Here are the Ideal Equity Mutual Funds for Long-Term Financial Investment Goals


Equity funds should be the vehicle of choice when investing for long-term goals such as your child’s education or retirement. Diversified equity funds have created enormous wealth for investors over the past 10 to 15 years. But choosing the right funds to track their progress is essential. In the past, many successful funds have lost their aura and given pitiful returns.

There is a wide choice in front of investors. Diversified equity funds are divided into four broad categories. There are large cap funds that invest primarily in large cap stocks. These are suitable for investors looking for stable returns. Over the past 10 years, the large cap category has beaten the Nifty by a narrow margin of 78 basis points (100 basis points equals one percentage point). The funds on our list outperformed Nifty by 445 basis points on average.

Then there are mid-cap funds that carry a higher risk but can also be very rewarding in the long term. The risk quotient increases dramatically in small cap funds, but so do the returns. The best small cap funds have generated over 40% annualized returns over the past three years. Investors should ideally go for multi-cap funds that are not limited to any segment and invest in all market caps. These all-purpose funds have been the best performers over the long term. Hyderabad-based Harsh Sharma invests 12,000 rupees per month in a mix of equity, debt and gold funds for very long-term goals that include the education and marriage of her newborn and her baby. own retirement.

“Since the goals are long term, the robo advisor places 70% of the investment in equity funds.”

What he did

Invests Rs 12,000 per month in a mix of equity, debt and gold funds for long term goals which include child education and retirement.

Why invest in mutual funds?

Many investors think they can do better than mutual funds. They believe they can choose multibagger stocks and earn higher returns than a diversified basket of stocks. But choosing stocks is not easy, especially when it comes to small and mid caps. A study by brokerage firm Motilal Oswal shows that between 2010 and 2015, only 24 out of 200 mid-cap stocks registered a 33% CAGR to become mega-caps. Another 88 grew at a compound rate of 9% and stayed in the same segment, while another 88 destroyed wealth and moved to the mini-cap segment.

However, many Indian investors still believe that they can choose stocks better than professional fund managers. “Individuals hold 22% of the total market capitalization through direct investments in equities and only 4.5% through mutual funds in equities,” said Sanjiv Singhal, founder and COO of Scripbox.

Mumbai-based Marketing Director Chintak Dalal is a savvy investor who combines equity knowledge with pragmatism. Dalal invests directly in large cap stocks but relies on mutual funds to invest in small caps. He holds blue chip stocks such as L&T, HDFC Bank and ITC in his portfolio, but has also invested in small cap funds such as ICICI Pru Discovery Fund and Franklin India Smaller Companies Fund. Both funds gave him good returns. “If you don’t have the knowledge but want to invest in small and mid caps, it’s best to invest through a mutual fund,” he says.

“Small and mid-cap stocks can be tricky. It is best to invest in it through a mutual fund. ”

What he did

It invests alone in large cap stocks to reduce the cost of the investment. To gain exposure to small and mid-cap stocks, he invested in two mutual funds.

As we have often said, SIP mode is the best way to invest in equity UCITS. But that doesn’t mean you stop monitoring your investments. “SIPs are like the automatic cruise function in a car. You can relax, but you still have to watch out for potholes or sharp bends in the road, ”says Nilesh Shah, MD and CEO of Kotak Mutual Fund.

What the investor wants

* Good return on investment

* Reasonable level of risk

* Advantageous tax treatment

* Ease of investment, withdrawal


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