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Best 5 Equity Mutual Funds for Wealth Creation

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.

38 Comments

  • Sriranjini Thakur Posted June 14, 2011 7:11 pm

    excellent website.. Simple advice which makes investment an easy task.. Thank u.. Personally thank u Melvin Sir

    • Finvin Posted June 15, 2011 11:14 am

      Thank you

    • Sugar Posted June 26, 2011 5:41 pm

      Great post with lots of ipomrantt stuff.

  • Deepak Posted June 17, 2011 1:31 pm

    Simple and informative

    • Finvin Posted June 17, 2011 1:37 pm

      Thank you Deepak

  • Yorrick . G . Pinto Posted June 28, 2011 12:27 pm

    Short , Simple and Wise. I liked the manner you presented the facts with confidence and authority.

    • Yorrick . G . Pinto Posted June 28, 2011 12:31 pm

      Short, simple and wise.

  • Narayana Rao Posted June 29, 2011 12:45 pm

    It is good and simple for the invester to decide about the investment.

  • harihar nandanwar Posted June 30, 2011 5:01 pm

    very good article on investment, simple to understand

    thanks

  • Jitendra Dave Posted July 24, 2011 4:23 am

    Please suggest any good Tax Saving Mutual Fund, which allow SIP investment.

    • Finvin Posted July 24, 2011 12:05 pm

      You can invest in Fidelity Tax Advantage Fund or HDFC Tax saver. Please not that from 1st April. 2012, there is no Tax benefits for these funds.

  • Naeem ahmad Posted July 26, 2011 10:39 pm

    Hello sir
    my portfolio having icici pru focus bluechip, hdfc top 200, hdfc equity, idfc small & mid cap and reliance pharma fund each 2000 sip since may-11. i want to invest in reliance banking funds more 2000, is it better for my portfolio? please let me know ur valuable advice.

    thanx
    naeem
    dubai

    • Finvin Posted July 27, 2011 8:06 am

      All your current investments are in good funds.But I feel, it has a Mid and Small Cap bias and now you have to add some large Cap funds to it to balance the portfolio. I suggest instead of Reliance Banking, you start SIP in DSP Black Rock. Top.100 fund. The performance of these funds has to be reviewed periodically to ensure that your funds are performing well.Also ensure that the proper asset allocation is maintained always. If you are interested in a Comprehensive Financial Planning, please let me know. We have many customers from Middle east and we do it online. We charge Rs. 1499/- annually for this service. Please visit our site http://www.finvin.in

  • Md Shabbir Ahmad Posted July 31, 2011 2:46 am

    Sir,
    Your website is extremely beautiful and helpful for new investors like me .
    I have to invest my marriage gift money about Rs. 400000 to any high growing wealth creation mutual fund for more than 20 years to get a very good return for my child. Please suggest which fund/ funds will be the best suited for this purpose and about how much money shall I get after such a long period. Also I want to invest Rs. 10000 monthly through SIP for 15 years which funds will be (about 10) best for this category. Please reply immediately.
    Thanking you in anticipation.
    Shabbir, Dhanbad

    • Finvin Posted July 31, 2011 10:52 am

      Hi,You can invest 1 Lakh each in HDFC Top. 200, Birla Sunlife frontline Equity,Fidelity Equity and DSPBR Top 100 equity.It will be better to invest in 4 batches of 25,000 monthly to avoid any market volatility. This 4 Lakhs will become around 38 Lakhs @12% return or 65Lakhs @15% return. You can very much expect in between these 2. For SIPs, you can think of the above 4 funds along with HDFC Prudence. But a periodical review of these funds is a must, because some of the funds will under perform after sometime and then we have to switch to better funds. It is always better to fix the financial goals first and then save for it. If you require a financial planning @1499/-, please let me know. You can contact me @ melvinjo123@gmail.com

      • Md Shabbir Ahmad Posted August 1, 2011 12:25 am

        Thankx a lot for sending reply. I must contact you in future for my financial planning. “Shabbir”

  • BHUSHAN S. Posted August 5, 2011 2:44 pm

    good !!!

  • BHUSHAN Posted August 5, 2011 2:48 pm

    hi

    I have invested in HDFC EQUITY , ICICI DISCOVERY , RELIANCE GOLD SAVING
    BIRLA FRONTLINE EQUITY , DSP BLACK ROCK TOP 100

    KINDLY ANALYSE MY PORTFOLIO AND SUGGEST ME SOME GOOD FUND TO INVEST FOR LONG TERM

    • Finvin Posted August 5, 2011 3:20 pm

      These are good funds and you can continue. There is no meaning in adding more funds,you can increase your allocation to these funds. If you want a financial Planning done@1499/-, please let me know.

  • Manish Dhingra Posted August 9, 2011 4:18 pm

    ya, this is a nice site.

    plz tell me in the future in which place I invest the money on monthly basis…

    can u give me some suggestions……..

    • Finvin Posted August 9, 2011 4:23 pm

      You can invest in good mutual fund schemes as per your financial goals and time to reach them. Please read our articles on best 5 mutual funds for wealth creation. It is advisable to do it after a financial planning. We can do it at an annual charges of Rs. 1499/-. If interested , please let me know by mail at melvinjo123@gmail.com

  • sonali Posted August 10, 2011 10:30 am

    HI

    I have invested in HDFC EQUITY , DSP BLACK ROACK,

    Kindly suggest me good fund of SBI and franklin in todays market senario
    it is good ti continue invest in MF specialy Equity

    • Finvin Posted August 10, 2011 11:09 am

      HDFC Equity and DSP Black Rock equity or Frontline Equity are good funds. Among SBI funds, I will not recommend anyone because of their performance.In Franklin, you can think of Franklin India Blue Chip Fund. You may read my article on Top 5 Mutual Funds for wealth Creation in our site http://www.finvin.in

      • sonali Posted August 10, 2011 11:41 am

        but it currently as per the market fluctuation its right timer to invest

        • Finvin Posted August 14, 2011 8:24 pm

          Yes through SIPs. Please see my article on this which is posted in the website today.

  • V G Bhat Posted October 11, 2011 11:18 pm

    What About

    1. IDFC Premier Equity (plan A-Gr)
    2. SBI Magnum Emerging Businesses Fund (G)
    3. ICICI Prudential Focused Bluechip Equity Fund (G)
    4. Birla Sun Life Dividend Yield Plus (G)
    5. Fidelity India Growth Fund (G)

    I have investments in these funds

    • admin Posted October 12, 2011 12:19 pm

      I will not recommend SBI Magnum emerging business.All other funds are good. But do keep a watch.

  • Prajna Capital Posted January 15, 2012 8:20 pm

    HDFC Equity Fund
    ICICI Prudential Dynamic Fund
    DSP BlackRock Equity Fund
    Sundaram Midcap Fund
    UTI Devident Yield
    IDFC Premier Equity

    Could be good addition to this list. It again depends on risk profile of the individual

    Most these funds can be bought online….

    https://sites.google.com/site/buymutualfundsonline/

  • SUBROTO DAS Posted February 19, 2012 3:12 pm

    I am having Axis mutual fund SIP @ rS 1000/- pm for the last one year. Should I continue??
    I have SBI Gold Fund since last Diwali.
    I have HDFC Top 200 for the last nine months.
    My age is 41 yrs.

    Shoud I start Franklin India Blue chip fund as SIP of Rs 1000/- pm for the next 5 years.
    Kindly advise.

    • admin Posted February 19, 2012 10:41 pm

      It is better to avoid new fund houses like Axis, till they have some track record. It is better to fix the goals and amount first and then plan for it through a mix of good funds. You can consider Franklin India Bluechip fund.

  • mahesh Posted March 20, 2012 12:19 pm

    is there any alrenate instrumen to FD for 2-3 years time
    and what abour debtmutual funds are can we accept 11-to 12% retrun in one year
    kindly suggest

    • admin Posted March 22, 2012 6:42 pm

      Debt funds can give 9-10% and that too with indexation benefits. it will be better compared to FDs.

  • Sameer Posted January 26, 2013 6:08 pm

    Hello Sir,

    I am Sameer i have SIP for HDFC Top 200 for Rs.1000 pm and DSPBR top 100 Equity Fund Rs.1000 pm. Now i want to add one more fund and its should give me a good return for my Retirement. My age is 31 and i started these funds a year ago.

    Please suggest a good fund.

    Thanks,
    Sameer.

  • Saikat Sircar Posted August 27, 2013 11:55 am

    Hi,

    I am 43 and investing Rs 86000/- through MF SIP every month.

    I am having a moderate risk appetite and want to be in the investment for 15/20 years window. I have a complete faith on equity returns and my target is to have 10 cr after 15 years and my MF SIPs are:

    1) Franklin – 10k
    2) ICICI Pru Blue Chip – 10k
    3) BSL Frontline Equity A – 10K
    4) UTI Opportunities – 10k
    5) HDFC Midcap – 5k
    6) IDFC Premiere Equity – 10k
    7) SBI Emerging Business – 5k
    8) Reliance Equity Opportunities- 10k
    9) Templeton India Equity Fund – 4k
    10) UTI MNC – 5k
    11) BSL Gen Next – 5k.

    Please advise whether my portfolio funds are good and sufficient enough to achieve the goal of 10 cr in next 15 years or not? If not, then what should the suggested portfolio and Fund mix?

    Regards, Saikat

    • Melvin Joseph Posted September 21, 2013 4:16 pm

      If you are having moderate risk appetite, you should not have such a big list of 11 funds. this is overlapping or duplication. Assuming a return of 12%, you may create around 4 crore in 15 years by investing 86,000 per month. If you plan for more than this and go for risky funds, that may result in erosion of capital, which is not ideal for your age.I suggest you approach a Financial Planner and avail his services for better monitoring.

  • PRADEEP DSYLVA Posted May 3, 2015 6:33 pm

    Thank you very much for a very informative website that de-mystifies investing and mutual funds.

    Do you have an updated fund recommendation or are you still standing by the five recommended above.

    For example, DSP Blackrock is listed as a 3 star fund by Value Research and I wonder why? They have beaten the benchmark and have beaten and have a expense ration of 2.25 (lower than peers)

    https://www.valueresearchonline.com/funds/fundanalysis.asp?schemecode=1540

    • Melvin Joseph Posted May 7, 2015 12:45 pm

      DSPBR is not there in my recommended list.

  • Hemanth K Shenoy Posted June 3, 2017 10:43 am

    Hi sir,
    Am 24 aged, Currently i am investing in ICICI value discovery, DSP Black rock micro cap, SBI Bluechip. Now i am planning to add some ELSS funds via SIP mode of investment. Can you suggest me some good funds?

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