Whenever we think of long-term investments, we always seek for something that is considered safe, give high returns or provide a steady income. However, in India, individual investors often confuse and get tangled between the choice of various stocks, bonds, fixed deposits, money market securities, gold, etc. Most ordinary salaried individuals working for organizations barely get the requisite time or manage to build up the needed expertise to invest in high-risk investments to get high returns. Not to mention, market fluctuations are so responsive and delicate that even the slightest change in the KMP of a listed company or a political scenario building up could make you lose your money within a click. So, if you feel that the risk involved is too much, then Mutual Fund is just the right thing to go for!
When it comes to long-term wealth creation, Mutual Fund is seen as a vastly chosen investment option in the last few years. It is noticed to provide around 12% to 15% Return on Investments per annum and also leads to appreciating the value of the initial corpus amount invested. Furthermore, SEBI and the Mutual Fund Advisory Committee have made it easier now to choose between various schemes by introducing categorization and rationalization. Each scheme now has been categorized with descriptions, clarity and ratings for investor’s self-evaluations.
In present market conditions, every individual is looking for a return on investments to beat inflation. Investment in assets like Equity is considered to be one of the best inflations beating returns but also comes with high risk while debt and hybrid funds are on the low-risk side. Hence, using Mutual Funds and the service of professional fund managers to create a suitable portfolio that matches the risk appetite of the individual and selecting funds based on it, proves to be a safer platform for investment because of the benefit of asset allocation and diversification. Even for first-time investors, who wants to get exposure in the equity market without making lump sum investments, can do so by investing in MF through Systematic Investment Plan (SIP) made at periodic intervals.
While ascertaining and choosing the top mutual funds and creating an ideal portfolio, few things are to be kept in mind like financial goals to be achieved, risk tolerance, Lock-in periods or liquidity benefits and Return on Investments (ROI). One should also look at the past performance of the fund and its consistency w.r.t ROI. The fund manager’s profile, expertise and past experience with the fund should also be checked and evaluated to determine the risk involved and the fund’s return. Also, the expense ratio and redemption fee/exit load should also be checked before investing. Generally, an ideal investment should have a comparatively lower percentage of expense ratio (Annual Fund Operating Expense) and redemption fee for higher return generation. It should also be noted that during diversification, some amount should also be invested in Debt Mutual Fund like zero-coupon bonds so that it acts as a safety net over your investments during market volatility. The proper diversification will help you to set off your losses of one fund with the gains of another.
Below is a list of top 10 carefully chosen mutual funds that are well managed and have consistently provided good ROI with an investment for a long-term tenure of 5 to 7 years. Keeping in mind the risk-factors and capital protection of moderate investors and conservative investors, we have designed a list of some small cap, mid cap, large cap, Bluechip, multi-cap funds that invest in 100% equity or debt or hybrid schemes would help you meet your desired long-term financial goals and maximize Returns.
They are briefed as
Chart Showing Diversified Mutual Fund Portfolio
As on 27.11.18
|Asset Size |
As on 31.3.2018
|One year||Three year||Five year|
|SBI Bluechip Fund||Large Cap Fund||36.725||13264.78||-3.7||9.2||16.5|
|Aditya Birla Sunlife Frontline Equity Fund||Large Cap Fund||211.780||15075.08||-3||10.1||15.5|
|Axis Bluechip Fund||Large Cap Fund||26.280||1786.82||6.5||11.9||14.9|
|Reliance Small Cap Fund||Small Cap Fund||53.474||5565.14||-10.4||13.2||29.3|
|L&T Emerging Business Fund||Small Cap Fund||24.292||3257.18||-11||16.3||_|
|ICICI Prudential Equity and Debt Fund||Aggressive Hybrid Fund||126.610||24904.32||-1.8||11.3||16.5|
|Reliance Tax Saver (ELSS) Fund||ELSS||39.355||9729.27||-19.9||6.4||18.5|
|Kotak Debt Hybrid – Regular Plan||Conservative Hybrid Fund||29.459||373.83||-1.3||7.1||9.5|
|Mirae Asset Emerging Bluechip Fund||Large & Mid Cap Fund||48.937||4371.48||-4.6||16||28.4|
|SBI Magnum Multicap Fund||Multi-Cap Fund||44.615||3555.53||-5.5||11||19.3|
- SBI Bluechip Fund
This scheme is ranked four by Crisil, and the risk is moderately high. This Large cap fund invests on Bluechip companies like Reliance Industries, Infosys, Sun Pharma, etc. This fund has a low expense ratio, and the fund manager of this firm has a six years’ experience.
- Aditya Birla Sunlife Frontline Equity Fund
This fund has shown a consistent performance with good returns and is currently ranked three by Crisil. The risk associated with this fund is moderately high. The portfolio of this large-cap fund invests on 100% equity which is diversified on financial and industrial sector under Nifty 50.
- Axis Bluechip Fund
This large-cap fund is among the best performing funds and is ranked one by Crisil. Moderately high risk is associated with the fund. Its AUM is comparatively smaller than other large-cap Hence, its investment is made on selective best-performing companies and thus providing a high-performance result in its category.
- Reliance Small Cap Fund
This is a small-cap fund and is one of the best in its category. It is ranked three by Crisil with a moderately high risk. It is noticed to give high returns (32.4%) when invested for a tenure of 5 years or more. This fund offers a good investment opportunity due to its low expense ratio. The primary objective of this fund is to create wealth appreciation in the long run and the secondary objective is to invest in debt instruments and money market securities to achieve consistent returns.
- L&T Emerging Business Fund
Regular PlanThis is also another excellent Small Cap Fund which is ranked two by Crisil. The fund invests specifically in those businesses which are in its early stages and have the potential to become high revenue companies generating and deliver greater returns. The long-term ROI in 5 years was marked at 32.5% in its category.
- ICICI Prudential Equity and Debt Fund
This is an Aggressively Hybrid Fund which is best diversified fund in its category. It has a moderately high risk but has comparatively higher returns with a recorded 18.2% annualized return with an investment of 5 years.
- Reliance Tax Saver (ELSS) Fund
This is an open-end ELSS fund which invests with the balance between Large Cap and Mid Cap companies. Its primary objective is to generate wealth appreciation in the long term.
Since, this is an Equity Linked Saving Scheme (ELSS) fund, investing in this fund comes with a tax benefit under section 80C of Income Tax Act with deduction up to Rs.1.5 lacs.
- Kotak Debt Hybrid – Regular Plan
This is a debt oriented conservative plan suited for regular investors who aren’t willing to risk the principal amount. The primary objective of this fund is to invest the majority of the amount in debt instruments like Government bonds and securities and also give minimal exposure towards equity. Therefore, this is an excellent scheme to choose while getting exposure to equity-oriented instruments with a safety net to protect the fund from market volatility.
- Mirae Asset Emerging Bluechip Fund
It falls under the category of Large and Mid-Cap Fund and is associated with a moderately high risk. It is ranked two by Crisil making it outperform all its peers and providing a 31% ROI in 5 years. Its prime objective is to generate income and capital appreciation by investing in Indian Equities of large-cap and mid-cap companies under NIFTY 100.
- SBI Magnum Multicap Fund
This fund is a steady performer in its category and has distinguished itself from other Multicap Funds. It is ranked three by Crisil and has been seen to perform consistently with good returns. Its primary objective is to provide long-term capital appreciation and liquidity benefit of an open-end scheme. This fund is relatively less risky in comparison with pure mid cap and small cap funds and is suitable for moderate investors.
The list above consists of some of the best mutual fund options in their category if you are just starting for long-term However, choosing a small-cap, mid-cap or multi-cap fund and whether to invest in equity or debt or hybrid mutual fund will depend on your risk appetite, personal preference and future financial goals.