With Nifty near all time high levels and in a position to breakout from the consolidation range and in light of strength in equities, investors willing to cash in on the boom going ahead may be apt in taking the route in the equity space via mutual funds route and within that most apt via the Systematic investment plans or SIPs.
Determining your risk appetite or risk profile for investment purpose
Now here before you begin your investment journey into Mutual funds, you need to be well acquainted with your risk appetite as well, while the risk-o-meter that has been recently overhauled by the AMFI, defines the mutual fund's risk, you need to also assess your risk considering the following important parameters:
1. Financial or investment goals
2. Time horizon
3. Liquidity concerns
4. Current and future income flow
5. Your age
6. Net worth
7. Insurance cover
So, as is we can make out to be in the relatively safer position and still benefit from the gains in the stock market, an investor in the moderate risk category need to be maintaining a mix of debt and equity.
How to determine your risk profile for investment purpose?
Your risk profile or risk taking capacity can be known through the investible surplus you have, supposing if you have a sizeable corpus of say 30 lakhs, losing Rs. 30000 here and there will not be detrimental to your financial goals, but losing the same from Rs. 3 lakh capital shall highly mar your overall finances. And now as your risk appetite can well be determined taking into consideration your investible surplus and financial goal at hand, you need to adopt an asset allocation strategy to get the best out of your investments.
Asset allocation: Mutual fund portfolio recommended for Moderate risk investors
There is indeed a portfolio i.e. recommended out for moderate risk appetite investor class:
|Type of fund||Allocation percentage|
|Aggressive hybrid funds||50%|
|Large cap funds||15%|
|Short duration funds||20%|
|Dynamic bond funds||10%|
|Credit risk funds||5%|
1. ICICI Prudential Regular Savings:
This is a conservative hybrid fund from the house of ICICI Prudential Mutual fund. The fund commands an AUM of Rs.3287 crore as of June 30, 2021. The fund with an expense ratio of 1.74% invests major sum into debt while some 17% is into Indian stocks.
The fund launched in the year 2004 has since inception provided a return of over 10 percent. The benchmark of this fund is Nifty 50 Hybrid Composite debt.
Value Research as well as MorningStar has accorded the fund 5-Star rating. An investor looking out for moderate returns or for steady income source can park their investible surplus in a SIP starting for just Rs. 100 in the fund, while for lump sum the payment has to be Rs. 5000.
Rs. 10000 SIP started 3 years ago is now valued at Rs. 4.21 lakh. Furthermore, as the fund also provides exposure to equity some of the top stock holdings include ICICI BankHDFC Bank, Avenue Supermarts, Axis Bank, Motherson Sumi, TVS Motor etc.
2. Mirae Asset Large Cap fund:
Fund size of the large cap fund by Mirae Asset is Rs. 26,746 crore and is primarily invested into stocks which is concentrated mostly around large caps. The fund identifies high quality businesses of some reasonable price and holds the same in fund's portfolio over a longer period of time. Hence investments are typically in sector leaders with strong pricing power as well as sustainable competitive advantage.
The Mirae Asset large cap fund came into being in 2008 and aims to provide capital appreciation. Since launch the fund has yielded a return of 16%. The expense ratio of the fund is 1.59% lower than the category average.
Top holdings of the fund are Infosys, HDFC Bank, ICICI Bank, RIL, Axis Bank, TCS etc. SIP in the fund can be kick-started for Rs. 1000.
Rs. 10000 SIP started 3 years ago i.e. an investment of Rs. 3.6 lakh is now valued at Rs. 5.02 lakh.
3. SBI Equity Savings Fund:
This fund from the SBI Mutual fund falls in the equity savings category and commands an asset size of Rs. 1495.74 crore. Benchmark of the fund is Nifty Equity Savings Index. Through a moderate equity exposure the fund tends to provide capital appreciation and via capitalizing on the arbitrage opportunities, it tends to generate income. The debt and money market exposure is capped up to 35%.
The fund is in existence since 2015 and has since then provided a return of 8.5%. SIP in the fund can be started for Rs. 500, while the lump sum investment can be initiated with Rs. 1000.
Top equity holding of the fund includes stocks like RIL, HDFC, Adani Ports, Tech Mahindra, ICICI Bank and HUL among others.
Top Mutual Fund SIPs For Moderate Risk Investor With Rating And Returns
|Mutual funds||Fund category||Annualised SIP 1-year return||SIP 3-year return||SIP 5-year return||Rating|
|ICICI Prudential Regular Savings||Conservative hybrid fund||11.01%||10.48%||9.35%||5-Star by Value Research and Morning Star, 3-Star By CRISIL|
|Mirae Asset Large Cap fund|
|Large cap fund||41.74%||22.73%||16.98%||5-Star by Value Research and Morning Star, 3-Star By CRISIL|
|SBI Equity Savings Fund||Equity Savings fund||20.01%||13.67%||10.23%||3-Star by Value Research and Morning Star,|
Choosing a mutual fund for investment involves a host of steps to reap optimal returns from shortlisting the scheme to maintaining a proper allocation as well as later reviewing them on a time and again basis. Further, if the scheme is not performing well, you need to also eliminate it from your long term portfolio, such that your investment portfolio does not gets affected too severely.
Mutual funds are risky and with markets near all time SIP route shall be the best to take advantage of rupee cost averaging. Nonetheless all the investments listed out on GoodReturns.in should not be taken as investment advice and one needs to take professional advice.