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17 Oct

Amazing mutual fund investments that can make you very rich this Diwali 2017

Diwali is a good time to invest in mutual funds, and here is a list of MFs that can generate out-sized gains for you in the next 5 years.

Image Credit: forbes

Mutual funds have demonstrated a strong capability of generating wealth. Retail investors these days do not need to rely on hot stocks and tips to see their hard-earned money work harder for them. With mutual funds, investors can double their money in 5 years since it easy to get 15% returns annually by investing in good funds. Diwali is a good time to invest in mutual funds, and here is a list of MFs that can generate out-sized gains for you in the next 5 years.

Balance and beauty
Balanced funds are geared toward investors who are looking for a stable combination of safety, income and modest capital appreciation. Since they have shown a category average of 15% annual returns in the last 5 years, balanced funds can very well double your wealth in the next 5 years as well. “You should take the systematic investment plan route for balanced funds. We prefer Aditya Birla Sun Life 95 Balanced Fund, and DSP BlackRock Balanced Fund for a few reasons. Both these funds have a long track-record of over 15 years. They have beaten various benchmarks and even peers across time-periods, and have managed to double money in a safe way. Don’t forget to add a bit of balanced fund magic when you invest this Diwali,” says Anil Rego, Founder and CEO of Right Horizons.

Name Of The Fund	3-Year Return (%)	5-Year return (%)	10-Year return (%)
Aditya Birla Sun Life 95 Balanced Fund	14.92	17.73	12.42
DSP BlackRock Balanced Fund	14.96	15.82	11.26

Data: Value Research; as on Oct 10.

Image Credit: valueresearchonline

Strength of size
Large-cap funds are known for stability. Investing in top-quality companies with successful businesses, large cash flows and dividend-paying track-record, large-cap funds are an attractive yet simple way to make money. Rego recommends Aditya Birla Sun Life Frontline Equity Fund because it is probably the only fund that has consistently beaten its benchmark for the last 10 calendar years. With an 18% plus annual return record, this fund has silently worked its way to become one of the biggest stock funds in our country. Franklin India Bluechip Fund, one of the oldest funds still in existence, boasts of a low portfolio turnover, solid risk-return profile and the capacity to beat Sensex over the long term.

Name Of The Fund	3-Year Return (%)	5-Year return (%)	10-Year return (%)
Aditya Birla Sun Life Frontline Equity Fund	14.04	18.21	11.9
Franklin India Bluechip Fund	12.06	14.69	9.61

Data: Value Research; as on Oct 10.

Small is beautiful
Small-cap funds are considered more risky than most equity fund categories, but with high risks come bigger rewards. L&T Emerging Businesses Fund has a short track-record, but in 3 years it has managed to return 26% annually such. “This is a good fund to hold for the next 5 years. Investors should also consider buying Reliance Small Cap Fund, a seven-year performer. With above 31% gains annually in the last 5 years, this fund has shown that it’s possible to get five-fold returns in five years! Depending upon your risk profile, allocate funds to this category,” says Rego.

Name Of The Fund	3-Year Return (%)	5-Year return (%)	10-Year return (%)
L&T Emerging Businesses Fund	26.76	n.a.	n.a.
Reliance Small Cap Fund	23.2	31.16	n.a.

Data: Value Research; as on Oct 10.

Multicap funds
Multicap funds are market capitalisation agnostic and invest across the breadth of the equity market. This ensures they do not leave out any potential opportunities. Investing across largecap, midcap and smallcap stocks also makes them very diversified. Right Horizons prefers Franklin India Prima Plus Fund and HDFC Equity Fund for their vintage, their respected fund managers and their demonstrated capability of performing across market-cycles. These funds have below-average risk grade but above-average returns for the last 5 years.

Name Of The Fund	3-Year Return (%)	5-Year return (%)	10-Year return (%)
Franklin India Prima Plus Fund	14.62	19.05	11.51
HDFC Equity Fund	10.29	16.33	12

Data: Value Research; as on Oct 10.

Image Courtesy: wikimedia

Sectoral bets
A bullish view for the next 5 years means that the main sectors of the stock market will perform. You should buy one banking sector fund and one pharma sector fund to reap rich rewards. Banking is a growth sector while pharma is a defensive sector. “Banking and finance are the backbones of the economy. ICICI Prudential Banking and Financial Services Fund has superb track-record of picking stocks ahead of others. In the pharma fund space, the SBI Pharma Fund is a good pick to hold with a 5-year view. Pharma funds have been beaten down of late, and an investment today will ensure superior risk-adjusted returns in the next half a decade,” says Rego.

Name Of The Fund	3-Year Return (%)	5-Year return (%)	10-Year return (%)
ICICI Prudential Banking and Financial Services Fund	24.04	24.6	n.a.
SBI Pharma Fund	5.37	17.35	14.07

Data: Value Research; as on Oct 10.

(These mutual funds have been recommended by Anil Rego, Founder and CEO of Right Horizons. Although due care has been exercised by them while selecting these funds, readers are advised to consult their financial adviser before investing in any of these funds)

Read More: This article is originally published on financialexpress.
Author Credit: Sanjeev Sinha