Which mutual fund should I choose for 15 years term?

POSTED BY tushar ON December 24, 2013 5:53 pm COMMENTS (9)

I want to invest some amount in SIP way in Equity oriented MF. My goal is to get 12-15% return (More will be GREAT 🙂 )  in 15 years time frame.

I can invest Rs 5000 per month as a start and I can increment this amount by 10-15% every year depending on my financial situation at that time. Considering the 15 years term that I can invest, I think Equity oriented MF will be good. And I am thinking about these:

1. Franklin India Prima Plus

2. ICICI Pru Focused Blue chip equity fund.

3. HDFC Prudence

Are there any better options? And how much should I put in each of these out of my monthly investments? One more thing, what is the exact difference between “Growth” and “Dividend Reinvestment” Methods?

9 replies on this article “Which mutual fund should I choose for 15 years term?”

  1. ashalanshu says:

    Dear Moneydoc, the dividend pay out option ‘ll not reduce the compounding?

    Thanks

    Ashal

  2. moneydoc says:

    As per current peer group standings, ICICI Focussed Bluechip/ Quantum Long Term Equity from large cap category and Icici Pru Dynamic/ UTI equity opportinities from diversified category would be my picks, of course in dividend payout mode only…… !!

  3. tushar says:

    Wow…
    never thought fro this point of view. This was an eye-opening explanation.

    Thanks Moneydoc.

  4. moneydoc says:

    Can a top of the line car or the house made from the choicest materials last for 15 years without any maintainence…. please understand mutual funds are run by fund managers who are humans and they change their jobs and has no promises to stick on to a mutual fund scheme for 15 years, so how can you trust your hard earned money with any scheme for so long….. like we all clean up our house every year before diwali likewise you should review the performance of your chosen fund once a year at least !!! compare it with peer group performance and hence take the next step of whether to hang on or move to someother offerings. Although 1 year is short as a time frame, but if you get into certain quantitative aspects of funds performance viz. alpha, beta, sharpe and standard deviation your choices would be clear. Although they sound technical but once learnt will remain as a handy tool for reviewing your holdings throughout your lifetime, nowdays most funds have these figures readily available as a part of their fund details on the web page. Pls don’t say that you dont understand all this and find it overwhelming, because before standard seven or eight you never knew about algebra or calculas either but you had to learn it for your final exams….. and you did learn it… so whether you are remotely not dealing with finance and its related aspects certain things have to be judged by yourself. Or hire professionals who will provide you with these analysis based on qulatitative and quantitative parameters.

    As a thumb rule large cap funds are ideally suited for longterm since the underlying volitility is far lesser than other fund groups but since the amount is 5000 you could also consider splitting the same into two halves between a top line Large cap and also an Equity Opportunity fund which should be available under diversified category.The reason for this is simple, sometime these large cap funds are slow off the block when it comes to underlying market related volitility, since the corpus is too large for the fund to swiftly move out from one stock to another this has been evident from performances of some the legendary equity large cap funds viz. Templeton, Reliance and HDFC which from leadership positions within category around five years back, as on date do not feature amongst the top five funds.

    Hope you have gotten your answer …… incase you need any specific guidance feel free to write in.

  5. ashalanshu says:

    Dear Tushar, pleae invest in only 1 fund from your list.

    Thanks

    Ashal

  6. Sumit says:

    I would select following if I had to choose 3 (1 large, 1 large-mid, 1 balance) :

    1) ICICI FBC
    2) Quantum LTEF
    3) SBI Magnum Balance/ ICICI Pru Balance

  7. tushar says:

    Ashal,
    I do understand performance of none of the funds can be guaranteed or predicted.
    I just wanted to know opinions of various experienced and expert persons here about type/management/returns of these funds and/or if there are any other funds that I may not have listed.

  8. ashalanshu says:

    Dear Tushar, can you guarantee that you ‘ll remain alive in next 15Y? Of course not. then how can anyone guarantee here a fund ‘ll perform for you in all these next 15Y?

    Please invest all the 5K into only 1 fund from your selected list.

    thanks

    Ashal

  9. hemanthchandra62 says:

    you can also try ‘PPFAS Long Term Value Fund’ which comes from a firm with a good experience in wealth management. It was started recently and I hope it will be really good in long term as it is mainly designed for long term investors
    This is a large-mid cap fund as per my knowledge.

    You can also try ‘ICICI Pru US Blue chip equity fund’ which is a fund invests in US equities (since we cannot invest directly in US equities, it is a good option if you want to try). It has performed well till now.

    You can also start an SIP in PPF if you have not started yet.

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