When you invest your money in mutual funds, it is very important to build a balanced portfolio. This portfolio should be based on your financial goals and risk appetite.
For example, if your financial goal is to build a retirement corpus, then you should shortlist the equity mutual fund category. If you want to build an emergency fund, you should consider the debt fund category. Now within equity, there are many sub-categories like large cap, mid cap, small cap, multicap, etc.
You need to shortlist sub-categories based on your risk appetite. Some people like to take more risk and prefer more exposure in mid and small cap whereas some people like to stick with large cap fund.
So the mutual fund selection would vary from person to person. In this article, I have identified my list of top 5 mutual funds for long term investment. Before we proceed further, please let me clarify that there is nothing called best mutual fund for 2021 or best mutual fund for 2022. It is not that in 2021 you will invest in X fund and then next year you will invest in Y fund. When you invest in a mutual fund for your long term goal, you should not switch the fund unless the fund is not doing well for a long time.
Let me also clarify that, these top 5 funds that I am going to tell you, are not the only best funds available. There are many good funds in the category. It is just that I have picked my top 5 funds.
So let’s look at my list of top 5 funds:
#5 Axis Bluechip Fund
- Axis bluechip is one the best performers in the large cap category. Funds in this category invest in the top 100 listed companies of India.
- This fund has an AUM of Rs 20,480 Cr. and an expense ratio of 0.55%.
- If we look at the one year return, Axis Bluechip fund has given 17.15% return whereas its benchmark Nifty 100 TRI has given a return of 13.49%. Clearly, Axis bluechip fund has easily betan the benchmark.
- 2 year average return is 18.24% as compared to benchmark average return of 12.67%.
- 5 year average return is 16.5% as compared to benchmark average return of 12.67% 13.41%. So Axis bluechip has consistently beaten the benchmark.
Portfolio detail of Axis Bluechip Fund:
#4 Mirae Asset Focused Fund- It is one of the best fund in the focused fund category. Funds in this category have restricted their portfolio to a maximum of 30 stocks. So each fund is selected carefully.
- This fund has an AUM of Rs 4,172 Cr. and an expense ratio of 0.41%.
- If we look at the one year return, Mirae asset focused fund has given 20.7% return whereas its benchmark Nifty 500 TRI has given a return of 15.7%. Clearly, Mirae Asset Focused fund has easily betan the benchmark.
- There is not much data for 2 year and 5 year return as this fund was launched in May 2019. However, since then, it is the #1 fund in the category.
Portfolio of Mirae Asset Focused Fund:
#3 Axis Growth Opportunity Fund- This is again a relatively new fund. It was launched in May 2018 and belongs to large and mid cap category.
- The advantage of this fund is that it invests the money in large as well as mid cap. So large cap stocks provide stability and mid cap stocks provide the high growth opportunity. In fact, this fund also has an exposure in US based companies like Microsoft, Amazon, Alphabet, Facebook, etc.
- This fund has an AUM of Rs 1,907 Cr. and an expense ratio of 0.7%.
- If we look at the one year return, Axis Growth Opportunity fund has given 24.6% return whereas its benchmark Nifty 500 TRI has given a return of 15.7%. Clearly, Axis growth opportunity fund has easily betan the benchmark.
- Since inception in May 2018, this fund has given an average return of 20.66%.
Portfolio of Axis Growth Opportunity Fund
#2 Mirae Asset Emerging Bluechip Fund
- Mirae Emerging bluechip fund is one of the best fund in large & mid cap category.
- This fund has an AUM of Rs 13,405 Cr. and an expense ratio of 0.76%.
- If we look at the one year return, Mirae Emerging bluechip fund has given 22.24% return whereas its benchmark Nifty 500 TRI has given a return of 15.7%. Clearly, Mirae Emerging bluechip fund has easily betan the benchmark.
- 2 year average return is 18.57% as compared to benchmark average return of 12.3%.
- 5 year average return is 13.6% as compared to benchmark average return of 13%. So Mirae Emerging bluechip fund has consistently beaten the benchmark.
Portfolio of Mirae asset emerging bluechip fund:
# 1 Parag Parikh Long Term Equity Fund or Parag Parikh Flexi Cap Fund- Parag Parikh Long Term Equity Fund belongs to the multicap category and one of the best performers. Due to recent changes in multicap rules, this fund has now been renamed as Parag Parekh Flexi Cap Fund where fund managers would have the freedom to select funds across large cap, mid cap and small cap without any restriction on the allocation in each category.
- So Parag Parikh Flexi Cap Fund invests across the categories where large cap stocks provide the stability and mid cap and small cap stocks in the portfolio provide the growth opportunity.
- In addition, Parag Parikh Long Flexi Cap Fund also has 28.8% allocation in US stocks like Alphabet, Amazon, Microsoft, Facebook, etc.
- If we look at the one year return, Parag Parikh Long Flexi Cap has given 32.3% return whereas its benchmark Nifty 500 TRI has given a return of 15.7%. Clearly, Parag Parikh Long Flexi Cap fund has easily betan the benchmark.
- 2 year average return is 22.2% as compared to benchmark average return of 12.3%.
- 5 year average return is 15.9% as compared to benchmark average return of 13%. So Parag Parikh Long Flexi Cap fund has consistently beaten the benchmark.
Portfolio of Parag Parikh Long Term Equity Fund:
Conclusion:So in this article, we discussed my favourite top 5 funds for long term investment. I have tried to keep a fine balance between large cap, mid cap and small cap. Additionally, I have also kept some exposure in US funds. So, what do you think about this list? Do you hold any of the funds in your portfolio?
Please note that the mutual fund selection would depend upon your individual goals and risk appetite so consult your financial advisor before investing your money!
Note: All numbers are as of 14th Dec 2020. All funds are "direct plan" and "growth option".
PS: If you want to learn every aspect of fundamental analysis of stock and other important concepts of personal finance, you can explore my video course on "everything about money management".
Disclaimer: This article is only for education purpose. Consult your financial Advisor before investing your money.
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