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Useful articles for your finance management by our team of experts

top diversified equity mutual fund in 2012 test

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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 investor’s 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 any research. 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 minimizes 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:

Scheme name

Benchmark index

*Fund Size (Rs Crore)

Total Return (Annualized) in %

Total expense ratio (%)

 

 

 

1Yr

3Yr

5Yr

 

UTI Opportunities (G)

BSE 100

3,035.8

15.6

9.4

10.3

2.3

ICICI Prudential Focused Bluechip Equity (G)

S&P CNX Nifty

4025.4

11.7

9.9

n.a

1.8

Franklin India Bluechip (G)

Sensex

4852.8

9.2

7.8

6.1

1.8

Fidelity Equity (G)

BSE 200

2,792.7

8.8

8

6.4

1.8

Return less than 1-year are absolute and over 1 year are annualized; *Fund size as on Sept 30th, 2012

Returns as on Oct 19th, 2012; n.a. = not applicable                                                           Source: Morningstar

 

  UTI Opportunities (G)

Objective: To generate capital appreciation and income distribution by investing the funds of the scheme in equity shares and equity related instruments.

Top Sector Allocation: Financial service, FMCG, energy, information technology and diversified which constitute around 65% of total portfolio.

 

Investment Style: Investment amongst different sectors as prevailing trends change in Indian economy.

ICICI Prudential Focused Bluechip Equity (G)

Objective: To provide capital appreciation through investment in equity of companies, listed on Sensex and Nifty.

Top Sector Allocation: Financial service, energy, information technology, automobile and FMCG, which constitute around 75% of, total portfolio.

 

Investment Style: Investing in 20 large cap companies from the top 200 stocks listed on the NSE on the basis of market capitalization.

Franklin India Bluechip (G)

Objective: To provide medium to long term capital appreciation through investment in equity of quality companies and by focusing on well established large sized companies.

Top Sector Allocation: Energy, financial service, information technology, healthcare and telecommunication, which constitute around 65% of total portfolio.

Investment Style: Invests mainly in large cap stocks.

Fidelity Equity (G)

Objective: To achieve risk adjusted returns consistently by investing in stocks across sectors without market capitalization restrictions.

Top Sector Allocation: Financial service, energy, FMCG, information technology and healthcare, which constitute around 70% of, total portfolio.

Investment Style: Bottom up approach

 

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

Scheme name

Benchmark index

*Fund Size (Rs Crore)

Total Return (Annualized) in %

Total expense ratio (%)

 

 

 

1Yr

3Yr

5Yr

 

SBI Magnum Emerging Business (G)

BSE 500

733.8

22.8

20.9

7.4

2.9

ICICI Prudential Discovery (G)

CNX Midcap

1,985.2

22.7

13.3

13.4

1.9

HDFC Midcap Opportunities (G)

CNX Midcap

2,267.1

16.8

16.1

11.1

1.9

Reliance Equity Opportunities (G)

BSE 100

3,830.1

22.5

16.7

10.9

1.9

Return less than 1-year are absolute and over 1 year are annualized; *Fund size as on Sept 30th, 2012

Returns as on Oct 19th, 2012; n.a. = not applicable                                                              Source: Morningstar

 

SBI Magnum Emerging Business (G)

Objective: The schemes primary objective is to focus on investments in emerging business themes, primarily based on the export or outsourcing opportunities and global opportunities of such themes. It will also focus on emerging domestic investment themes.

Top Sector Allocation: Financial service, oil and gas, automobile, information technology and healthcare, which constitute around 60% of, total portfolio.

Investment Style: Bottom up approach

 

 

ICICI Prudential Discovery (G)

Objective: To invest in a well-diversified portfolio of value stocks and attractive financial valuations.

Top Sector Allocation: Healthcare, financial service, oil and gas, services and information technology, which constitute around 50% of, total portfolio.

Investment Style: Value investment approach in which fund manager is scrutinizing undervalued stocks available at attractive valuations in relation to their PE, BV or current/ future dividend.

HDFC Midcap Opportunities (G)

Objective: To generate capital appreciation in long term by investing mainly into mid cap and small cap stocks.

Top Sector Allocation: Healthcare, financial service, engineering, chemicals, FMCG and metals which constitute around 60% of total portfolio.

Investment Style: Bottom up approach

Reliance Equity Opportunities (G)

Objective: To invest in stocks across sectors that would drive the economy in long term.

Top Sector Allocation: Information technology, automobile, services, healthcare and financial service which constitute around 65% of total portfolio.

Investment Style: Top down approach

3. Dividend Yield Diversified Equity Mutual Funds:

Scheme name

Benchmark index

*Fund Size (Rs Crore)

Total Return (Annualized) in %

Total expense ratio (%)

 

 

 

1Yr

3Yr

5Yr

 

ING Dividend Yield Fund (G)

BSE 200

85.6

10.7

11.4

12.8

2.5

UTI Dividend Yield Fund (G)

BSE 100

3,630.6

7.6

8.8

9.3

2.0

Principal Dividend Yield Fund (G)

S&P CNX 500

103.0

17.1

8.3

5.9

2.5

Return less than 1-year are absolute and over 1 year are annualized; *Fund size as on Sept 30th, 2012

Returns as on Oct 19th, 2012; n.a. = not applicable;                                                          Source: Morningstar

 

ING Dividend Yield Fund (G)

Objective: To provide capital appreciation in medium to long term by investing in a well-diversified portfolio of companies that have a relatively high dividend yield.  

Top Sector Allocation: Financial service, energy, FMCG, information technology and automobiles, which constitute around 75% of, total portfolio.

Investment Style: Top down approach

UTI Dividend Yield Fund (G)

Objective: To provide medium to long-term gains by investing in high dividend yielding stocks.

Top Sector Allocation: Financial service, energy, FMCG, information technology and construction, which constitute around 65% of, total portfolio.

Investment Style: Investing in high yield stock across market cycles.

Principal Dividend Yield Fund (G)

Objective: To provide capital appreciation by investing predominantly in a well-diversified portfolio of companies that have a relatively high dividend yield

Top Sector Allocation: Financial service, energy, information technology, FMCG and services, which constitute around 75% of total portfolio.

Investment Style: Top down approach

There 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 on “UTI Opportunities” 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 ideal 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 analyze whether the fund is able to outperform returns of benchmark index over the long term (3 to 5 years).

 

 

Compare returns against the funds own performance

Historical performance of same fund should play a vital role while investing. There are many funds, which deliver 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 mutual funds, considering the risk capability and expected returns to achieve your goals.

Author

Hiral Thanawala is a PGDM (Finance) graduate and Certified Financial Planner. The views explained by him are personal. He can be reached at 

hiralthanawala@gmail.com

 

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