With the festive season considered as auspicious for investment, it is the best time to place money in equities. If you are not used to parking money directly through equities, we suggest that you take the mutual fund route. There are some schemes that have given good returns. However, it is not only the returns that are important, there are also other things that you should look for investing in mutual fund schemes. Before we tell you the best mutual fund schemes that you could invest, it is imperative that we tell you what to look for in a mutual fund scheme.
Look at various charges
Look at the exit load. Most mutual funds charge 1 per cent for exiting the scheme. Also, look at the expense ratio of mutual fund schemes, which are borne by you. Expense ratio is the ratio mutual funds incur to sell a unit, manage a fund etc. This would include fund managers fees, marketing expenses etc. All of these have to be borne by you. So, it is very important that you take a look at expenses of the mutual fund house as well. We have selected a few mutual fund schemes that are worthy of investment ahead of Diwali. Here are a list based on returns, Crisil ratings, past track record and also expenses.
Birla Sun Life Top 100 Fund
As the name suggests the fund invests its money in the top companies in the country. Essentially, these are all the large cap companies in the country. So, please note, that Birla Sun Life Top 100 Fund is a large cap fund and if you are looking to invest in a large cap fund, this has to be it. Those looking at investing under the growth scheme, will have to do it at an NAV of Rs 47.66, while if you are looking at regular dividends you can do it at Rs 16.47. One can invest in the scheme through small amounts of as little as Rs 1,000 through the Systematic Investment Plans. You can begin with an initial amount of as little as Rs 1,000.
Rationale for investment in Birla Sun Life Top 100 Fund
Crisil has rated this fund as the No 1 in its category. However, that is not the only reason to invest in the fund. If you look at the fund more closely, you realize that the fund has some very good stocks in its portfolio including the likes of HDFC Bank, Tata Motors, L&T and Reliance. Apart from this the returns has been excellent for the fund. The 5-year returns has been near 17.71 per cent, while the 10-year returns has been 12.38 and 3-year returns has been 21 per cent. This is excellent by any stretch of imagination. Apart from this, the expense ratio at 2.27 per cent, is not bad at all. Go for the scheme, if you are a long term investor. One of the best mutual fund schemes to invest in at the moment.
DSP Black Rock Micro Cap
This is essentially a fund that invests in small cap stocks. It invests in stocks that are not part of the top 300 companies by market capitalization. The one thing that we must make clear is that this is a small cap fund and hence it is extremely risky. You can make more money, while you can also lose more money, given that small cap funds are more risky than large cap funds. DSP Black Rock Micro Cap fund has sizeable assets under management to Rs 2,680 crores. If you are looking to invest in this fund, you can do it through small SIP amounts of as little as Rs 1,000. The initial investment of course is also similar at Rs 1,000, which is not bad considering most funds want an initial investment of Rs 5,000. The fund has a net asset value of Rs 52.88 under the growth plan and Rs 32.11 under the dividend plan.
Reasons to invest in DSP Black Rock Micro Cap Fund
Can you believe a fund can give 50 per cent returns each year in the last three years. Yes, DSP Black Rock Micro Cap Fund has given that. The fund has given a return of 25 per cent on an average in the last three years. The top holdings of the fund are SRF, KPR Mills and Sharda Crop Chem.
We wish to emphasize that though the returns of the past have been phenomenal, there is no guarantee that returns in the future can be fantastic. These are investment in small cap companies that can be fraught with risks. So, it is a highly volatile fund, which can be more volatile than large cap funds.
Franklin India Balanced Fund
We have recommended a large cap a small cap and now it is time for a balanced fund. Franklin Balanced Fund is one which invests in a mixture of both debt and equity. So, if you are looking for balanced returns, balanced fund this is the right one to go for. If you are looking at the growth option, you need to invest at a price of Rs 101.27. On the other hand the dividend plan of Franklin India Balanced Fund comes at a net asset value of Rs 22.256. One can invest in the fund through the SIP route, wherein you need to invest as much as Rs 2,000 every month. This is much higher than Rs 500 or Rs 1,000 that most other mutual funds charge. The expense ratio of the fund is Rs 2.52, which is at par with others.
Reasons to invest in Franklin India Balanced Fund
The 5-year returns of the fund is 16.36 on an average each year, which beats bank deposit rates. The 3-year returns of the fund is 22.26 per cent and the fund has large amounts of money invested in government securities. This is a good fund to invest, if you are looking at more balanced kind of returns from debt and equity.
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