Mutual funds like equities are always a risky proposition. If you are looking to invest you should be able to pick and choose the best. We have given a mutual fund schemes, which could be suited for beginners or first time investors. This is largely based on past track record, rating of some of the agencies like Crisil, expense ratio, portfolio, exit load etc.
SBI Blue Chip Fund
This has to be one of the best large cap funds a beginner should be investing in. The portfolio is very good and the performance of the fund in the last few has been exceptional. Let us first take a look at some of the details of the fund before we see reasons why to invest. SBI Blue Chip Fund has large assets under management of Rs 8,300 crores. This implies that a lot of investors have faith in the scheme and have invested in the same. One other positive aspect of the fund is that the expense ratio is very low at 1.97 per cent. We have yet to see such low expense ratio in any other fund, except Quantum Long Term Equity.
Reasons to invest in SBI Blue Chip Fund?
There are plenty of reasons why you should be buying the SBI Blue Chip Fund . One of course as we said is that the expense ratio is low, which will improve the returns for investors. The second is that the stocks in the portfolio of SBI Blue Chip is good and one good thing is that it seems to have cut exposure to IT stocks. The fund has increased its exposure to stocks Sun Pharma, which now has the second highest weightage in the portfolio after HDFC Bank. Interestingly, the portfolio looks solid with Bharat Electronics, Reliance Industries and Mahindra and Mahindra in the top three.
If you buy the growth fund of SBI, the net asset value is Rs 29.81 and on the other hand the dividend plans comes with an NAV of Rs 16.96.
Big reason to invest is the track record
Now just look at the returns from the fund? In the last few years, SBI Blue Chip Fund has generated returns of 10.60 per cent on an average each year, since its launch in 2006, which is pretty good. In fact, the three-year returns of the fund is 21 per cent on an average each year. The Fund's portfolio is more skewed to stocks that can give returns more in the long-term, like Sun Pharma. Buy into the scheme, if you have a long term objective in mind.
Quantum Long Term Equity Fund
Quantum Long Term Equity Fund is one more fund fund that we like, but, it is always risky to predict the highest returns from any scheme The fund has generated decent returns, though its expense ratio is much lower then as SBI Blue Chip Fund. In fact, the expense ratio of the Quantum Long Term Equity Fund is the best in the business at 1.25 per cent. We like the fund because of its portfolio, which is very well diversified. the portfolio has stocks like Bajaj Auto, HDCF Bank, Hero Motor Corp etc. The fund has a number one rating from Crisil.
Returns from Quantum Long Term Equity
Quantum was launched way back in 2006 and has generated returns of 14 per cent on an average each year in the last 10 years. The last one year returns is as high as 16 per cent, where most funds are languishing at 7-10 per cent. One thing we need to mention is that the fund has a very high exit ratio. So, if you are investing and are likely to invest before a year, do not invest at all. The exit load is 4 per cent, if you exit the fund before 6 months and 3 per cent, if you plan to exit from 6 months to 1 year. So, make sure you are in for the long haul, when you invest in this fund.
The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author and his family do not own any mutual fund schemes mentioned above.