A fund for every investor

When the stock market indices are going up, there is an unprecedented interest among non investors to make a smart. Mutual Funds have been around for decades and are the most convenient route to invest in the stock markets. However, how do you select a fund to invest in from the plethora of funds that exist? The challenge gets tougher during bull market runs, because almost every equity fund is faring well, until such time that the markets start to fall.

We are not soothsayers to predict when that will happen, but based on past records, every rise is followed by a fall and so goes the cycle. With such a possibility staring at us, we decided to pick the brains of India’s oldest and best mutual fund tracking company—Value Research. The task in hand was pretty simple—how do we arrive at a list of funds that are good to invest in keeping the future in mind? The answer lies in the list of 16 funds—The Stellar List, based on three distinct factors that most investors seek— conservative growth, growth and tax savings.

The intent was to deliberately focus on equity mutual funds because identifying the time-tested funds in this space is more important and challenging. With the basic objective in place, we did what we are best at—cut the noise. So, out went fund classification as defined by the mutual fund industry: large-cap, multi-cap, small-cap and so on. We looked for funds as regular SIP investment vehicles with a 5-year investment time frame and we further identified regular plans, so over time, evolved investors could invest through the direct mode and earn a higher return purely because of low expense ratio in case of direct plans.

The final selection is a set of 16 schemes which should address the primary need of most investors—growth, conservative growth and tax savings. Lot of care has gone into identifying these funds keeping in mind their performance in both the down and up cycle of the markets, through which they have come out unscathed.

A word of caution, do not treat this list as the flavour of the month or the best performers. As these are hand-picked funds that stick to their stated objective and consistently do better than their benchmarks. Select a few funds and do not get excited to invest in all these funds at one go. The only aberration in the list is Motilal Oswal MOSt Focused Multicap 35, which makes its way in because of the unique idea and performance it has managed in its short existence.

Use the SIP route to investing in these with a 3-5 year time frame to derive maximum gains from investments. Investments in these funds are low maintenance, as you don’t have to frequently check on their performance. So, go make that investment you have been wanting to and also make it a habit to check the performance of your investments at least once a year.

olmdesk@outlookindia.com