|Index Return||28-Sep-18||1 M (%)||YTD (%)|
|S&P BSE Sensex||36,227||-6.3||6.4|
|S&P BSE Midcap||14,763||-12.5||-17.2|
|S&P BSE Smallcap||14,431||-16.1||-25.0|
Source: ACE MF
Investing in mutual funds via systematic investment plan (SIP) is the best way to create wealth in the long term. SIP is a way to invest a fixed amount regularly in mutual fund schemes. Investors get the combined benefit of rupee cost averaging, power of compounding, and disciplined investing, thereby beating market volatility via SIPs.
Besides, the SIP amount gets auto-debited from bank accounts of investors with flexibility to increase, decrease, and stop the SIP anytime. The SIP mode of investment is gaining traction among retail investors with their growing participation in equity mutual funds for the desire to create wealth in the long term.
Below, we have mentioned our top recommended mutual funds for investors to create wealth in the long term:
|CAGR Return||Value of Rs 10,000 p.m. SIP (in Rs lakhs)|
|1 Y (%)||3 Y (%)||5 Y (%)||3 Y||5 Y||10 Y|
|ICICI Pru Equity & Debt Fund(G)||29,032||6.4||12.4||18.2||4.3||8.5||27.7|
|Axis Focused 25 Fund(G)||6,053||8.8||15.1||18.5||5.0||9.8||--|
|Tata Equity P/E Fund(G)||4,969||-1.1||16.2||23.9||4.6||9.7||32.0|
|DSP Midcap Fund(G)||5,816||-4.4||12.1||24.9||4.4||9.4||34.5|
|SBI Small Cap Fund(G)||1,067||0.6||16.7||32.5||4.9||11.6||--|
Source: ACE MF
ICICI Pru Equity & Debt Fund
- It is an equity-oriented balanced fund, which carries out tactical allocation between debt and equity based on the market outlook to ensure optimal risk/reward.
- The fund increases its exposure in debt when the equity market is overvalued and increases its allocation in equities when the equity market is undervalued.
- As of August 2018, the fund had invested ~67% of AUM in equity, ~20% was allocated to debt, ~18% (~Rs 5,200 cr) was in cash, and had ~9.6% of short position in Nifty 50 futures. The fund had invested ~60% of the AUM in large-cap stocks, while ~7% was invested in mid and smallcap stocks.
- Investors who want to follow a balanced approach, i.e., ~65% equity and ~35% debt can invest in the scheme to create long-term wealth.
Axis Focused 25 Fund
- It is an equity fund that invests in high-conviction stocks, a maximum of 25 stocks, from the top 200 stocks by market capitalization.
- The fund’s strategy is to invest in quality companies with credible management, sustainable profit growth and cash flows, and clean balance sheets.
- As of August 2018, the fund has invested ~72% of AUM in largecap stocks and ~16% was allocated to midcap stocks. The fund had the highest allocation in Financials (~21%), followed by Banks (~14%) and IT (~11%).
- Investors who want to take exposure in high conviction largecap and midcap stocks can invest in the fund to create wealth in the long term.
Tata Equity P/E Fund
- It is a value-conscious equity fund, which aims to invest 70-100% of its AUM in stocks whose 12-month rolling P/E ratio is lower than 12-month rolling P/E ratio of BSE Sensex.
- The remaining AUM is allocated to other equity and debt instruments.
- As of August 2018, the fund had invested ~74% of AUM in largecap stocks, ~21% was allocated to mid and smallcap stocks, and held ~5% (Rs 240cr) in cash. The fund made the highest allocation to Banks (~14.5%), followed by Financials (~14%) and Auto (~13%).
- Investors who are value-conscious and want to invest in large and midcap stocks can invest in this fund.
DSP Midcap Fund
- It invests predominately in stocks beyond the top 150 companies based on market capitalization.
- The fund manager invests in small and midcap stocks with consistent earnings and significant growth potential. He follows the bottom-up approach to select stocks.
- As of August, 2018, ~65% of its AUM was invested midcap stocks, ~25% in smallcap stocks, and ~6% in largecap stocks. The fund had the highest allocation in Industrial Products (~12%), followed by Banks (~11.5%) and Banks (~10.5%).
- Investors who want to primarily invest in mid and smallcap stocks can invest in this fund to generate long-term wealth.
SBI Small Cap Fund
- It invests in a maximum of 30 stocks in the smallcap space, beyond the top 250 companies based on market capitalization. The fund manager follows a blend of growth- and value-style of investing. The fund follows a bottom-up approach to select stocks.
- As of August 2018, ~77% of its AUM was invested in smallcap stocks and ~12% (~Rs 130cr) was in cash. The fund made highest allocation to Consumer Goods (~23%), followed by Industrial Manufacturing (12.6%) and Construction (~8.6%).
- Investors who want to primarily invest in a concentrated portfolio of smallcap stocks can invest in this fund to achieve growth of investment corpus in the long term.