Best Mutual Funds to invest in 2016 (Equity Oriented Funds)

We have 11,681 Mutual Fund Schemes that are currently available in the market(Equity & Debt Schemes). That’s a huge number, right? It is a challenging task for any investor to identify and invest in best mutual funds.

A ‘good mutual fund scheme’ is the one that consistently manages to outperform its category returns and also it’s Benchmark’s.

Equity mutual funds are one of the best wealth creation tools for your long-term financial goals like; retirement planning, kid’s education goal, kid’s marriage expenses etc., For medium term financial goals, you can rely on balanced or hybrid mutual funds. In fact, you can create the entire investment plan with mutual funds alone.

I had published on article on ‘Best Equity mutual Fund schemes 2015 almost 12 months back. Below is the top 15 mutual funds (category wise) list as per my old article.

  • Large-cap fund category
    1. UTI Equity Fund
    2. ICICI Pru Focused Blue-chip Equity Fund
    3. UTI Opportunities Fund
  • Diversified or Multi-cap category
    1. Franklin India Prima plus
    2. ICICI Prudential Dynamic Fund
    3. HDFC Capital Builder
  • Small & Mid-cap fund category
    1. UTI Midcap
    2. HDFC Midcap
    3. Franklin India Smaller Companies Fund
  • Hybrid – Equity oriented category
    1. HDFC Balanced
    2. ICICI Prudential Balanced Fund
    3. TATA Balanced Plan A
  • ELSS / Tax saving category
    1. Franklin India Tax shield
    2. ICICI Pru Tax plan – Regular Plan
    3. Axis Long Term Equity Fund

Let me now present you the latest & updated list of the best mutual funds for SIPs (or) lump sum investments in 2016 and beyond.

Methodology to select Top Performing Equity MF Schemes to invest in 2016:

I have tried my best to analyze and identify top three best equity mutual fund schemes across five different Fund categories – Large Cap, Multi-cap, Small & Mid cap, Balanced and ELSS tax saving categories.

Below parameters have been considered for short-listing the 15 top performing Equity mutual funds that can be considered in 2016 and beyond.

  • I have considered the past returns generated by these funds for the last 1 year, 5 year, 10 year period and since inception.
  • Funds with a good track record for the last 5 to 10 years have been preferred. I have considered only those funds which are at least 6 years old.
  • Equity Funds which have low risk grade have been given comparatively higher rank. Due importance have been given to Standard Deviation, Alpha, Beta, Sharpe Ratio and overall Risk grades of the funds. (Read : ‘How to compare & select the right and best Mutual Fund Scheme based on the Risk Ratios?‘)
  • I have considered Expense ratio as one of the criteria.
  • This year besides moneycontrol, valueresearchonline and Morningstar portals, I have also used few ‘mutual funds calculators’ available at freefincal.com portal.
  • Morningstar portal’s ‘mutual fund screener’ has been used to filter funds based on fund performance & risk(risk adjusted), standard deviation, fund portfolio & expense ratio.
  • The fund returns Vs fund category returns have been given due importance.
  • Like last time, in this review too I have not considered the STAR ratings of funds provided by ranking agencies. Usually these star ratings reflect the short term(1 or 2 year’s)performance of the funds.

Top 15 Best Mutual Funds in India for 2016

Below are some of the top performing best mutual funds that you can consider for investing in 2016 and beyond.

Top Performing Best Mutual funds in india for 2016 Best Equity Funds For SIP 2016 pic

(Click on the above image to open it in a new browser window)

Let us now look at some more details of each of the fund categories.

Top performing Large Cap Equity Mutual Funds for SIPs in 2016:Best Large Cap Equity Mutual Funds 2016 pics

  • When compared to last year’s best large cap funds list, UTI Opportunities Fund has been replaced by Birla Sunlife Frontline Equity fund. Though this fund was not in the 2015 list, I have mentioned it as one of the best Equity large-cap funds to watch out for.
  • There are roughly around 135 Large cap oriented Equity mutual fund schemesthat are currently available in the market. The average returns from large-cap fund category over a 5 year & 10 year period are around 6.89% & 11.56% respectively. Birla’s fund has not only outperformed it’s category returns and also its benchmark returns with a wide margin. All three funds have ‘Below Average’ risk grade. Birla & ICICI funds have ‘HIGH‘ return grade. UTI Equity fund has out-performed the other two large cap funds during last 5 year period.
  • Some more large cap funds to watch out for are; Franklin India Bluechip fund, ICICI Top 100 fund & Religare Invesco Growth Fund. HDFC Top 200 has given decent returns for the last 10 years, but off-late the returns have been not up to the mark. The fund has ‘HIGH’ risk grade.

Best Diversified Equity Mutual Fund Schemes :Best Diversified Equity Mutual Funds SIPs 2016 pic

  • Franklin India Prima Plus fund is still one of the most consistent diversified or multi-cap funds. This fund is one of the oldest equity funds. The fund has lagged behind its benchmark only in three of the last 19 years.
  • When compared to last year’s best Diversified Equity funds list, ICICI Prudential Dynamic Fund & HDFC Capital Builder Fund have now been replaced by ICICI Prudential Value Discovery Fund & Mirae Asset India Opportunities fund.
  • ICICI Prudential Value Discovery Fund has given excellent returns. You can view this fund as a ‘contrarian fund’. The fund generally buys and holds stocks that are trading at a discount to their intrinsic value.
  • Mirae Asset India Opportunities fund invests around 75% of its portfolio in large-cap stocks and the remaining in mid or small cap stocks. This can be one of the main reasons for its good performance in the recent years.
  • All three funds have ‘Below Average’ risk grade and have ‘High’ return grade.
  • Franklin India High Growth Companies fund is another fund to watch for in Flexi-cap fund category.

Best Small & Mid-cap Mutual Funds for SIP in 2016 :Top Best Mid Small Cap Equity Mutual Funds 2016 pic

  • There is no change in the best small & mid-cap equity funds list.
  • There are around 123 Small & Mid cap mutual fund schemes. The average returns have been around 15.35% from this category over the last 5 year period.
  • Small & Mid cap funds are the ones which can give you high double digit returns if you remain invested for longer period.
  • Keep a close eye on BNP Paribas Mid-cap & Mirae Asset Emerging Blue-chip funds too.Both these fundshave LOW risk & HIGH return grades.

Top 3 Best Balanced Mutual Funds for SIP :Best Balanced Funds for 2016 pic

  • Kindly note that there is no change in the best balanced funds list too.
  • There are around 53 Hybrid or balanced equity oriented funds. The average category returns for the last 10 years have been around 11.85%.
  • Child plans of Mutual Funds like HDFC Children’s Gift fund have also been giving good returns. But there are certain terms & conditions associated with investments in these kind of funds. Kindly read my article : ‘Children’s Gift Funds – Review’.

(Read: ‘Top & Best Equity Oriented Balanced Mutual Fund Schemes – 2016‘)

Top 3 Best ELSS Mutual Funds Schemes :Best ELSS Funds 2016 pic

My Portfolio

I have investments in the below mutual funds. These are my MF picks. As of now, I have decided to continue with them in 2016 too.My mutual fund picks

Some Important Points to ponder about Mutual Fund Investments :

  • I have tried to list some of the best performing equity mutual funds here. To get good returns, it is not compulsory that that you have to invest in atleast one fund from each category. Kindly do not over clutter your portfolio. Select 2 to 3 good funds based on your financial goal(s).
  • Kindly do not invest in too many funds especially within the same fund category. Over-diversification is not beneficial and may lead to high portfolio overlap.
  • If you are new to mutual fund investments or do not have time to invest manually, the best way to invest in equity mutual funds is through SIPs (Systematic Investment Plans).
  • Goal based portfolioYou can invest in same set of funds for different long-term financial goals but with different SIP amounts(based on your existing resources, goal amount, goal priority & time-frame).
  • Portfolio ReturnIf one of the schemes in your MF portfolio is not performing well, do not immediately churn your portfolio. Also, do not churn your portfolio very often based on fund star ratings. The negative consequences of regularly churning the portfolio are undeniable.Do track that scheme’s performance for sometime (say 1 or 2 years) before deciding to drop it from your portfolio. Sometimes, it is prudent to analyze the overall portfolio performance than to get too worried about individual fund’s performance.
  • You may allocate and invest more monies in Small & Mid-cap oriented funds for long-term goals.
  • Suggest you not to remain invested in equity oriented funds till the goal target year. You may consider redeeming MF units by starting SWP (Systematic Withdrawal Plan) may be 2 to 3 years before the goal year. You can re-invest this amount in safe investment avenues.
  • Invest in Equity funds based on your future goals & financial resources and not based on your current age. For example – If you are a retiree (say 65 years) and have regular income which is more than your monthly living expenses, you can surely invest a portion of your surplus income in hybrid or equity oriented mutual funds.
  • Understand the risks associated with equity mutual funds. Kindly do not invest for quick gains or based on tips.
  • Continuously track and monitor your mutual fund portfolio. If possible invest through online platforms. You can prefer investing in Direct Plans of MF Schemes to Regular plans. Direct plans can give you slightly better returns than regular ones.
  • Some of your goals especially short-term ones can be achieved by investing in best Debt Mutual Funds.
  • Last but not the least, remember “Mutual Fundinvestmentsare subject to market risks. Past performance may or may not be sustained in future.”

In case if your fund(s) are not in the above list, it does not mean that you need to replace them immediately. As mentioned earlier, it is a tough task to not only identify best mutual funds but also to be with the best consistently. As long as your overall portfolio returns are in line with your expectations (should be realistic) , remain invested with your existing mutual fund schemes.

If you are a DIY investor (Do-It-Yourself), trust your MF picking skills & your conviction. In case, if you take mutual fund agent or advisor’s help , kindly take informed decisions.

Kindly share your views and comments on the above best mutual funds list.

(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (References : moneycontrol, valueresearchonline, freefincal & morningstar)

“Submit FATCA Compliance form before 31-Dec-2015 . If you do not meet this compliance requirement then fresh investments (SIP or Lump sum) will not be accepted from 1st Jan, 2016.”

  • Dhaval says:

    Hello Sreekanth,
    Writing after long time. I’m sure there are many like me who want better understanding of below case.

    – Salary let’s say 12 LPA.
    – HRA, PF, Medical, Telephone, Uniform already provided as per regulatory.
    – Investment done up to 1.5L
    – After that as well, as per my calculation, one has to pay roughly 70k-80k as annual TDS.

    How to save this 70-80K by any mean? Or there is no way at all? 🙂

    Thanks,
    Dhaval

  • Shekhar says:

    Hi Sreekanth! I wish to invest Rs 1 lakh in lumpsum for 5 yrs may be 50k-50k each if u suggest two good funds.A balance mf will be a good option??Or should I invest in short term gilt funds.Time horizon may be increased to 7-8 yrs.

  • Suri says:

    HI there,

    I would like to seek your advice for effective management of different Mutual SIP, we are a couple with 2 children and like to plan for education for in 6 years duration and my retirement on long term basis.
    My present allocations are below, please suggest if it needs any changes

    Birla Sun Life Frontline Equity Fund – Direct Plan (G)4000/-
    Franklin India Bluechip fund growth4000/-
    ICICI Prudential Value Discovery Fund (G)5000/-
    IDBI NIFTY index fund5000/-
    Motilal Oswal MOSt Focused Midcap 30 Fund – Direct Plan6000/-
    ICICI Prudential Balanced Fund (G)2000/-

    Your advice is much appreciated
    Thanks
    Suri

  • Giri says:

    Hello Srikanth,

    I am looking for a long term equity fund say 15 years, planning to invest rs 1 lakh currently. Can you please suggest me some good funds ?

    Note: I would like to go with complete equity based instead of debit based since I strongly believe the return of equity market in long term.

  • Vishal S.Rana says:

    Hi Sreekanth,
    Want your suggestion,
    At present, I am having 3 SIPs (SBI Bluechip Fund, DSPBR Micro Cap and Franklin High Growth Com Fund).
    I have to add three more funds (balance, diversified, sector fund) in my present portfolio considering my long time investments so which balance fund, diversified fund and sectorial fund I should pick for my portfolio.
    Kindly suggest me the three funds for SIP to make my portfolio complete.

    • Dear Vishal,
      Franklin HGF can be considered as a multi cap oriented fund, but with slightly higher allocation to large cap stocks.
      You may pick a balanced fund like HDFC balanced or SBI balanced fund.
      Sector funds – If you understand the risks Vs return trade off, can allocate small allocation to Infra fund, may perform well over the next few years.

  • OM PRAKASH DUBEY says:

    Hi Sreekanth,

    I am investing 5000 monthly through SIP in Axis long term ELSS Direct Plan. I am further planning to invest in below fund

    1. Birla Sun life Tax plan(Direct)-2000 Monthly
    2. Franklin India Taxshield Fund(Direct)-1000 Monthly

    Can you please suggest if I am going in right direction.

  • SWADHIN KU PANDA says:

    Hi Sreekant! i am new to mutual fund. want to plan a baby within 1 yr.i want to invest 5000 in sip route for my child education. want ur suggestion in which fund i will start . my age is 31.kindly guide

  • k subbiah says:

    Hi sreekanth, Thanks for this very good article

    For last 10 months i m investing in the below funds by SIP
    1) Franklin india smaller cos. fund DG Rs4000
    2) Franklin india high growth DG Rs2500
    3)ICICI pru value discovery DG Rs3500
    4) TATA balanced fund DG Rs2750
    5) DSP micro cap DG Rs3000

    the returns are very low and TATA fund is in negative. Can i discontinue or invest more when NAV is low? As per your Suggestion for 2017, TATA balanced is not in list…If advice for redeem,Pls suggest good funds . my goal is 7 to 8 years.
    Can i invest one new large cap fund or Balanced fund?

  • RAJAT BANGA says:

    Hi Sreekanth, Thanks for this very good article. Based on this, I have shortlisted the below 2 mutual funds for SIP. My goal is wealth creation over the period of 5-7 years.

    i) Mid & Small : Franklin India Smaller Companies Fund
    ii) Diversified : ICICI Prudential Value Discovery Fund

    Please confirm if I can go ahead & buy.

    • Sreekanth Reddy says:

      Dear RAJAT,
      You may go ahead. Kindly consider allocating higher % of investment to Diversified fund.

  • Arindam Guha says:

    Sir
    I have been following your page on mutual fund and SIP which is written in simple and lucid language which is self explanatory.
    My age is 45 years and I am into pharma sales. I have just started investment into mutual fund and SIP from last year.

    I need guidance from you regarding my portfolio.

    • Arindam Guha says:

      My portfolio is as given below
      Franklin India Ultra Short Bond Super Ins(G)-50000(Liquid Liquid Plus)–STP
      Franklin India High Growth Companies Fund-1000(G)
      Franklin India Smaller Companies Fund-1000(G)
      Axis Mid Cap Fund-1000(G)
      ICICI Pru Value Discovery Fund-1000(G)

      I have started the investment from last year September 2015.

      Please guide me if the portfolio is okay or not. My estimated period is for 8-10 approximately.

  • Rishi says:

    I have quite a few MF which I think require some rejig;
    All non SIP investment has a Value of appx 8 Lacs in which SBI- ELSS alone has MV of 5 lacs and lock in period is over. Please suggest which to move and I have no intention to sell the MFs.
    RELIANCE REGULAR SAVING FUND (REGULAR) Expired SIP
    HDFC LONG TERM ADVANTAGE FUND (Reg) Expired SIP
    RELIANCE GROWTH FUND (REGULAR) Expired SIP
    SBI MAGNUM GLOBAL FUND (REGULAR) Expired SIP
    SBI MAGNUM TAX GAIN FUND (REGULAR) Expired SIP
    SBI MAGNUM TAX GAIN FUND (DIRECT) Expired SIP
    TATA EQUITY OPPORTUNITIES FUND (DIRECT) Expired SIP
    DSP BLACK ROCK TAX SAVER FUND Reg Expired SIP

    Please
    —————————————
    Below are the current running SIP and I am investing Avg Rs. 3000 per month.

    FRANKLIN INDIA SMALLER COMPANIES FUND (DIRECT)
    FRANKLIN INDIA HIGH GROWTH COMPANIES FUND (DIRECT)
    HDFC TOP 200 FUND (REGULAR)
    ICICI PRUDENTIAL VALUE DISCOVERY FUND (DIRECT)
    RELIANCE SMALL CAP FUND (DIRECT)
    DSP BLACK ROCK MICRO CAP FUND (REGULAR) Recently started

    I think some SIP needs to be relooked, please suggest your views. my objective is wealth building with long term horizon.
    Thanks in advance

  • Anil says:

    Hi Sreekanth, I have to redeem some of my mutual fund holdings but only those units which has completed 1 year to avoid short-term gain. My question is how to redeem those selected units from my ongoing sip? or how to avoid short term capital gains at the time of partial redemption from an sip.

    Thanks and Regards

    • Sreekanth Reddy says:

      Dear Anil,
      For tax purposes, units of mutual funds schemes should be considered as separately date-stamped. That is, every unit will carry a date of allocation that would be the exact date of net asset value (NAV) allocation for that unit. For example, if you have made 60 installments of investments, there would be 60 different blocks of units in your folio (sometimes called tax-lots). When you sell, if you sell the entire holding, you simply would have to determine how many long-term units and how many short-term units you have sold (based on the period of holding for each tax lot) and pay taxes accordingly.

      If you sell partially, then you need to determine which units have been sold using the first-in-first-out (FIFO) method. For example, if you redeem 50% of your investment, you should think of it as redeeming the earliest X number of units that would total up to the amount of your redemption and do the analysis of how many long-term and short-term units there are in that set. It is not easy to do this by hand when you have 60 installments to consider, so you might want to take the help of a tax preparation software or a tax attorney or can ask your broker to provide capital gain statement.

      (above info source : livemint.com)

  • Sachin says:

    Hi Sreekanth,
    In your previous comments you said that investing in 3-4 funds is enough (like one large cap, one diversified equity fund, one balanced fund and one mid or small cap). I am aged 36 and have a daughter 10 years old. I am already investing in few good equity funds for my 3 main goals in future: daughter’s education, marriage and retirement.

    My question is whether we should maintain separate portfolio for all these goals with 3 funds in each of these goals? SO this would be about 9 total funds. Please guide me as i am bit confused. I already have 7 funds in my portfolio but i have not yet separated them for my goals.

  • LALIT DHANDE says:

    Dear sir,
    i m new for mutual fund investment, could u suggest me 2-3 best options for lump sum investment plans currently & how much exit load these plans have

  • PRASANTH V J says:

    THANKS A LOT.BUT ONE DOUBT IN YOUR 2016 PROTFOLIO THEIR I S NO SBI BLUE CHIP.

  • PRASANTH V J says:

    HAI SRIKANTH,MY NAME IS PRASANTH.FOR LAST 4 YEARS IAM INVESTING IN THREE MUTUAL FUNDS -HDFC TOP 200,SUNDARAM SELECT MIDCAP,DSP BLACKROCK EQUITY FUND .BUT THE RESULTS ARE NOT AT ALL GOOD.SO NOW I DECIDED TO CHANGE THE PROTFOLIO . AFTER READING TO YOUR ARTICLE I DECIDED TO INVEST IN 4 MUTUAL FUNDS .IAM ADDING SOME OF THEM PLEASE GUIDE ME TO TOOK THE BEST 4 WHICH YOU THINK IS BETTER.PLEASE HELP
    BIRLA SUNLIFE FL EQUITY FUND OR SBI BLUE CHIP FUND
    FRANKLIN INDIA PRIMA PLUS OR MIRAE ASSET INDIA OPPERTUNITIES FUND
    FRANKLIN INDIA SMALLER COMOPANIES OR HDFC MID CAP FUND
    HDFC BALANCED FUND OR ICICI PRUDENTIAL BALANCED FUND
    WAITING FOR YOUR REPLAY SOON.THANK YOU

  • Dinesh says:

    Hi Sreekanth, How are you, I am bit confused can you please help, I wanted to invest in Franklin India Smaller Companies Fund (G) through direct option – but later I realised after few days that it was some other fund it reflects as Franklin India Smaller Companies Fund – Direct – Growth . I am bit confused now are they both same as the nav is different for these 🙁 I did a lump sum few days back. should I revert or continue with the same ..
    Also in money control it shows as “This scheme is not ranked by CRISIL (for quarter ended Jun 2016) since it does not fulfill certain eligibility criteria of CRISIL”
    so bit worried.. please suggest

    • Sreekanth Reddy says:

      Dear Dinesh,
      Looks like you have invested in right option only.
      Kindly read these articles :
      Mutual Fund Direct Plans Vs Regular Plans: Returns Comparison & Analysis
      Direct Mutual Fund Plans : Details & Benefits

      • Dinesh says:

        Hi Sreekanth,
        Thanks but , I don’t think they are same as the NAV’s are different see below from MoneyControl. also is there any reason why they are not listed in Ranking last two.. i think better to redeem and invest it again in the correct one please advise..

        Franklin India Smaller Companies Fund (D) NAV – 25.651
        Franklin India Smaller Companies Fund (G) NAV – 43.829
        Franklin India Smaller Companies Fund – Direct Plan (D) NAV – 26.873
        Franklin India Smaller Companies Fund – Direct Plan (G) NAV – 45.667

        • Sreekanth Reddy says:

          Dear Dinesh,
          Did you go through the suggested articles?
          The first two funds are Regular Schemes (with growth & dividend options)
          &
          The 3rd and 4th funds are Direct plans of the same scheme.

          • Dinesh says:

            Many Thanks Sreekanth , That clears , I Assumed (D) in the fund name to be Direct but it is Divident

  • Dr. Jawahar Lal bansal says:

    Dear Shreekant,Today an article appeared in Economic times “Invest in dynamic bond funds to benefit from falling rates.Long term debt funds are considered risky as they are highly sensitive to changes in the interest rate environment.Kindly analyse and comment.Suggest some dynamic bond fund.

  • D GANESH says:

    Dear sir,
    i am new to mutual funds and i want to invest 20000/month through demat SIP. I Have shortlisted some funds . my goals are buying car,home and wealth creation and my age is 30.please suggest
    1.BIRLA SUNLIFE FRONTLIINE EQUITY FUND or SBI BLUE CHIP(5000) for 10 years
    2.TATA Balanced fund(5000 for 5 years)
    3.franklin india smaller companies fund(5000) for 20 years
    4.axis long term equity fund(5000) for 20 years

  • Subbarao says:

    I have 15 lacks with me. I would like to invest for long term for my retirement and my son.please suggest good funds

  • Karthick says:

    Hi Sreekanth,

    I have about 1CR to invest for a year. I can take upto a 10% risk. Meaning to say that if I lose 10%, I can replenish to meet my commitment of 1CR. What would be your suggestion to get maximum returns?

    Thank you.
    Karthick

    • Sreekanth Reddy says:

      Dear Karthick,
      Is it that you would like to accumulate Rs 1 cr or you would like to invest Rs 1 cr in a year?
      Read: List of best investment options!

      • Karthick says:

        Dear Sreekanth,

        I have 1 cr to invest right now. However, I would have to take out about 70L in a year or two. The remaining can continue to grow towards long term. What would you suggest should be my MF portfolio?

        Thank you.
        Karthick

  • DrJLBansal says:

    Dear Srikanth,your update on Top 15 best mutual funds for 2017 is very much due.This will help your blog readers to decide investment from jan,2017 ownwards.

  • Rajesh says:

    Hi Sree,

    Last August, I had invested lumpsum amounts of Rs 5 lacs each in Reliance Equity Opportunities Fund and in Reliance Growth Fund. Additionally, i had invested Rs 2.5 lacs in Reliance Pharma Fund.

    During my yearly portfolio review, I have observed that these funds have not given me the expected returns over the past year. Kindly provide me with your expert advise if I should continue to be invested in these funds or if I should redeem these units and invest in another fund, which might give me better returns.

    Do suggest me alternative funds as well. I intend to be invested with this lumpsum amounts for at least 10 years.

    Rgds

    • Sreekanth Reddy says:

      Dear Rajesh,
      May I know the reason for choosing Reliance funds only? What is your investment time-frame?
      If you are comfortable doing lump sum investments, kindly opt for STP route.
      Reliance Equity opp fund is a multi-cap fund & Reliance Growth is a mid-cap oriented fund. I believe that there are better funds in the respective categories.
      You may switch your investments to Franklin Prima plus and HDFC Mid-cap.
      Read:
      MF portfolio overlap analysis tools.
      How to pick right mutual fund scheme?

      • Rajesh says:

        Dear Sree,

        There is no specific reason for me to choose Reliance, apart from the fact that it was recommended by my Financial Advisor then, based on CAGR values.

        Kindly advise if it is the recommended approach / best practise to opt for STP route when investing lumpsum amounts into Mutual Funds.

        Rgds

        • Sreekanth Reddy says:

          Dear Rajesh..The main benefit can be ‘rupee cost average’ and brings in disciple to the way you invest in MFs. Suggest you to consider investing in different fund categories across different fund houses.

  • Pranal says:

    Hi Sree, i came across category average returns for equity mutual fund (MF) in economic times website. example for Small Cap category it shows 38% across 3 year time period.

    1) Do you have any idea whether these returns are ANNUALIZED returns for Small Caps category or AVERAGE of all the funds in this category AT THE END of 3 years?

    2) Could category average be considered as a BENCHMARK?

    Thanks in advance

    • Sreekanth Reddy says:

      Dear Pranal,
      1- Yes annualized.
      2 – Avg returns generated by the respective Fund Categories and also the respective Benchmark indices can be considered when doing analysis.

  • Muthu says:

    Hi Sreekanth,

    Thanks for doing good work in relakhs website, its empowering us to learn more about personal finance.
    I would like to seek your opinion on my funds conclusion for kids educations (long term).
    Provided the break down with years and the amount.
    Planning to invest all in Direct & via MFU online.

    L cap – Birla Sun Life Frontline Equity Fund – Direct Plan – 5k – 10 yrs SIP monthly
    Mid and Small Cap Funds – Franklin India Prima Fund – Direct Plan – 5k – 10 yrs SIP monthly
    Balance/Hybrid Equity Oriented Balanced Funds – HDFC Balanced Fund – Direct Plan – 5k – 10 yrs SIP monthly

    Mid and Small Cap Funds – Franklin India Smaller Companies Direct-G – 5k – 14 yrs SIP monthly
    Balance/Hybrid Equity Oriented Balanced Funds – ICICI Prudential Balanced Fund – Direct plan – 5k – 14 yrs SIP monthly

    Portfolio analysis :
    * Checked with MF overlap tool from free financials and the portfolio is not overlapping more than 35% at max and that too only 2 funds.
    * The overall portfolio have 82% Equity and 10% debt and remaining others like CD.
    * For Equity Portfolio Aggregates as below.
    Giant – 35.27
    Large Cap – 14.52
    Mid Cap- 38.74
    Small Cap- 11.50

    Any suggestions ?

    • Sreekanth Reddy says:

      Dear Muthu,
      Good work and analysis 🙂
      You may kindly go ahead with your investment plans.

      • Muthu says:

        Thanks Sreekanth.
        For the portfolio considerations, do we have to construct portfolio based on individual financial goals or do we have to consider overall our investment portfolio ?
        Say financial goals can be kids educations and retirement .

  • thomas says:

    Hi Srikanth ,

    I have multiple SIPs via AMC and one SIP a direct one . However along with SIP, Ideally I would like to purchase more units when NAV comes down for a particular MF ( for example some of my invested MF’s NAV came down coz of tata-cyrus mistry issue)
    In the same SIP folio, how can I purchase more units based on market timings like this(for that day)..Since I am investing SIP via AMC whether it is possible ..? Or is it allowed in direct option SIP ?

    Kindly advise .

    Thanks
    Thomas

  • Sujeet says:

    Hi Sreekanth,

    First i would like to appreciate your good work.

    Please have a look at my portfolio and guide me if any change is required.

    1. Birla Sunlife Frontline Equity Fund Direct (G) – 1000/m for 15 Years
    2. ICICI Prudential Value Discovery Fund Direct (G) – 2000/m for 20 Years
    3. Franklin India Smaller Companies Fund Direct (G) – 2000/m for 20 Years
    4. HDFC Mid-cap opportunities Fund Direct (G) – 2000/m for 15 Years
    5. HDFC Balanced Fund Direct (G) – 2000/m for 15 Years

    6. Axis Long Term Equity Fund Direct (G) – 35000/year (Lumpsum) for 20+ Years
    7. Birla Sun Life MIP || Wealth 25 Plan Direct (G) – Remaining Surplus Money (lumpsum) 50%
    8. Birla Sunlife MIP II Savings 5 Fund Direct (G) – Remaining Surplus Money (lumpsum) 50%

    Please review

    Thanks

  • John says:

    Hi Sree,

    I am new in MF and interested to Invest 10 Lacs for a period of 10 to 15 Years. which is the best fund to Invest to have maximum benfits. Ready to take Moderate risk.

    • Dear John ,
      You may consider one large cap, one diversified equity fund and one balanced fund from the above list.
      For a >10 year horizon, I believe you should take more risk. If so, you may consider adding one mid-cap fund to the portfolio.

  • Chander says:

    Hello Sreekanth,

    \I want to do SIPs for wealth creation and ready to invest for longer period of time, say 15 years. I would be glad if you suggest some really good funds across all categories ( large/mid/small/diversified/tax saving). Initially I plan to invest Rs 10000 per month in SIPs. Kindy advise.

  • Pankaj Gupta says:

    I submitted form on Feb 2010 of SBI & Birla MF in directly in office.
    After separating into regular & direct plan in 2013, I was allotted regular plan even after I submitted directly in office.
    1) Why wasn’t I allotted direct plan.
    2) who is taking commission every year.

    • Dear Pankaj,
      If you have kept the applicable sections blank (sections related to intermediary code etc), probably the staff would have assigned your application to some distributor’s code.
      You may make future investments in Direct plan under the same folio. Kindly contact the respective customer care.

  • Rajesh says:

    Dear Sree,

    Kindly advise the benefits of long term lumpsum amount investment in Mutual Funds, since unlike SIP’s there is no averaging of cost nor any compounding effect to the invested amount.

    Any profit generated on lumpsum invested amount is directly dependent on the market condition and the NAV at the time when the Mutual Fund units are redeemed.

    Rgds

    • Dear Rajesh,
      Market conditions at the time of buy or sell + investment horizon.
      (Market conditions at the time of sell + horizon is applicable for SIPs too).

      If I have a horizon of say 10 years, I do not mind investing lump sum amount now. As with any investment, we need to keep a track of the performances (returns & asset allocation)..

  • Roy says:

    Hello Sreekanth,

    I am in the process of c0mpleting my EMI’s in a few months and would like to add some sip’s to my core portfolio gradually over the next 6 months.Given below is the status of my current ongoing sips and the addition being the one i intend to start with and also the % exposure to these funds.Rationale is to spread risk over fund houses/funds.

    Icici Pru Value Discovery Fund-Direct Growth-Diversified6000+12000=1800017%
    Franklin India Prima Plus -Direct Growth-Diversified6000+nil=60006%
    Franklin India High Growth co’s Fund-Direct Growth-Diversified6000+nil=60006%
    Tata Balanced Fund-Direct Plan-Growth-Hybrid11000+5000=1600015%
    ICICI Pru Focussed Bluechip Equity Fund-Direct Growth -Large Cap3000+2000=50005%
    Birla Sunlife Frontline Equity-Direct growth-Large Cap-Nil +10000=100009%
    HDFC Mid Cap Oppurtunities Fund -Direct Growth-Mid/smallCap9000+7000=1600015%
    Franklin India Smaller Companies Fund-Direct GrowthMid/smallCap7000+nil=70006%
    DSP Blackrock Micro Cap Fund-Direct GrowthSmall/Micro cap12000+3000=1500014%
    Franklin India Taxshield FundElss-Direct growth-5000+5000=100009%

    Plan for additional sips to be allocated is as follows:

    Retirement Corpus-Existing/plan-horizon -20 yrs
    DSPBR Micro Cap:7 k ongoing (plan to for addtnl 3 k in DSPBR micro cap and 2 k in HDFC mid cap )
    ICICI pru value discovery: 2 k ongoing (plan for addtnl 5 k)
    Tata Balanced fund- Plan for 4 k
    Birla Sunlife frontline equity-Plan for 10 k
    ICICI pru bluechip- Plan for 2 k
    Franklin Taxshield elss-Plan for 5 k

    House Renovation-Existing/Plan-horizon 8 yrs
    ICICI pru discovery- 2 k ongoing
    HDFC midcap – plan for 1 k

    Pilgrimage-Existing/plan-horizon- 8 yrs
    DSPBR micro cap- 3 k ongoing
    Tata Balanced fund- plan for 1 k
    ICICI pru discovery- plan for 4 k
    HDFC midcap- plan for 2 k

    Car -Plan-horizon- 6 yrs
    ICICI pru discovery-plan for 3 k
    HDFC mid cap-plan for 2 k

    Would appreciate your valuable advice on the above plan.

    Have a nice evening.

    Best Regards,
    Roy

    • Dear Roy,
      Investing in too many funds may not be really beneficial.
      Read:
      How to select the right mutual fund scheme?
      MF portfolio overlap analysis tools.For any fresh investments, you may consider investing in exiting funds only.

      • Roy says:

        As always thank you for your prompt response Sreekanth.

        The sips that have been planned are in existing funds only with the exception of Birla Sunlife equity ,but yes there is a significant overlap with ICICI pru bluechip .Please advice if below mentioned portfolio wise plan is ok.

        Retirement Corpus-horizon -20 yrs
        DSPBR Micro Cap:7 k ongoing (plan to for addtnl 3 k in DSPBR micro cap and 2 k in HDFC mid cap )
        ICICI pru value discovery: 2 k ongoing (plan for addtnl 8 k)
        Tata Balanced fund- Plan for 4 k
        ICICI pru bluechip- Plan for 7k
        Franklin Taxshield elss-Plan for 7 k

        House Renovation-Existing/Plan-horizon 8 yrs
        ICICI pru discovery- 2 k ongoing
        HDFC midcap – plan for 1 k

        Pilgrimage-horizon- 8 yrs
        DSPBR micro cap- 3 k ongoing
        Tata Balanced fund- plan for 1 k
        ICICI pru discovery- plan for 4 k
        HDFC midcap- plan for 2 k

        Car -horizon- 6 yrs
        ICICI pru discovery-plan for 3 k
        HDFC mid cap-plan for 2 k

        Thanks and Regards,
        Melroy

  • Leon says:

    Hello Sir,

    I have invested following amount for long time. Kindly restructure my portfolio so that i can avoid mutual funds overlapping and minimize expense ration. You are also requested to give me idea wheather i go for sip or lump sum amount when market low.

    To prepay home loan ( Instead of prepayment invested in ELSS )
    Rs. 4500 – AXIS LONG TERM EQUITY FUND – GROWTH PLAN
    Rs. 2500 – DSP BLACKROCK TAX SAVER FUND – GROWTH
    Rs. 3500 – Franklin India TAXSHIELD GROWTH

    For Long Term Equity
    Rs. 10400 – SBI BLUE CHIP FUND – REGULAR PLAN – GROWTH
    Rs. 5000 – Franklin India PRIMA PLUS GROWTH
    Rs. 5000 – BIRLA SUN LIFE FRONTLINE EQUITY FUND – GROWTH

    For Balance Investment
    Rs. 7500 – HDFC BALANCED FUND – REGULAR PLAN – GROWTH
    Rs. 3000 – TATA BALANCED FUND – REGULAR PLAN – GROWTH

    For Small & Mid Cap
    Rs. 5000 – DSP BLACKROCK MICRO CAP FUND – REGULAR PLAN – GROWTH

    Give me advice. I have two goal complete home loan & Long term wealth creation.

    • Dear Leon,
      You have invested in multiple funds from the same fund category. You may go through this article and check the overlap and you may trim down your portfolio if the overlap % is on higher side. Read: MF portfolio overlap analysis tools.

      • Leon says:

        Sir,

        I have already gone through this tool but still i am confused related to my portfolio. You are requested, please go though my portfolio and give me portfolio which i can invest 10k per month. I want tax benefit and long term wealth creation…

        • Dear Leon,
          You may pick 1 ELSS fund, 1 Large cap fund, 1 diversified equity fund, 1 Balanced fund and a Small cap fund.
          My picks would be – Axis LTE/Franklin Taxshield, SBI Bluechip, Franklin prima plus, TATA balanced fund & DSP micro cap.
          Out of this you can check overlap between ELSS fund Vs Franklin Prima plus, if the overlap is high and you want a tax saving option then go with Axis LTE.

          • Leon says:

            Thank you for analysis..

            Still i have following doubts, please clear it
            1) Is it go if i am investing in one ELLS fund only for long time ?
            2)
            AXIS LONG TERM EQUITY FUND ( Top 3 Sectors are Banking/Finance, Automotive, Pharmaceuticals )
            SBI Blue Chip Fund ( Top 3 Sectors are Banking/Finance, Automotive, Pharmaceuticals )
            Franklin India Prima Plus ( Top 3 Sectors are Banking/Finance, Automotive, Pharmaceuticals )
            Tata Balanced Fund – Regular ( Top 3 Sectors are Banking/Finance, Cement, Pharmaceuticals )

            All three mutual funds investing in same sectors except Cement

            Is it good for long time ?

            3) Kindly suggest me portfolio for long time which neither overlapping with each other nor invest in same sectors.

            please clear my doubts .

          • Dear Leon,
            You may kindly check the portfolios of other funds by yourself and also the overlap and pick the funds as per your conviction.
            Kindly note that the portfolio allocations can change and may not remain the same over longer period. Thaty why they are referred to as actively managed funds.

  • Rajesh says:

    Dear Sree,

    About a year back in Aug 2015, I had invested a lumpsum amount of Rs 5 lacs into ICICI Pru Value Discovery Fund, but currently observe that the returns it is giving in the present market conditions is only between 5-6% as compared to my other lumpsum funds which are giving me minimum 10% returns. Since I am doing a yearly review of my portfolio, would you recommend that it is advisable for me to switch from the Value Discovery Fund into another fund which could give me higher returns.

    Additionally, I already have an ongoing SIP of Rs.10,000 monthly, in ICICI Pru Value Discovery fund, which is doing fine and giving me returns of 10-11%. I will be continuing with this SIP.

    Rgds
    Rajesh

    • Dear Rajesh,
      It is one of the best and consistent funds in Multi-cap category.
      Two points here;
      1 – Kindly do not churn your portfolio based on short-term review. You may give it some more time..
      2 – Sometimes, it is advisable to look at avg portfolio return than giving too much importance to individual funds.

      By the by, may I know your investment time-frame?

      • Rajesh says:

        Thanks Sree for your prompt advise.

        To be honest, I really do not have any fixed timeframe, as most of my major requirements can be paid off from my other existing investments / savings and for me Mutual Finds is just an additional avenue to invest. It is not linked or related to sufficing any such goals.

        The payments to my existing SIP’s can optimistically go on till such time that I retire, which is 15 years from now. till then I am only investing in Mutual Funds, with the intention of Wealth creation (from SIP’s) and profit booking from my lump sum investments in Mutual Funds.

        Kindly advise the best approach for the above mentioned purpose / goal of Wealth creation.

        Rgds

  • thomas says:

    Hi Sreekanth ,

    I followed your advise via this site which I got from some of my previous mails , and have made a new MF portfolio according to my investment needs .. More importantly I got motivated to learn more on MFs ::) , thanks for that ..

    However from one of my friends, I got the below points .Could you pls let know your views on that .

    a) When the time horizon is below 10 years it is mandatory to have flexicap investment ratio higher(up to 60 %) in the MF portfolio and we need to limit small ,mid and micro cap to ONLY up to 30 percent of allotment ?

    If you forget the criteria of risk appetite in this , is there a proven reasoning behind this ( as flexicap MF can play with and make use of the best times in small/mid and largecaps??) , or just a general one..?

    b) The below is what I got from a website :

    If the risk appetite is more , It is important to have a theme based MF (theme/sectorial) as some of them consistently outperforms flexicap funds .

    whats your view on that as I didnt see the theme based funds /or any sectorial funds in your articles (sorry if I missed it ) .

    If yes , do you have any suggestion of theme based funds like (the example of Mirae consmer fund) , or any funds from sector (like example UTI logistics fund ) in the current market scenario to be included in the MF portfolio ..?
    Or is it too risky and unpredicatbility is more .

    thanks in advance ,

    • Dear Thomas,
      a) There is no thumb rule or hard-n-fast rule to this. How sure are we that flexi-cap that we invest in is going to allocate higher fund corpus to mid/small stocks?? So the prudent thing that one can do is to invest in 2 to 4 funds with consistent track record for the last say 10/15 years and diversify across fund categories.
      b) Nothing wrong in investing Theme based or Sector based funds, if one can understand and comfortable with the sector business in which they invest in. For example : I do not understand the Pharma industry, hence I avoid investing in it. Does that mean, pharma is a bad sector to invest ? – NO.
      After investing in a core portfolio (say with large/diversified/mid), if one has the required risk appetite and requirements, can surely invest in Sector funds. But has to understand the risks associated with them before investing!

      • thomas says:

        thanks a lot Srikanth for your advice ..I was checking more on Sundaram Rural fund and seen that it has a good track record .. However In money control and all , I cannot see the risk parameters , based on your experience the Rural development of India theme is a safe one to invest (compared to any sectors etc)

        Thanks ,
        Thomas.

        • Dear thomas ..If you have already constructed a good MF portfolio with core funds (like a large cap, diversified equity fund, mid/small cap fund), you may consider sector oriented funds to add to your portfolio.
          You may find the risk parameters data on Valueresearchonline.com or monrningstar portals.

  • Subramanyam says:

    Hi Srikanth,

    I am 53 years old and wish to have a tax free corpus of Rs.50 lacs by the time i turn 60. Considering my retirement timelines, am ready to invest either through SIP/ Lumsum over a period of 5 years( till i turn 58). Can you please suggest 1-2 options with low risk and a decent returns??

  • Manja says:

    May i suggest that you invest directly through the individual AMCs rather than through your exisitng banks mutual fund platform ( in case you have decided to). Since you are investing for long term, you will see larger benefit from the lower expense ratio offered by the DIRECT plans of the same funds which are only offered directly throigh these AMC. what i mean is go to the websites of these individual mutual fund houses and create account / portfolio there. In case you are still confused let us know

  • Manja says:

    Hi Sreekanth,
    Interest rates are fallen and are expected to fall further, do you think we should add Short Term Bonds to our portfolio. I have some Ultra Short Term funds which I had kept as oppurtunity fund (when markets go down, I top up my Equity funds – like the one on 29 Sep). There are more surplus funds I have received this month and was thinking of putting them in Short Term Bonds instead of Ultra Short Term funds to have a slight edge on returns compared to Ultra Short Term Funds.

    • Dear Manja,
      Yes, looks like the Short term debt funds can deliver decent returns in next 6 to 12 months, considering the expected rate cuts (if any) by RBI.
      But, I am sure are you aware of taxation part, if you are redeeming the debt funds and re-investing in Equity schemes.

  • Dipa Ahuja says:

    Hello Sir,

    From where i can invest on mutual fund by my own. I have invested in SBI mutual fund as SIP. When i ask the manager to tell me how can i invest other than SBI MF he said they only help me to SBI

    When i asked ICICI manager they replied the same.

    Is there any website where i can choose funds by myself ? If so what is the difference between investing by own and investing via any bank? what are the risks ?

    Also Please suggest me top lump sum mutual funds to invest 5lakh

    • Manja says:

      If you have mutual fund account created via any bank like HDFC, ICICI, you should be able to select any mutual funds through their platform. However, from 2013, individuals AMCs – fund houses which actually offer these mutual funds have been allowed to sell Direct Mutual funds. So you can go to any individual AMCs like Birla Sun Life, HDFC MF, create an account there and invest directly with them. Through this you can select what is called as DIRECT fund, these have lessor expense ratio than the ones you seldct via your Banks mutual fund account and hence provide more effective returns for the same fund.

    • Dear Dipa,
      If you can identify right schemes by yourself then there are plenty of websites/online platforms that you can consider for MF investments.
      You can even visit respective mutual fund house websites and can invest.
      Another option is you can invest in MF schemes through a MF advisor.
      Kindly read below articles;
      What are Direct plans of mutual fund schemes?
      MF Utility online platform.

  • Meenu says:

    Hi,

    I want to start investing Rs. 30000 in SIP’s. Have identified the following funds, 5k each:
    HDFC Balanced Fund
    Franklin India Smaller Companies Fund
    ICICI Pru Value Discovery Fund
    DSP BlackRock Micro Cap Fund
    Birla Sunlife Frontline Equity
    Franklin India Prima plus

    Is the portfolio well diversified to cover all risks, I am looking at 15-18 year horizon
    to build a corpus for retirmement, child education and marriage. Also, is it better to commit
    to a longer tenure of SIP (say 5 yrs) or do a yearly review and renewal. Are they any additional charges for renewal?
    Please advise. Thanks in advance!

  • Kavitha says:

    Hai sir l want to take up monthly mutual fund invest plan but not much amount. May be 500rs a month and ready to pay for about three to five years. Please tell me which plan to take up

    • Manja says:

      Hi Kavitha,
      What is the investment objective? Ideally you should set up a Goal, lets say Buying a luxury car in 5 years and use various calculators to find out what amount is required each month based on certain %age. For example, if you are looking for 10 Lakh car in 5 years, you will require to invest about 14.2 K p.m (@ 8% return p.a) OR 13.1 K p.m (@ 12% return p.a) OR 12.1 K p.m (@ 16% return p.a). Now you decide which %age you are comfortable to take. Let’s say you are conservative and only believe in 8%, then you should invest 14.2 K each month FD / Liquid / Ultra Short term fund which hopefully will give you 8% return to achieve 10 Lakh goal in 5 years. If you can take risk and go for 16% return, then you should invest 12.1 K each month in combination of Large Cap, Diversified or Mid Cap Equity funds to be able to clock in 16% average return YOY.

      Without the goal, you will never know how much is enough to invest per month and tomorrow when markets are down, you will lose hope in the investment and discontinue the investments. Hope this explains.

      Please note that I am just another user. Sreekanth may have better answers.

  • Raja Rajagopal says:

    Hi Sree,

    Hope you and your family doing good.

    This month one of FD is getting matured (Rs. 1,19,250). I do not want go back and invest the amount in FD again. As you know now the FD IR’s are very low.

    My time horizon is 2-3 years. Investment goal is, in another two years my sister daughter is going to complete her school studies and then I need take her to some professional degree courses.

    Please suggest me some good funds where I can invest this FD amount. Also I am keeping nearly 3,00,000 in savings. Is that good idea to keep it in savings. I am planning to invest in Liquid fund. Kindly give your advise.

    Thanks & Regards,
    Raja Rajagopal

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