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Best Mutual Funds to Invest in 2010

investInvestment Yogi : Offers a list of the Top Mutual Funds to Invest in 2010 in India

                         

Mutual funds need no introduction. They are one of the most popular investment vehicles in the country today. Mutual funds allow a group of investors to pool their money together and taste a broader range of stocks or bonds than they could if they were trying them on their own.

                                        

Some of the many benefits of investing in mutual funds are:

  1. Easy to buy and sell.
  2. Investments can be made in lump sum or periodic payments (easy on the pocket).
  3. Mutual fund industry in India is very well regulated and transparent.
  4. Professional management - saves time and costs.
  5. Diversification - to protect from downside risk.
  6. Rupee cost averaging – profit from small regular investments.

There are many categories of mutual fund schemes available today and in each category there are 100s of mutual funds present akin to stars in a milky way.

                

A Mutual fund scheme category depends on the kind of securities it holds. For example, an equity fund invests in stocks of private companies. Depending upon the category of mutual fund scheme you invest in, the earnings from such investments can be in the form of regular income (dividend payouts) and/or capital appreciation. The taxation differs for different categories of mutual fund schemes.

               

CATEGORIES OF MUTUAL FUND SCHEMES

The characteristics of growth oriented mutual fund categories and the top funds under each category based on last 5 years’ performance are reviewed below:

  1. Equity Diversified: Equity diversified funds invest primarily in stocks across sectors and industries. Hence, it minimizes the risk of exposure to a single company or sector. These funds can be large cap, mid cap or small cap oriented depending on the fund manager’s style and investment objective.

Best Mutual Funds 2010

Figure 1: Best Equity Diversified Funds

   

2. ETF (Exchange Traded Funds): Exchange Traded Funds (ETFs) are funds that track stock market indexes. The main difference between ETFs and other types of index funds is that ETFs don't try to outperform their corresponding index, but simply replicate its performance. ETFs are highly valued for their low cost in terms of expense ratios. Since they don’t have managers actively buying and selling investments within the funds, the costs to run them are significantly lower.

Top Mutual Funds India

Figure 2: Best Index Funds

  

3. Balanced funds: Balanced funds (also called Hybrid funds) provide investors with a single mutual fund that combines both growth (equity) and income (debt), by investing in both stocks and bonds. Such diversification ensures that the funds will manage downside of the stock market fluctuations without too much of a loss; the flip side is that balanced funds will usually give returns less than an all-equity fund during a bull market.

Systematic Investment Plan

Figure 3: Balanced Funds

  

How to choose a fund for investing?

A good track record is no guarantee for future performance. You should also look at some quantitative measures to evaluate which fund is good for you.

  

Expense Ratio: Denotes the annual expenses of the funds, including the management fee, and administrative cost. Lower expense ratio is better.

      

Sharpe Ratio: An indicator of whether an investment's return is due to smart investing decisions or a result of excess risk. Higher Sharpe Ratio is better.

                              

Alpha Ratio: Measures risk relative to the market or benchmark index. For investors, the more positive an alpha is, the better it is.

                                  

R-squared: Measures the percentage of an investment's movement that are attributable to movements in its benchmark index. A mutual fund should have a balance in R-square and ideally it should not be more than 90 and less than 80.

  

Read this article for a detailed explanation on how to evaluate mutual funds.

  

You should do sufficient analysis before making investment decisions. It should be guided by your overall financial situation, goals and risk profile. A Financial Plan is recommended before making investment decisions. SIP (Systematic Investment Plan) for a long time horizon is the most recommended way to invest in equity funds. You should avoid lump sum investments, especially when the market is on a high.


For details on latest top mutual funds, please click here

                             

Do you want to know if you are saving enough? Try out this FREE financial health check

Try out this calculator which tells you how much to invest each month through SIP to achieve future goals. More such calculators here.

                      

                 

RELATED STORIES:

Rules for Investment Planning

Best Mutual Funds for SIP

Best Tax Saver Mutual Funds

more Investment Articles                 

           

Investment Yogi : Offers advice on Tax Planning, Systematic Investment Plan and the Best Mutual Funds to Invest in 2010.

Published Jan 27 2010


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Comments

Comments

 

pradan said:

The article is very informative well detailed and crisp. I was planning to invest in mutual fund and your article came as a boon to me.This provided me the path in which i should think and act. Thank you Yogi.

January 28, 2010 4:28 AM
 

Anindya said:

This is the best personal finance site I have seen. Full of information and tools.

Great job InvestmentYogi!

January 28, 2010 7:27 AM
 

Best index funds said:

Besides the traditional index fund, there are the fundamental index funds, also known as quad funds. In this kind of funds, the index isn't composed by the trends of the market, but by quantitative goals.

February 2, 2010 5:13 AM
 

Srikanth Matrubai said:

Some recommended fund names would have made the article complete. However, my blog goodfundsadvisor.blogspot.com has given some funds for investment.

do check it out.

February 7, 2010 11:01 AM
 

lawd said:

I Am The Great CornHolio!!! Give Me Your TP For MY Bunghole!!!!

March 2, 2010 10:27 AM
 

Santanu said:

Hi I want to invest 50,000 by april 2010 in MF and I donot want to touch this money for 3.5 years.

Suggest me where to invest this one time 50,000 , your guideline will help me.

Please do let me know also how much I will be get after 3.5 years, principal + (?) amount approx, so that I can plan accordingly for near future.

March 19, 2010 6:15 AM
 

priya said:

@Santanu: Kindly provide us your email address so that we can mail you an answer. For any queries in the future, mail to expert@investmentyogi.com.

April 10, 2010 2:35 AM
 

RAJ VEER said:

PL SUGGEST THE BEST MUTUAL FUND (EQUITY) UNDER SIP FOR A LONG TERM.  MONTHLY SIP Rs.25,000/-.  MY MAIL ID jvracs@gmail.com.

April 13, 2010 6:57 AM
 

Anuj said:

Hi,

I am looking for a systematic investment plan. I want to put like 20000Rs a month or so every month.. for the next 1 year.

which is the best way to invest.

please email.. if you have got any ideas.

My email id is badjatya.anuj@gmail.com

Thanks

Anuj

April 29, 2010 9:54 PM
 

vishal said:

wat is the eqity fund and how can i invest in  the eqity fund for good return tell me the process for investing.

May 11, 2010 3:29 AM
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