Investing in mutual funds seems to be more comfortable 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 is a challenging global and domestic macro environment. The depreciating Indian Rupee, a continuous hike in crude oil prices, and global trade war results in pulling 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 the best-performing categories over five years. IT funds have outperformed significantly in the last year. Whereas the Pharma funds are the only category that delivered a positive return in the previous 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 five 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 the long-term, while 28% is allocated to debt investments to cap the downside risk.
This mutual fund has 57% of the AUM invested in Indian large-cap stocks, while 13% is invested in mid-cap and small-cap stocks. In the preceding five 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 that primarily invests in the top 100 stocks by market capitalization. This MF follows growth plus the value investment to increase wealth in the 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 five 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, a maximum of 25 stocks, from the 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 the last five 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. That aims to invest 70-100% of its AUM in stocks. Its 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 the crisis of any particular sector, 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. it is to generate higher returns. In the last five 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. That 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 investors with high returns with lower investment risks.
Also, the investor can buy “Growth,” “Quarterly Dividend,” or “Yearly Dividend” Plans. But, considering the declining trend since the last one year, opting for the Growth plan remain the smarter choice.
This fund has also managed its concentration risk, and the top 10 stocks account for only 25% of the AUM. In the prior five years, it has outperformed its benchmark, Nifty Free Float Mid-cap 100, and average category return.
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