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Amandeep Sonewane

29 October 2018

How To Opinions Fundamental analysis

5 Best Mutual Funds to Invest this Diwali

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Investing in mutual funds seems to be easier than stocks or other funds, but choosing the right MFs for long-term growth might be confusing. Over here are the 5 Best mutual funds to invest this Diwali for long-term profits.  

October 2018 | AtoZ Markets

Indian equity markets have corrected sharply by around 12% after rising an all-time high in late August. A liquidity crisis in the debt markets, challenging global and domestic macro environment, the depreciating Indian Rupee, a continuous hike in crude oil prices and global trade war results to pull down Indian equity markets. 

The midcaps and small caps have underperformed recently in the past few months. However, most midcap and small-cap funds have done well in containing the market fall. They are still among best-performing categories over 5 years. IT funds have outperformed significantly in the last one year. Whereas the Pharma funds are the only category which delivered a positive return in last one year.

5 Best MFs to Invest for Long-term Gains

Since the last year, the MF industry has received Rs 23,750 crore via Systematic Investment Plans which is also known as SIPs. And interestingly, the mutual fund industry has added ~8.5 lakh SIP accounts every month during FY18. Below are some of the 5 best mutual funds to invest this Diwali for the long-term wealth gains.

ICICI Pru Balanced Fund

ICICI Prudential Balanced MF is an equity-oriented balanced fund which carries out strategical allocation between debt and equity based on the market outlook to ensure optimal risk-reward. The risk profile remains at a moderate level and considered safe for long-term investment. As of October 2018, the fund has invested 70% of AUM in equity to give steady growth over long-term while 28% is allocated to debt investments to cap the downside risk.

This mutual fund has 57% of the AUM is invested in Indian large-cap stocks while 13% is invested in mid-cap and small-cap stocks. In the preceding 5 years, the fund has consistently outperformed its benchmark and average category return.

Aditya Birla SL Top 100 Fund

Aditya Birla SL Top 100 MF is an equity fund which primarily invests in top 100 stocks by market capitalization. This MF follows growth plus the value investment to increase wealth in long-term. Plus, the investors can choose the "Growth" or "Periodic Dividend" for this fund. 

As of October 2018, the fund has invested almost 80% of its AUM in large-cap stocks and 8% is invested in mid-cap stocks. In the last 5 years, the fund has consistently outperformed its benchmark, Nifty 50, and average category return.

Axis Focused 25 Fund

Axis Focused 25 MF is an equity fund that invests in high conviction stocks, maximum 25 stocks, from top 200 stocks by market capitalization. As the name suggests, the fund manager follows the track of best performing 25 stocks in the market and change the portfolio accordingly. The fund’s strategy is to invest in quality companies with credible management, sustainable profit growth, and cash flow, and have a clean balance sheet.

As of October 2018, the fund has invested approximately 60% of its AUM in large-cap stocks and 27% in mid-cap stocks to generate higher returns. And in last 5 years, the fund has consistently outperformed its benchmark, Nifty 50, and average category return.

Tata Equity P/E Fund

Tata Equity p/e MF is a value-conscious equity fund which aims to invest 70-100% of its AUM in stocks whose 12 months rolling PE ratio is lower than 12 months rolling PE ratio of BSE Sensex index.

The remaining AUM is allocated in other equity and debt instruments. This portfolio is very diversified as it focuses on various industries. So, at the time of crisis of any particular industry, the investor might not suffer from significant risk.

This mutual fund has diversified the investment into 58% of its AUM in large-cap stocks and 28% in mid-cap stocks to generate higher returns. In the last 5 years, the fund has consistently outperformed its benchmark, BSE Sensex, and average category return.

HDFC Mid-Cap Opportunities Fund

HDFC Mid-cap Opportunities MF is a mid-cap equity fund which has allocated 60% to mid-cap stocks and 28% to large-cap stocks to generate high returns for investors. This mutual fund maintains a well-diversified portfolio with no more than 10% exposure to any particular sector. Thus, providing the investors high return with lower investment risks. 

Also, the investor can buy "Growth," "Quarterly Dividend," or "Yearly Dividend" Plans. But, considering the declining trend since the last 1 year, opting for the Growth plan remain the smarter choice. 

This fund has also managed its concentration risk, top 10 stocks account for only 25% of the AUM. In the prior 5 years, it has outperformed its benchmark, Nifty Free Float Mid-cap 100, and average category return.

Think we missed something? Let us know in the comments section below.

Mutual Fund SIP investment
The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZMarkets.com, nor should they be attributed to AtoZMarkets.

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