In the last 2 articles, we have discussed the concept of mutual fund and the parameters to look for while selecting good mutual funds. In this article, we give the details of 5 mutual funds which are worth investing. All these 5 belong to the Diversified equity fund category. These are long-term winners in their categories and have proved their performance over the years by beating their benchmark and category average by a good margin.
All these funds have returned Compounded annualized growth rate (CAGR) of 25% or more in the long term which is encouraging when you want to invest in these funds. Our concentration is on large cap oriented mutual funds, we are not including funds which have high concentration in midcap or small cap funds.
|Long term returns on select 5 mutual funds|
|Sl. No||Fund Name||Date of launch||Years in existence||NAV as on 01.04.2011||CAGR from inception|
|1||DSP black Rock top100 equity||Feb.2003||8 yrs 1 mth||101.722||33.32%|
|2||Birla Sunlife Frontline Equity||Aug.2002||8yrs, 7 mths||89.84||29.11%|
|3||Franklin India Bluchip Fund||Nov.1993||17 yrs,4 mths||219.22||25.63%|
|4||HDFC Top 200 Equity Fund||Sept.1996||14 Yrs,6 mths||214.836||25.38%|
|5||Fidelity Equity Fund||April.2005||6 yrs||36.404||24.58%|
1. DSP Black Rock Top 100 Equity Fund
DSPBR top 100 Equity Fund is an 8 year old fund and its performance is strong enough to say that its one of the best in the category as of now. The fund has given enough proof of its performance like even in the first year of its launch it gave an amazing return of above 120% beating its benchmark with a huge margin. It also showed its capacity to restrict loses in the bear market of 2008 by falling by only 46% compared to its benchmark which fell by 55%. The best thing about this fund is that this fund has provided very strong performance by mainly focusing on large cap companies, the fund allocation in large cap companies stands at 95% which is outstanding. This clearly shows the competence of Fund manager. The benchmark index of this fund is BSE.100. The fund is managed by Mr. Apoorva Shah.
2. Birla Sun Life Frontline Equity A
Launched in 2002, this is another performer in the Large & midcap category. Over the years Birla Sun life frontline equity has consistently outperformed its benchmark by a good margin. During the market falls of 2004, 2006 and the big crash of 2008 and early 2009, this fund was able to restrict downsides better than its benchmark. The fund is largely Large Cap oriented, however the fund is known to take some risks in Midcap space.
The fund is benchmarked to BSE.200 and is managed by Mr. Mahesh Patil.
3. Franklin India Bluchip Fund
This is one of the oldest equity funds in India, launched in November. 1993. With a 17 year CAGR of 25.63%, this is one fund, every investor should have in his portfolio. It is having a portfolio consists of around 85% in large cap stocks and 15% in mid cap stocks. An investment of 1 lakh in this fund at inception is valued at 51Lakhs now!
This is an excellent fund for investors who want to beat the Sensex over the long term without taking undue risk. By and large, this fund delivers returns superior to the category average and occasionally astounds, catapulting it to the top slot.
The fund is managed by Mr. Anand Radhakrishnan and the benchmark index is the Sensex
4. HDFC Top. 200
HDFC Top 200 is one of the most well-known Mutual Funds in the country. It’s amazing performance of 25% CAGR in last 14 yrs is a proof. Some achievements of Fund’s are that in 2008 bear market, HDFC Top 200 was able to restrict its fall to 45% only, which was 11% less than its benchmark. Prashant Jain is the Fund Manager of HDFC Top 200 and is one of the best known and famous Fund managers in the country with a long term experience.
The criteria that go into selecting stocks/sectors are quality, understanding, growth prospects, valuation of businesses and the composition of the benchmark – BSE 200. The fund has good 20% allocation in Midcap or small cap stocks which gives a kicker in returns.
This fund invests in stocks drawn from the companies in the BSE 200 Index as well as 200 largest capitalized companies in India. With equity exposure up to 90 per cent, the fund manages to achieve capital appreciation over time. We like this fund for its solid long-term record and skilled management that makes it the best performer over the past 5-years.
5. Fidelity Equity Fund
Though the fund can invest in companies of large, mid and small cap, it prefers to invest more in large-cap. Ever since launch, Sandeep Kothari, the fund manager has allocated over 65 per cent to the same. The fund’s popularity shot up after its performance in 2008 when it was among the few that managed to contain downsides despite being fully invested.
Fidelity is a process oriented fund house and if the performance of this fund in the first 6 years is an indication, this will be one of the best funds of next decade. What you can expect here is a diversified portfolio, low individual stock bets and no undue risks with a clear focus on bottom-up stock picking and comfort in valuations. The benchmark index is BSE.200
Which Fund should you invest in?
Remember that you have to take a call based on what your time frame is and which fund suits your requirement. Another thing which you should understand that this is not an exhaustive list. There are enough funds other than these which could have been here in the list, but I have not included them as these 5 funds were the one which came on the top and also that one can choose with less confusion. Also make sure your asset allocation is correct. You can ideally invest in 2-3large cap funds, one mid cap fund, one thematic fund and one Gold ETF, if the term of investment is 5 year or above. Please ensure annual review of performance because today’s star may not continue as star forever.
We will discuss Midcap, Thematic and index funds later.
Disclaimer: Please note that these 5 funds are pure equity funds and just because they have performed excellent in the past, does not make them future star performers. This is just an assumption that they will keep doing great even in future given their investment style and integrity in management till date. Also you have to make sure you review your investments every year so that you throw out the laggards and pick better funds. Expect around 12-15% CAGR in future even though they have potential to deliver higher. This article should in no way be treated as encouragement to invest in these funds. Decision is purely yours because investments in equities are market linked and past performance cannot guarantee any future performance.