November 8, 2012 3:21 pm
Please let me know the best equity MF to currently invest in? I want to invest it for a period of 3 years.
Dear Balaji, do you want to invest your money or want to Award the fund manager for his work? If you want to invest, how can you know your future today? Today’s best may not be there after 3Y & today’s not so best may be the winner. How ‘ll you quantify this.
If you really want to earn some quick money in 3Y, Gambling, Lottery, Satta, Matka are there. You may win heavily or may lose heavily. Please do not invest at all for such a short term & high expecations in any instruments be it debt Mf or Eq. MF or any other thing. Before investing your money, invest your time to understand all these things. So much info is hidden here in the forum. it’s upto you how do you want to move ahead?
Krishna has answered the questions quite well. A few cents:
Allocate/plan your investments across fund categories for the different nature of different scheme types.
Having allocated funds say to large caps, finding the best funds to invest in, is a bit tricky…
Let me explain why:
All of us have been used to looking at past fund performance to find the best funds and invest in them. We look at various web sites providing funds ranked by 1yr, 2yr etc returns or at best ratings achieved by giving some weights to these numbers.
Ever wondered if that is the best way out?
Well, lets make it a bit more logical. How do fund managers make ‘investments’ in stocks? By judging the health of a stock using its fundamental financial information.right?
The word ‘investment’ is emphasized for the long term nature of the views. Then there are intraday traders who trade on stocks purely looking at the price movement I.e. technical analysis.
So making investments in stocks for a long term requires a strong analysis of its fundamentals.
And here our hard earned money goes into mfs just by looking at nav return over past few years.
When we can’t invest in stocks using just the price return infirmation and can’t predict it’s future returns, how is it possible to achieve the same for a fund which is a collection of stocks?
There are sovereign funds of foreign countries which also invest in Indian MFs. Do you think they go to these sites and rank the funds and invest? No.
They do a very detailed analysis right from understanding various aspects of risk and return, style of a fund manager, skills etc etc. essentially they do a health check of the funds. They check if the high returns are commensurate with the risk levels, has the fund followed what it has promised, has the fund generated returns by skill or luck?…
There are scientific means of doing all these analyses, though due diligence is a bit qualitative also.
The point I am driving at is: our hard earned money deserves more seriousness than what’s it’s currently meted out?
There is a free tool that provides this detail analysis of the mf schemes in the market. Once you have short listed your funds you might wish to quickly check them for:
1. How good is the fund managers risk adjusted performance
2. How good is the fund managers stock selection calls and sector calls (the skills)
3. Where is the fund generating its alpha/outperformance from? Within or outside the index where it should invest…
4. How consistent are the decision making skills?
And many more answers to relevant questions…
It’s an attempt to provide individual investors and advisors the same sophistication in analysis that the global best institutions practice.
After all, we earn it.
Firstly regarding the Large cap funds, The best Mutual Funds available in the market are Franklin India Blue chip, DSPBR Top 100, Quantum Long term equity.
Under Large/ Mid cap funds or Multi cap funds , we have HDFC Top 200, HDFC Equity.
Small/ Mid cap : Here you can select between IDFC Premier equity & SBI emerging bussiness. Both having well track record.
When coming to the time frame :
Large cap : Here since we are investing in already well established companies like infy, ITC,ICICI etc which already captured most of its market , there growth will be not similar to there early years like 15-20% , it may be around 8-12 % on a whole & so risk is less. You can get good returns within 7-10 years.
Small/Mid cap : Here they have high chance of conquering new markets since they are in there early stage, they can get a growth of 15-18 %. But at the same time risk is more. Choose this category of funds if u have time period of more than 15 years. Since in long run u have higher chance of getting better returns than large cap.
Regarding Muthoot finance:
Since they are Debuntures ( Not backed by any securities like bonds ),
Muthoot finance have to invest some where which gives returns more than 13.5 in 5 years to pay back there investors. So in recent times only gold had given such returns as an asset class ( might be thats also the idea of muthoot finance ). So if in next 5 years IF our country develops, rupee w.r.t dollar appreciates, then gold decreases.
At this point of time Muthoot finance cannot pay back to investors, and more over these securities are not asset backed , WE as an investor can’t do any thing. So in my view it is has some risk factor associated with it. Please check twice before investing as its your earned money.
Happy Investing 🙂
Krishna Kishore Appala
Go to valueresearchonline to see the best mutual funds. You will find details of all sectors, large cap, mid cap, small cap. Go for 5 star ratings and keep reviewing every year.
Apologies, I found the details on Muthoot in this forum.
Thanks for your detailed mail. Just another question is, you mentioned about Sector funds, however whats your taken on large cap and small/mid cap funds. What kind of investment period should one look at, when investing in the above category?
Btw, I also, heard muthoot finance giving pretty good fixed deposit rates. Just wanted know what everybody’s take on it. I will find out the rates and publish them here.
The Diversified Equity funds doesn’t have any life cycle as they use Sensex / Nifty as there Benchmarks. The only purpose / obligation of these MF’s is to beat index with a good margin and also outperform their competitors.
So as long as Sensex grows in India (happens in a developing country like ours), there will be no such life cycle for any diversified fund.
These life cycle can be the case of Sector funds, like Infrastructure funds, FMCG funds, IT funds, Banking Funds. Even though these funds also have the benchmarks as Bank Nifty etc. There are many chances that these funds perform extremely well during specific period of time only (Eg: IT funds Outperformed every other fund during IT boom, and same case in Infrastructure funds). But later they are duds. And will never ever beat sensex in long run. Please don’t select any Sector funds for long period investments.
Invest in some good diversified fund like HDFC Top 200, Quantum Long Term Equity, Franklin India Blue Chip, ICICI Pru Discovery & track them once in a year.
P.S : Choose the growth option for any fund, as it will help in compounding your money in long run.
Hey Dude you wrote well yaar. Full Dabang 3 punch lines.
Thanks for your reply. Appreciate your inputs. The HDFC Top 200 has been there for long years. Do you think investement in them for again another 7 + years from now onwards recommended? don’t these funds have a lifecycle. They may have reached their peak and now they are on their down side. Please share your thoughts.
3 year is not enough for Diversified Equity fund. If your time-horizon is 7-10 years or more then you can choose few equity funds like HDFC 200, HDFC Equity, Quantum long term equity, IDFC Premium equity, ICICI Prudential Discovery.
For 2-4 year time-frame, Invest in Balanced fund through SIP. Few best performing balanced funds are HDFC Prudence, HDFC Balanced, ICICI Prudential Balanced, Escorts Income Bond.
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