Mutual funds have always been a preferred investment avenue, especially among retail investors. Most young and enthusiast investors kick start their investment journey with mutual funds. However, when it comes to selecting funds, the investors often fall into a dilemma about selecting the best mutual fund owing to the multiple options available. Don’t worry! We have made this simple for you. Here are two of the good performing mutual funds that can be an ideal selection for your portfolio:
Kotak Emerging Equity Growth Direct Plan
For investors looking for good returns over a mid-term period, Kotak Emerging Equity Growth Direct Plan can help you achieve your financial goals. Since its inception on 01-01-2013, it has Rs. 19,303 crores of Assets Under Management (AUM) as of 31st March 2022. Being a mid-cap fund, the funds are invested in Indian stocks with 24.71% in the small-cap, 53.96% in the mid-cap, and 5.75% in the large-cap companies. These ensure that investors earn good returns with moderate risk. Following are the peculiar features that make it an ideal choice for the investors:
- The fund’s expense ratio is 0.47%, which is lower than other mid-cap funds.
- There is an exit load in case the investor decides to exit the fund. In case of units exceeding 10% of the funds invested, an exit load of 1% shall be charged for redemption within 365 days.
- The minimum initial investment required shall be Rs. 5,000. However, the minimum additional investment is Rs. 1,000. Further, in case you want to go for SIP, then the minimum SIP investment required shall be Rs. 1,000.
- Being a growth plan, the returns generated by the funds are reinvested back into the asset class. This opens the door for compounding that can create significant wealth in the long run.
LIC MF Tax Growth Direct Plan
LIC MF Tax Growth Direct Plan is a preferred plan for investors with a mid-term investment horizon and looking toward investing as well as tax saving. The fund invests 97.1% of the funds in the Indian stocks with 5.7% in small-cap, 22.5% in mid-cap, and 58.68% in large-cap companies. With a larger proportion of investments in the large-cap companies, the overall portfolio risk reduces as the large-cap typically comprises blue-chip companies. Following are the peculiar features that make it a preferred choice for the investors:
- The fund comes with a lock-in period of 3 years from the date of purchase.
- The funds can be sold after the lock-in period. However, it shall be liable to long-term capital gains tax. The current LTCG tax rate is 10% for gains above Rs. 1 lakh.
- Investments done in this fund are eligible for deduction under section 80C of the Income Tax Act, 1961. The maximum amount of deduction that can be availed is Rs. 1,50,000 for each financial year.
- As of 31st March 2022, the Assets Under Management (AUM) were Rs. 402.65 crores.
- The fund attracts no exit load in case an investor wants to exit.
- The fund commands an expense ratio of 1.3%.
- The minimum amount of investment is Rs. 500. Further, the minimum additional investment is also Rs. 500. In case you want to go for SIP, then the minimum SIP amount to be invested is Rs. 500.
- Being a growth plan, the returns generated by the fund are reinvested back in the asset class. This compounds the returns generated by the fund, which is a significant factor for long-term wealth generation.
In a Nutshell
If you are willing to take moderate risks and desire returns comparable to those of the market, you should go for the above-listed mutual funds. With a minimal investment in small-cap companies, the volatility associated with these funds is lower than other mutual funds. This presents an ideal risk-reward ratio to the investors.
If you are an investor with a mid-term to long-term investment horizon and a goal for wealth creation, making risky investments will make your portfolio vulnerable to market volatility, especially in the short run. As the safety of the capital invested is an important factor here, the key is going with moderate risk and good return providing assets.