Top mutual funds for FY19

The equity market has been volatile so far in April-May 2018 due to rising crude oil prices and bond yields, uncovering of governance issues in banks and the possibility of four rate hikes in 2018 in the US. Therefore, investors should use the current volatility as an opportunity to create wealth in long-term.

May 30, 2018 11:05 IST others Jitender Singh |

Investors can also make significant returns in the long-term as the India growth story is still intact. Economic growth is expected to revive in FY19 after subdued growth in FY18 due to the twin shock of demonetization and GST transition. Now, as the impacts of the twin shocks have receded, corporate earnings are also expected to grow in mid-teens in FY19. However, the markets have already factored in the recovery in the earnings in the valuations.

The equity market has been volatile so far in April-May 2018 due to rising crude oil prices and bond yields, uncovering of governance issues in banks and the possibility of four rate hikes in 2018 in the US. Therefore, investors should use the current volatility as an opportunity to create wealth in long-term.

Systematic Invest Plan (SIP) is the best way to beat the volatility and create wealth in long term. SIP is a way to invest a fixed amount regularly in mutual fund schemes. Investors get the benefit of Rupee Cost Averaging, Power of Compounding and Disciplined Investing, and can beat the volatility via SIPs. Besides, SIP amount gets auto-debit from the bank accounts of the investors and it gives flexibility to investors to increase, decrease and stop the SIP anytime. Moreover, investors can invest as low as Rs500 in a scheme per month. SIP is gaining traction amongst retail investors as their participation has been increasing in equity mutual funds since they also want to create wealth in long term. However, many retail investors now know the path but many do not know the best bus which can take them to their goals. So, we have shortlisted Below mentioned mutual funds for investors to create wealth in long term.
 

Scheme Name Corpus
(Cr)   
Absolute Return (%) CAGR Return (%) Value of SIP of 10,000 p.m. (in lakhs)
6 M 1 Y 3 Y 5 Y 3 Y 5 Y 10 Y
HDFC Balanced Fund(G) ₹ 21,779 -0.8 8.4 11.0 18.7 4.3 8.7 28.5
ICICI Pru Equity & Debt Fund(G) ₹ 28,807 -1.9 7.8 11.0 17.3 4.3 8.6 27.4
Axis Focused 25 Fund(G) ₹ 3,714 7.5 22.9 15.3 17.9 4.9 9.6 --
Tata Equity P/E Fund(G) ₹ 3,520 0.7 14.6 15.4 24.2 4.8 10.2 32.3
DSPBR Midcap Fund-Reg(G) ₹ 5,720 0.1 10.8 16.5 25.6 4.6 10.2 36.0
Returns and SIP values as on May 29, 2018; AUM as on April 30, 2018
Source: ACE MF
 
HDFC Balanced Fund 
  1. HDFC Balanced Fund aims to maintain an effectively diversified portfolio across market capitalizations.
  2. The fund invests in companies that enjoy leadership position in their industry with superior growth prospects and available at a reasonable price.
  3. The fund manager actively manages the debt portfolio based on the interest rate outlook. Securities are selected after assessing credit, interest rate and liquidity risk.
  4. As on April 30, 2018, the fund has invested ~28% of its AUM in debt instruments, ~46% in large-cap stocks, ~14% in mid-cap stocks and ~7% in small-cap stocks.
  5. Investors who want to follow balanced approach i.e. 65% equity and ~35% debt can invest in the scheme to create wealth in long term.
 
ICICI Pru Equity & Debt Fund (Erstwhile ICICI Pru Balanced Fund) 
  1. It is an equity-oriented balanced fund, which does tactical allocation between debt and equity, based on the market outlook to ensure optimal risk reward.
  2. The fund increases its exposure in debt market when the market is overvalued and increases its allocation to equity when market is undervalued.
  3. As on April 30, 2018, the fund had invested ~26% of its AUM in debt, ~57% in large-cap stocks and ~6% in mid-cap stocks.
  4. Investors who want to follow balanced approach i.e. 65% equity and ~35% debt can invest in the scheme to create wealth in long term.
 
Axis Focused 25 Fund
  1. It is an equity fund that invests in high conviction stocks, maximum 25 stocks, from top 200 stocks by market capitalization.
  2. The fund’s strategy is to invest in quality companies with credible management, sustainable profit growth and cash flow, and having clean balance sheet.
  3. As of April 30, 2018, the fund has invested ~60% of AUM in large-cap stocks and ~29% is allocated to mid-cap and small-cap stocks to give steady growth over long term.
  4. Investors who want to take exposure in high conviction large-cap and mid-cap stocks can invest in the fund to create wealth in long term.
 
Tata Equity P/E Fund
  1. It is a value conscious equity fund, which aims to invest 70-100% of its AUM in stocks whose 12 months rolling PE ratio is lower than 12 month rolling PE ratio of BSE Sensex.
  2. The remaining AUM is allocated in other equity and debt instruments.
  3. As of April 30, 2018, the fund has invested ~69% of AUM in large-cap stocks and ~25% is allocated to mid-cap and small-cap stocks to generate higher returns over long term.
  4. Investors who are value conscious and want to invest in large-cap and mid-cap stocks can invest in the fund.
 
DSP BlackRock Mid Cap Fund
  1. It invests in stocks beyond top 100 companies, based on market capitalization.
  2. The fund manager invests in small-cap and mid-cap stocks with consistent earnings and significant growth potential. He follows bottom-up approach to select the stocks.
  3. As of April 30, 2018, ~66% of its AUM was invested mid-cap stocks, ~15% was invested in large-cap stocks and ~15% in small-cap stocks to generate high returns for investors.
  4. Investors who want to primarily invest in mid-cap and small-cap stocks can invest in this fund to create wealth in long term.

Related Story