Most analysts have one thing to say on the stock markets right now and that is they are expensive. It's hard to gather the courage to invest lumpsum amounts in mutual funds when the Nifty is near the 16,000 levels mark. The best way would be to invest staggered amounts and there is no better way of doing that than through Systematic Investment Plans.
Motilal Oswal Retail Research in a recent report said that the market faces headwinds from the advent of a possible third COVID wave, persistent inflation readings prompting a potential rate increase, and volatility around the US Fed taper talk. In times of volatility the best bet would be SIPs.
UTI Flexi Cap Fund
This fund has a 5-star rating from Value Research and CRISIL. It has generated a whopping 61% returns in 1-year. However, you should not read too much into returns, given the fact that markets have rallied in the last 1-year following a collapse in the first half of last year after the Covid outbreak.
The UTI Flexi Cap Fund as the name suggests invests in companies with different market capitalizations, so to that extent the fund manager of the mutual fund scheme has the flexibility.
UTI Flexi Cap Fund is managed by Ajay Tyagi and has assets under management of almost Rs 18,000 crores. SIPs in the fund are not too expensive and can be started with a sum of Rs 1,000 every month. Markets are expected to consolidate at these levels and if earnings done catch-up there could be a sharp downturn. It is therefore advisable to go for SIPs, as you can average the cost should the markets take a turn for the worse. UTI Flexicap has a lot of holdings in the financial sector and the performance of the fund would be linked to the economy, as banking stocks are a proxy for the economy.
Mirae Asset Largecap Fund
Before we suggest the Mirae Asset Largecap fund, we would like to inform readers once again that markets are clearly overpriced and hence you need to be cautious. The market-cap to GDP ratio has touched 105, against a historical average of 79 and on other parameters like price to earnings multiples for Nifty companies are also expensive. Hence, the best way to invest is through SIPs.
Mirae Asset Largecap Fund is a fund that invests its money in largecap stocks. It has been rated 5-star by Value Research, Morningstar and CRISIL. The 1-year returns from the fund is a whopping 51% over the last 1-year, and the 5-year returns are16% on an annualized basis. For investors who want to stay invested for a long period of time this is a good bet. Ideally, large cap equity funds can generate good returns over a long period of time like 5-years, but it is hard to predict where the markets would be 5-years from now.
Mirae Largecap Fund has holdings in stocks like Infosys, HDFC Bank, ICICI Bank, Reliance Industries and Axis Bank.
Axis Bluechip Fund
This fund is an eternal favorite of most analysts. The fund has been rated as 5-star by CRISIL, Value Research and Morningstar. In fact, Axis Bluechip Fund has given a returns of 44% in the last 1-year and the 5-year returns from the fund is 16% on an annualized basis.
Investors can look at investing in the fund through the Systematic Investment Plan route as a lumpsum investment is full of risks. The expense ratio of the fund is around 1.77%.
Over the years the fund has augmented good collections and now its assets under management are a huge Rs 28,000 crores. The top 10 stocks of the fund account for 65% of the portfolio, which means the investment in stocks is very concentrated around its top 10 holdings, which includes names like Infosys, HDFC Bank, Bajaj Finance, ICICI Bank and Tata Consultancy Services.
A SIP can be started in the fund with a sum of Rs 500 and 6 cheques.
Mutual fund investment is subject to risk associated with the stock markets and hence investors need to be very careful. Neither the author, nor Greynium Information Technologies Pvt Ltd would be responsible for losses incurred based on a decision to buy into the schemes based on the above article.