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    Best mutual funds to invest in 2019

    Synopsis

    Our list of top mutual fund schemes that you may consider to invest in 2019.

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    Which are the best mutual fund schemes to invest? Most investors have this query before they start investing in mutual funds. Curiously, it is the first question most investors ask or type on a search engine. However, it is also the main reason why many investors keep on postponing their investments forever.

    Even when the online search shows some results, most investors don't proceed further. They are still unsure about the dependability of the list. That is why we at ETMutualFunds.com thought about putting together a list of mutual fund schemes to help investors who are struggling with this question.

    Here is ETMutualFunds.com ’s list of best or top mutual fund schemes that you may consider investing in 2019. We have included almost every important category of schemes in our recommendation list: equity schemes, hybrid schemes, and debt schemes. You can scroll down to take a look at the complete list.

    However, before proceeding further, here are a few pointers you must keep in mind. One, you should always choose your mutual funds based on your financial goals, investment horizon, and risk profile.

    If your goals need to be met within less than five years, you may consider investing in debt mutual fund schemes. If you are investing for long-term goals of over five years, you may consider hybrid or equity schemes. You should invest in riskier options like mid cap and small cap mutual fund schemes only if you have a longer investment horizon of seven to 10 years.

    Note, it is extremely important to choose a debt mutual fund scheme that matches your investment horizon. Even while choosing equity mutual fund schemes, you should not overlook this aspect. For example, you should have a minimum investment horizon of five to seven years to invest in an equity scheme. However, if you are investing in mid cap or small cap schemes, you should have a longer investment horizon (seven to 10 years).

    However, you should keep in mind that all debt or hybrid or equity mutual funds do not have the same element of risk. Some schemes are riskier than the others. For example, overnight funds and liquid mutual fund schemes are the least risky among debt mutual funds, whereas credit risk schemes can be highly risky. Similarly, a small cap scheme is riskier than a largecap or multicap scheme.

    That is why it is extremely important for investors to keep their risk appetite in mind while choosing a mutual fund scheme. Any mismatch could cause a lot of heartburn later. If you do not have the appetite for the risk associated with your investments, you may find it extremely difficult to hold on to your investments during trying times.

    Here is the list of best mutual fund schemes across categories:

    Equity mutual funds
    Equity: Large Cap
    Axis Bluechip Fund
    Canara Robeco Bluechip Equity

    Equity: Multi Cap
    Motilal Oswal Multicap 35 Fund
    Kotak Standard Multicap Fund

    Equity: Mid Cap
    Invesco India Midcap Fund
    L&T Midcap Fund

    Equity: Large and Mid Cap
    Sundaram Large and Midcap Fund
    Invesco India Growth Opportunities Fund

    Equity: Small Cap
    L&T Emerging Businesses Fund
    HDFC Small Cap Fund

    Equity: ELSS
    Aditya Birla Sun Life Tax Relief 96
    Invesco India Tax Plan

    Debt mutual funds:
    Debt: Corporate Bond
    ICICI Prudential Corporate Bond Fund
    Kotak Corporate Bond Fund - Standard Plan

    Debt: Dynamic Bond Fund
    Franklin India Dynamic Accrual Fund
    Kotak Dynamic Bond Fund

    Debt: Gilt
    ICICI Prudential Gilt Fund
    Reliance Gilt Securities

    Debt: Medium Duration
    Axis Strategic Bond Fund
    Franklin India Income Opportunities

    Debt: Short Duration
    HDFC Short Term Debt Fund
    ICICI Prudential Short Term Fund

    Hybrid mutual funds
    Hybrid: Aggressive Hybrid

    SBI Equity Hybrid Fund
    Mirae Asset Hybrid Equity
    ICICI Prudential Equity and Debt

    Hybrid: Conservative Hybrid
    ICICI Prudential Regular Savings Fund
    UTI Regular Savings Fund

    Hybrid: Arbitrage
    Kotak Equity Arbitrage Fund
    Reliance Arbitrage Fund

    Here is our methodology:
    Methodology for equity funds:
    ET.com Mutual Funds has employed the following parameters for shortlisting the equity mutual fund schemes.
    1. Mean rolling returns: Rolled daily for the last three years.
    2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.
    i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.
    ii) When H is less than 0.5, the series is said to be mean reverting.
    iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series
    3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.
    X =Returns below zero
    Y = Sum of all squares of X
    Z = Y/number of days taken for computing the ratio
    Downside risk = Square root of Z
    4. Outperformance: It is measured by Jensen's Alpha for the last three years. Jensen's Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the market.
    Average returns generated by the MF Scheme =
    [Risk Free Rate + Beta of the MF Scheme * {(Average return of the index - Risk Free Rate}
    5. Asset size: For Equity funds, the threshold asset size is Rs 50 crore

    Methodology for debt funds:
    ET.com Mutual Funds has employed the following parameters for shortlisting the debt mutual fund schemes.
    1. Mean rolling returns: Rolled daily for the last three years.
    2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.
    i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.
    ii) When H is less than 0.5, the series is said to be mean reverting.
    iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series
    3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.
    X =Returns below zero
    Y = Sum of all squares of X
    Z = Y/number of days taken for computing the ratio
    Downside risk = Square root of Z
    4. Outperformance: Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund.
    Asset size: For Debt funds, the threshold asset size is Rs 50 crore

    Methodology for hybrid funds:
    ET.com Mutual Funds has employed the following parameters for shortlisting the hybrid mutual fund schemes.
    1. Mean rolling returns: Rolled daily for the last three years.
    2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.
    i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.
    ii) When H <0.5, the series is said to be mean reverting.
    iii) When H>0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series
    3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.
    X = Returns below zero
    Y = Sum of all squares of X
    Z = Y/number of days taken for computing the ratio
    Downside risk = Square root of Z
    4. Outperformance
    i) Equity portion: It is measured by Jensen's Alpha for the last three years. Jensen's Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the market.
    Average returns generated by the MF Scheme =
    [Risk Free Rate + Beta of the MF Scheme * {(Average return of the index - Risk Free Rate}
    ii) Debt portion: Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund.
    5. Asset size: For Hybrid funds, the threshold asset size is Rs 50 crore

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    19 Comments on this Story

    TRIVIKRAM Kamat318 days ago
    Mutual funds not doing well therefore l think stop investing in mutual funds
    N Sreenivas319 days ago
    I suspect it''s a Paid article.. as it recommends likes of Motilal 35 ..
    Anthony Barbosa319 days ago
    Mutual Funds Sahi Nahi Hai.
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