My Strong Mutual Fund Recommendations to Invest:

3 Best Large-Cap Funds:

In this category, the fund manager invests into Large-cap stocks of different Industries. Large-cap funds invest in large cap companies which are big, well-established companies of the equity market. These companies are strong, reputable, trustworthy, and generally are top 100 companies in a market by market cap. Hence, the risk is less and returns are moderate to higher. Ideal investment duration for these funds: 4+ years.


3 Best Large & Mid cap Funds:

In this category, the Fund Manager invests in Large & Mid-cap category stocks. Though the risk is higher than the Large-Cap Mutual funds, the returns are much better than those. As the selection criteria is not limited to large-cap companies, the Fund manager can identify the future large-cap companies from the Mid-cap category and maximize the profits. If you follow the SIP approach with Time horizon of 5+ years, then you can expect good returns from this category Mutual funds.


3 Top Multi Cap Mutual Funds:

In this category, the Fund Manager selects the stocks from Large, Mid and Small-cap category. The Fund Manager having the large span of choice to select the stocks into the portfolio. The investors who are having moderate risk appetite can opt this MF category. Some times you can expect more returns than any other category of Mutual funds. Ideal investment duration for these funds: 5+ years.


3 Best Small Cap Mutual Fund:

As the name suggested, the Fund Manager identify the stocks from Small-cap category. Hence the risk is higher and the returns are also higher than any other category of Mutual funds. So, it is advised to have the Time horizon is 6+ years with SIP approach. Any investor can allocate small portion of Investments into this category to see higher returns in the long term.


3 Best ELSS Funds to Invest:

ELSS (Equity Linked Savings Scheme) or Tax-Saving Mutual funds are dedicated mutual funds that allow investors to save tax under Section 80C. It also provides an opportunity for long-term capital appreciation and is arguably the best tax saving instrument in India. However, these are close-ended Mutual funds and the minimum lock-in period is 3 years. Ideal investment duration for these funds: 5 years (3 years is mandatory).


3 Best Hybrid/Balanced Fund:

As the name indicates, the Fund Manager invests not only in Equity but some portion in Debt Investments also. As the portfolio includes Debt also, these are comparatively safe for investment. Investors who are looking for moderate returns at lesser risk can go for this category. Ideal duration of the investment is 4+ years.


4 Best Sector Funds:

As the name suggests, the Fund Manager invests only in a particular sector stocks. The best mutual fund in case of sector funds is very hard to determine. This is so because each and every sector is different. Therefore, each of them behaves differently. Returns and risk associated with this fund depend on the sector of investment. Ideal investment duration for these funds: Variable (differs with the sector chosen for investment). As the India receiving good rain fall from the last 2 years, I have identified the following 4 Sector Mutual funds, which are best to my choice.


3 Best Debt Funds

In this category, the Fund Manager invests only in Debt investments and no Equity investments. Hence, the Debt mutual funds are associated with much lower risk. The best debt mutual funds can give you more consistent returns when compared to equity mutual funds. Debt funds are low-risk mutual funds which invest most of the money gathered from investors into fixed income instruments like corporate bonds, government bonds (both state and central), bonds issued by banks, certificate of deposit, treasury bills etc. Ideal investment duration for these funds: Depends on the type of debt fund.

Points to Remember:

  1. SIP with long term Time horizon is the best and proved approach to invest in Mutual funds.
  2. Increase your SIP amount as your salary increases. It is good idea to opt for top-up SIP instead of regular SIP. Top-up SIPs wherein you can increase SIP amount by specific percentage after a specific duration.
  3. The power of compounding is phenomenal. 
  4. Keep investing through SIP and do not stop in the middle of your target time horizon. 
  5. Do not look your portfolio every day. 
  6. ELSS or Tax-Saving Mutual funds are best option to save tax under Section 80C. A good ELSS or Tax-saving Mutual fund might yield returns from 10% - 20%, which is far better than your Bank FDs.
  7. If you want to invest Lump-sum amount, select any Debt fund and do STP approach.
  8. A periodic review is enough to monitor your funds' performances. I suggest once in 6 months is a good time-frame to review your funds.
  9. Look for consistent performance of the fund and not the unit value of the Mutual fund.
  10. Make sure you have contact and nominee details updated in all your active SIPs.
  11. Try to put your additional amount into your SIP related funds whenever possible, it can make big difference to the actual corpus in the long run.
  12. Whenever you are reaching to your goal and time-frame, opt for Systematic Withdrawal Plan (SWP) from existing equity mutual fund schemes.Or, you can do STP from Equity fund to Debt fund also.
  13. Try to get updates of the invested Mutual funds from the Market and keep an eye on the fund rating, any change in Fund Manager etc.

Disclaimer:

This data is for Academic purpose only. The data published on this post is just my opinion based on my own research and analysis and is provided as a general market commentary. As it does not take into account of your personal circumstances, please do not invest based solely on this information. By Viewing any material or using the information within this post you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general information provided here.

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