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Useful articles for your finance management by our team of experts

Top Diversified Equity Funds

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Mutual Funds

From long era there is a common statement, “Don’t put all of your eggs in one basket!” flashing again and again in front of investors eyes. But, many investors have been ignoring it and act as an over smart investor. They move ahead and invest heavily in one or two equity stocks or a couple of mutual fund schemes without much research behind it. Then feel the pinch when they face heavy losses in such investments. As per investment experts, “Diversification of investment does pay off if it’s done systematically considering the asset allocation and goals of an investor.”

InvestmentYogi gives you an example of Diversified Equity Mutual Funds invested across the sectors: BFSI, Real Estate, Oil and Gas, Infrastructure, Telecom, Information Technology, FMCG, etc.

By diversifying investments the fund minimises the risk of over concentration in specific sectors. In the long term, diversified equity mutual funds have given good results. In the examples below you will see some of the best equity diversified mutual funds across large cap funds, mid cap and small cap funds, and dividend yield fund categories.

1. Large Cap Equity Diversified Mutual Funds:

UTI Master Value

  • Objective: To provide substantial long term capital appreciation from investment in undervalued stocks. The scheme will invest predominantly in shares trading on the BSE and similar stocks having scope for attractive capital appreciation and good dividend yield.
  • Top Sectors Allocation: Pharmaceuticals, BFSI
  • Benchmark Index: CNX Midcap

Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
19.71632.175.6

* Returns over 1 year are Annualised

ICICI Prudential Discovery Fund:

  • Objective: To generate returns through a combination of dividend income and capital appreciation by investing primarily in a well-diversified portfolio of value stocks.
  • Top Sectors Allocation: Pharmaceuticals, BFSI
  • Benchmark Index: S&P CNX Nifty

Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
24.516.439.172.3

* Returns over 1 year are Annualised

Reliance Equity Opportunities Fund – Retail Plan:

  • Primary objective: To generate capital appreciation;
  • Secondary objective: Generate consistent returns by investing in debt and money market securities.
  • Top Sectors Allocation: Pharmaceuticals, Information Technology
  • Benchmark Index: BSE 100

Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
25.311.733.169

* Returns over 1 year are Annualised                                                                                                                              HDFC Equity Fund:

  • Objective: To provide capital appreciation through investments predominantly in equity oriented securities.
  • Top Sectors Allocation: BFSI, Oil and Gas and Pharmaceuticals
  • Benchmark Index: S&P CNX 500

Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
27.714.232.748.4

* Returns over 1 year are Annualised

Source: Value Research Online

2. Mid Cap and Small Cap Equity Diversified Mutual Funds:

DSP Blackrock Small and Mid Cap Fund:

  • Objective: To generate long term capital appreciation from a portfolio that is substantially constituted of equity and equity related securities, which are not part of top 100 stocks by market capitalisation. The Scheme may also invest a certain portion of its corpus in debt and money market securities, in order to meet liquidity requirements from time to time.
  • Top Sectors Allocation: Pharmaceuticals
  • Benchmark Index: CNX Midcap

Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
-12.733.171

* Returns over 1 year are Annualised

Birla Sun Life Mid Cap Fund Plan A:

  • Objective: To achieve long term growth of capital at controlled level of risk by primarily investing in mid-cap stocks.
  • Top Sectors Allocation: Pharmaceuticals, BFSI, Information Technology
  • Benchmark Index: CNX Midcap

    Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
25.511.627.749.1

* Returns over 1 year are Annualised

Sundaram BNP Paribas Select Midcap Regular plan:

  • Objective: To achieve capital appreciation.
  • Top Sectors Allocation: Pharmaceuticals
  • Benchmark Index: BSE Midcap

Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
27.712.128.250.7

* Returns over 1 year are Annualised

Source: Value Research Online

3. Dividend Yield Diversified Equity Mutual Funds:

ING Dividend Yield Fund:

  • Objective: To provide medium to long term capital appreciation and/or dividend distribution by investing predominantly in equity and equity related instruments offering high dividend yield.
  • Top Sectors Allocation: BFSI
  • Benchmark Index: BSE 100

Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
-19.636.567.3

* Returns over 1 year are Annualised

Tata Dividend Yield Fund:

  • Objective: To provide income distribution and/or medium to long term capital gains by investing predominantly in high dividend yield stocks.
  • Top Sectors Allocation: Information Technology, FMCG
  • Benchmark Index: BSE Sensex

Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
20.515.929.758.6

* Returns over 1 year are Annualised

Fortis Dividend Yield Fund:

  • Objective: To generate long-term capital growth from actively managed portfolio of equity and equity related instruments, primarily being high dividend yield stocks.
  • Top Sectors Allocation: Oil & Gas, BFSI
  • Benchmark Index: BSE Sensex

Returns % (as on 6th Jul, 2010)

5 Year3 Year2 Year1 Year
-12.933.955.7

* Returns over 1 year are Annualised

Source: Value Research Online

Diversified Equity Mutual FundsThere are many equity diversified mutual fund schemes available to opt while investing. Above discussed were a few of the best performing in respective categories. You need to follow certain strategies for selecting the right diversified equity fund. Let’s understand these strategies below:    Compare returns across the funds within same category:
For instance, returns of “UTI Master Value” large cap diversify equity fund should be compare with returns of other large cap diversify equity fund. These returns shouldn’t be compared with returns of mid and small cap diversify equity fund or any other category. Such comparisons will give you flawed results.

Compare returns for longer time frames:

The idle time frame for comparing returns is 3 to 5 years. This covers a complete economic cycle. So, it clearly showcases the returns during peak and recession phase.

Compare returns against benchmark index:

Each mutual fund scheme does specify the benchmark index in their Key Information Memorandum. While reviewing the performance of a fund and before investing, investors need to analyse whether the fund is able to out perform returns of benchmark index over the long term (3 to 5 years).

Compare returns against the fund’s own performance:

Historical performance of same fund should play a vital role in decision making while investing. There are many funds which delivers good returns but only for a certain period. Such mutual fund schemes should be ignored while investing. You need to have a mutual fund scheme which delivers consistent returns throughout the economic cycle.

There are certain risks involved while investing in mutual funds. This needs to be evaluated while investing and reviewing on a regular basis.

Be a smart investor. Diversify your investments by investing in diversified equity funds, considering the risk capability and expected returns to achieve your goals.

Written for InvestmentYogi by Hiral Thanawala

For details on latest top mutual funds, please click here

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