The concept of mutual funds in India is rather young and there are still several people, who are quite hesitant about this investment options. As the financial year 2011-12, has just set off several of you may be looking out for good investment option. In the following paragraphs, an explanation about mutual funds, their classification and a very well performing fund of each category have also been included.
What is a Mutual Fund?
Well let me put the concept before you in a quick rush…
* People with free cash lying around can invest their money into any mutual fund which is operated by financial institutions, companies and banks, and are managed by very well qualified fund mangers, who tend to have a high caliber for investment. There are some excellent strategies based upon which the funds are invested in. The strategy and its execution is referred to as the portfolio.
* The investors put in money into a pool and are allocated 'units' or 'shares' on the basis of how much they have put into the pool. A Net Asset Value (NAV) of the total fund can be computed and the proportionate NAV of each contributor (i.e. units allocated multiplied by the NAV) is used to pay off the returns. Thus more the NAV the better would be your returns.
* The money thus pooled in are invested by the fund manager and company into the decided portfolio. The investments are in several cases, brought and sold to realize profits. This trading is carried out by the fund manger and his team. Common investment destinations include, shares, stock, bonds, debentures and in some cases, money market instruments and also securities in off shore high yield accounts.
* The fund companies who provide this facility, charge some loads or commissions such as entry load, exit load, deferred load, sales charge, etc. This usually amounts to about 1-5% of the total invested about.
Well moving on to the best mutual funds for 2011 in India. Please note that there is almost no way to deem or arithmetically term any mutual fund as the 'best', there are several which are really good ones. In the following paragraphs, some of my personal favorites, the ones recommended by industry experts and also ones that have shown an excellent performance have been included.
Best Mutual Funds for 2011 in India
In the following paragraphs a very well performing fund of each of the 4 classes and categories have been described. Apart from that, a brief list of some of upcoming mutual funds has also been included.
1. Equity Funds
As the name indicates, equity funds have a maximum holdings in equities of the companies. Some of the common constituents of equity funds include mid-cap funds which go into mid-cap companies, diversified equity funds which go into diversified industries and sector specific funds which go into the funds of specific sectors. The HDFC Equity Fund (G) is an acclaimed fund led by HDFC. It is an open ended growth fund. This fund's portfolio invests into sectors that include, banking and finance, oil and gas, technology, metals and mining and pharmaceuticals, with some other funds being used in miscellaneous sectors. The fund invests into equity, money markets, debts, other mutual funds and cash and call. The gives a return of about 19.2% with a minimum investment of Rs.5,000. Some of the other common funds in this category include:
* ICICI Pru Discovery Fund (G)
* Birla SL Dividend Yield (G)
* DSP BlackRock Micro Cap Fund (G)
2. ELSS Fund
An ELSS or rather an Equity Linked Saving Scheme fund is basically fund which has a lock in period of 3 years and an investment of less than Rs. 100,000, in this fund qualifies for a tax exemption. Fidelity Tax Advantage Fund is one of the best ELSS fund which aims at investing in growth destinations. With a minimum investment of Rs. 500 it provides an annual return of about 17.1%. This fund chiefly invests into sectors such as media, pharmaceuticals, oil and gas, technology, banking and finance. The usual investment channels are used, which include equity, mutual funds, money markets, cash and class, etc. Some of the other common funds in this class consist of:
* Canara Robeco Equity Taxsaver (G)
* ICICI Pru Tax Plan (G)
* Franklin India TaxShield (G)
3. Balanced Funds
Balanced funds are the ones which used both, equity (stock) and debt funds (fixed income securities or I-owe-you instruments). Such funds chiefly profit from both the types of investments, namely, equity purchase and debt and lending oriented. HDFC Children's Gift (Inv) is a great high yielding fund with a Rs. 5,000 minimum investment, the fund provides a 23.3% returns annually. The common sectors in which this funds invests into include, automotive, engineering, consumer durables, pharmaceuticals and banking and finance. Some of the other funds in this category which have been performing really well consists of:
* UTI-Children's Career Balanced Plan
* HDFC Balanced Fund (G)
* Birla Sun Life '95 Fund (G)
4. Monthly Income Plan (MIP)
As the name suggests the MIP provides a monthly specified income to the investors who have purchased units in the fund. HDFC MIP - LTP, is an open ended growth fund which at a minimum investment of Rs. 5,000 yields a great annual return of 8.7%. This fund invests into banking, technology, oil and gas, metals and mining. As usual the channels of investments include cash and call, debt instruments, equity, etc. Some of the other popular funds from this class of mutual funds include:
* Birla Sun Life MIP II
* Canara Robeco MIP (G)
* Reliance Monthly Income Plan (G)
Three companies, namely, ING Optimix Financial Planning Fund (OFPF), ICICI and HDFC would be launching some really good funds which include ING OFPF - Aggressive Plan (D), ING OFPF - Cautious Plan (D), ING OFPF - Prudent Plan (D), ING OFPF - Conservative Plan (D), ICICI Pru MIP 5 (G) and HSBC Brazil Fund (G). In aforementioned paragraphs, please note that the actual rate of return, where ever it was mentioned, will be paid by the companies in accordance with their planned schedule. The annual rate of return has been included so as to give you a good idea. I hope that the elaboration on the best mutual funds for 2011 in India is resourceful.
What is a Mutual Fund?
Well let me put the concept before you in a quick rush…
* People with free cash lying around can invest their money into any mutual fund which is operated by financial institutions, companies and banks, and are managed by very well qualified fund mangers, who tend to have a high caliber for investment. There are some excellent strategies based upon which the funds are invested in. The strategy and its execution is referred to as the portfolio.
* The investors put in money into a pool and are allocated 'units' or 'shares' on the basis of how much they have put into the pool. A Net Asset Value (NAV) of the total fund can be computed and the proportionate NAV of each contributor (i.e. units allocated multiplied by the NAV) is used to pay off the returns. Thus more the NAV the better would be your returns.
* The money thus pooled in are invested by the fund manager and company into the decided portfolio. The investments are in several cases, brought and sold to realize profits. This trading is carried out by the fund manger and his team. Common investment destinations include, shares, stock, bonds, debentures and in some cases, money market instruments and also securities in off shore high yield accounts.
* The fund companies who provide this facility, charge some loads or commissions such as entry load, exit load, deferred load, sales charge, etc. This usually amounts to about 1-5% of the total invested about.
Well moving on to the best mutual funds for 2011 in India. Please note that there is almost no way to deem or arithmetically term any mutual fund as the 'best', there are several which are really good ones. In the following paragraphs, some of my personal favorites, the ones recommended by industry experts and also ones that have shown an excellent performance have been included.
Best Mutual Funds for 2011 in India
In the following paragraphs a very well performing fund of each of the 4 classes and categories have been described. Apart from that, a brief list of some of upcoming mutual funds has also been included.
1. Equity Funds
As the name indicates, equity funds have a maximum holdings in equities of the companies. Some of the common constituents of equity funds include mid-cap funds which go into mid-cap companies, diversified equity funds which go into diversified industries and sector specific funds which go into the funds of specific sectors. The HDFC Equity Fund (G) is an acclaimed fund led by HDFC. It is an open ended growth fund. This fund's portfolio invests into sectors that include, banking and finance, oil and gas, technology, metals and mining and pharmaceuticals, with some other funds being used in miscellaneous sectors. The fund invests into equity, money markets, debts, other mutual funds and cash and call. The gives a return of about 19.2% with a minimum investment of Rs.5,000. Some of the other common funds in this category include:
* ICICI Pru Discovery Fund (G)
* Birla SL Dividend Yield (G)
* DSP BlackRock Micro Cap Fund (G)
2. ELSS Fund
An ELSS or rather an Equity Linked Saving Scheme fund is basically fund which has a lock in period of 3 years and an investment of less than Rs. 100,000, in this fund qualifies for a tax exemption. Fidelity Tax Advantage Fund is one of the best ELSS fund which aims at investing in growth destinations. With a minimum investment of Rs. 500 it provides an annual return of about 17.1%. This fund chiefly invests into sectors such as media, pharmaceuticals, oil and gas, technology, banking and finance. The usual investment channels are used, which include equity, mutual funds, money markets, cash and class, etc. Some of the other common funds in this class consist of:
* Canara Robeco Equity Taxsaver (G)
* ICICI Pru Tax Plan (G)
* Franklin India TaxShield (G)
3. Balanced Funds
Balanced funds are the ones which used both, equity (stock) and debt funds (fixed income securities or I-owe-you instruments). Such funds chiefly profit from both the types of investments, namely, equity purchase and debt and lending oriented. HDFC Children's Gift (Inv) is a great high yielding fund with a Rs. 5,000 minimum investment, the fund provides a 23.3% returns annually. The common sectors in which this funds invests into include, automotive, engineering, consumer durables, pharmaceuticals and banking and finance. Some of the other funds in this category which have been performing really well consists of:
* UTI-Children's Career Balanced Plan
* HDFC Balanced Fund (G)
* Birla Sun Life '95 Fund (G)
4. Monthly Income Plan (MIP)
As the name suggests the MIP provides a monthly specified income to the investors who have purchased units in the fund. HDFC MIP - LTP, is an open ended growth fund which at a minimum investment of Rs. 5,000 yields a great annual return of 8.7%. This fund invests into banking, technology, oil and gas, metals and mining. As usual the channels of investments include cash and call, debt instruments, equity, etc. Some of the other popular funds from this class of mutual funds include:
* Birla Sun Life MIP II
* Canara Robeco MIP (G)
* Reliance Monthly Income Plan (G)
Three companies, namely, ING Optimix Financial Planning Fund (OFPF), ICICI and HDFC would be launching some really good funds which include ING OFPF - Aggressive Plan (D), ING OFPF - Cautious Plan (D), ING OFPF - Prudent Plan (D), ING OFPF - Conservative Plan (D), ICICI Pru MIP 5 (G) and HSBC Brazil Fund (G). In aforementioned paragraphs, please note that the actual rate of return, where ever it was mentioned, will be paid by the companies in accordance with their planned schedule. The annual rate of return has been included so as to give you a good idea. I hope that the elaboration on the best mutual funds for 2011 in India is resourceful.
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