Saturday, 11 May 2019

Best Mutual Fund for Wealth Creation

Dear investors & friends,

Hope you are all doing great. It's been a long time and today I decided to share my thoughts regarding an important question which I received from multiple friends over email in the past year.


Firstly, I am overjoyed that many of you are on the path of Financial Independence. To create wealth, believing in the process is important. Beginning to invest is important.

Now, practically, not everyone has the time to understand businesses. Hence Mutual Funds play an important role in this journey. 





Interestingly, I received an email from one of my readers (let us call her Kiran) last week. Kiran mentioned that she is paying an adviser to deploy her SIP every month in a Mutual Fund. She has dedicated Rs 30000 every month for SIP. The adviser chooses a Mutual Fund every month and takes a fixed fee for this service. Of course, the adviser would have own methods of choosing best fund every month. This email got me thinking. I thought I should write on this topic.

Now, before we proceed further, I request you to spend ten minutes reading this article:


Click here -> Wealth Creation with Mutual Funds


If you have decided to skip above article, then I am assuming that you understand Mutual Funds well and need no explanation.


In the above article, I have, in detail explained a few concepts regarding Mutual Funds.  


Now, if you have decided to start a Systematic Investment Plan in Mutual Funds, the million dollar question is - "Which is the Best Mutual Fund for Wealth Creation?". Everyone has this question. Everyone wants to make the best returns. No one wants to choose a wrong fund.


Let us take a look at some facts here (as of May 2019)

Disclosure - The information below is taken from Moneycontrol. I have only taken Direct Plans. All returns are SIP returns (not Lumpsum returns) because I believe in Wealth Creation by adding every month. SIP Returns are Absolute Returns since small amount is added every month. 


I DO NOT RECOMMEND ANY OF THESE FUNDS. BEFORE MAKING ANY CONCLUSIONS, PLEASE DO OWN HOMEWORK.


All of you readers know me well enough. Do not miss my message by debating on the Figures & Fund Names. Message is important. I repeat. Message is key here.


With this disclosure, let me go ahead.


Here are the Top 10 Large Cap Mutual Funds (SIP Returns) - 1 Year, 2 Year, 3 Year & 5 Year Absolute Returns







Let us pause. Now, I have put this information in a single table. Let us observe:



Few observations:


- 1st position fund in 1 year returns is at 4th Position in 5 year returns.

- 3rd position fund in 1 year returns is at 1st position in 5 year returns.
- 9th position fund in 1 year returns is at 5th position in 5 year returns.

You will observe that Performance Order of Funds keep changing based on the horizon you have taken.

If we plot the 10 year, 12 year & 15 year absolute returns, you will see similar observations. It will be really surprising.

Since I have compared Large Cap Funds to each other, you may do the same with Midcap funds. Smallcap funds. Multicap funds. etc...

Here is a small snapshot of Small Cap Funds (1 year, 2 year, 3 year & 5 year absolute returns)


- 2nd position fund in 1 year returns is at 8th Position in 5 year returns.
- 7th position fund in 1 year returns is at 2nd Position in 5 year returns.

Now, let us pause for a moment & think. 

Which is the Best Mutual Fund for Wealth Creation? How can we decide? Is there a sureshot answer for this question?

Hmmm.. Are you getting a new perspective? Pause. Think.

Here are my thoughts and of course, these are just my thoughts (we can agree to disagree):

- Do not compare funds across categories. There is no point in comparing a large cap fund vs diversified fund vs small cap fund. 

- Small cap funds might be highest risk & highest volatility in returns. Diversified funds might be conservative returns. So, choose a category which meets your comfort level & horizon.

- Most of the funds in a particular category perform well over time. They are managed by professional fund managers who have good stock picking abilities.

- Most of the funds hold good, liquid, quality businesses in that category with good track record. Sometimes, we will find many common companies across funds in a category. If we look at Large Cap funds, many of them will have same companies. Of course, weight of the stocks, mix, buy price and sell frequency differs.

- As we have seen in above examples, if a fund is highest performer in 1 year, it doesn't necessarily mean that it will remain at top position in 5 years, 10 years, 15 years time-frame. Also, a bad performer in 1 or 3 years, can be top performer in 15 years time.

- By looking at past data, we definitely cannot predict what returns the fund is going to give us over time. But past data definitely indicates which funds are consistent in their performance. But, this can again, can & will change over time.

- I see that over longer periods, well managed funds have achieved good returns.

My good friend, Dhruv Girdhar has written a spectacular article on this topic. I suggest you read the same. You will get an amazing perspective with some facts.


Another friend, Prasad Shete, had mentioned to me that his sister was looking for suggestions on how to evaluate mutual funds.

I found his reply to her, pretty interesting.

Click here to read - Letter from Prasad to sister on how to evaluate Mutual Funds - An Interesting Perspective

So, what would I suggest? Here are my suggestions:

- Do not break your head too much.
- Stock Market is a wonderful place if we want to beat inflation & compound money well.
- Greed has no Place in the Stock Market. The Greedy Perish over time.
- Do not keep Changing the funds every month. Remember, based on Return, Positions of Funds keep changing.
- You would do better-off if you choose one fund from 2-3 categories & SIP for 10 - 15 years.
- The amount of money you allocate every month is under your control. Be aggressive in investing.
- If your fund has given lesser returns after 1-3 year of SIP, celebrate. Maybe in 10 years, it could give super returns. Keep the faith. Keep going.
- If your fund has given bumper returns after 1-3 year of SIP, celebrate. Keep the faith. Keep going.
- Mutual funds advertisements will always choose the best returns when they project themselves. Some will market themselves as best 1 year returns (even though they have under performed in 10 years). Some will market themselves as best 15 year returns (even though they might have under performed in 3-5 years).
- Aim to beat inflation or index over period of 10 - 15 years. You will not be disappointed.
- No matter what happens, do not stop. Be consistent. Keep the faith. Keep going.

So, do you really need an adviser? Maybe you still do. Maybe you don't. 

But you can do a little homework and begin today...

Think about it. I leave you with these thoughts friends.

All the very best...

Please leave your comments below on this topic.

All my articles are in this link. Click here.


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Good luck,
Fundamental Investor

Thursday, 13 September 2018

My Inflation & Balance Sheet !!!

We are all worried about the Inflation Rate of our Country. Also, about the Balance sheets of Businesses. But, have we ever thought - What is my Inflation? How is my Balance Sheet? Read on...

Saturday, 30 June 2018

Magic of Dividends - The Real Return !!!

What are Dividends? Are Dividends Useful? Are Dividends Significant? What Impact do they have? Can they, over a period of time, cover Basic Expenses? Can Dividends Compound? Read on...

Saturday, 18 November 2017

Compounded Annual Growth Rate - CAGR

Ever come Across Following Phrases?
- Our Company has given 33% CAGR Returns in last 30 Years.
- If you had invested in our Mutual Fund Rs One Lakh in 2000, you would have 22 Lakh in 2017 - A Mind Boggling 20% CAGR in last 17 years
- This Company can Grow at 66% CAGR for next 10 years

And they follow this with Disclaimer - Read Offer Document Carefully before investing :-)

What is CAGR Really? Are these Statements Really as Awesome as they Sound? Read on...

Friday, 13 October 2017

Annual Reports FY 2017 Key Highlights

Dearest investors and friends,

How are you all doing? Hope you are all compounding wealth peacefully and steadily.

Apart from the Google Group & MMB, recently, I have been connecting with Investors in Twitter which is a wonderful platform for quick updates. I hope, through these channels, anyone can connect with me at ease and we can have good discussions.

If you like the collective work below, please take a moment and to Like & Retweet this link so that many more of your followers can also benefit.

Click to Retweet 

#AnnualReport #Notes 2017 for #Investor #Community

Click on the below Box for Annual Reports FY 2017 Key Highlights.



Please share the link to your circles on Emails, Whatsapp Groups, Twitter, FB etc so that more and more investors can read, understand, benefit and maybe help by contributing some more Notes.

As of today, the following companies have been covered:

- Piramal Enterprises Ltd
- Indiabulls Housing Finance Ltd
- Edelweiss Capital Limited
- Ujjivan Financial Services Ltd
- Advanced Enzyme Technologies Ltd
- Cupid Ltd
- Avenue Supermarts Ltd
- LT Foods Ltd
- Alembic Pharmaceuticals Ltd
- Finolex Industries Ltd
- V-Mart Retail Ltd
Granules India
- Avanti Feeds
- Murudeshwar Ceramics
- Manappuram Finance
- Maharashtra Scooters
- Future Enterprises
- Cadila Healthcare
- Omkar Speciality Chemicals
- Future Retail
- Virinchi Ltd
Rain Industries Ltd
- Caplin Point Laboratories Ltd
- Vakrangee Ltd
- Nitin Spinners Limited
- Multibase India Ltd
Maithan Alloys Ltd
- IG Petrochemicals Ltd
- Mold Tek Packaging Ltd
- Siyaram Silk Mills Limited
- BSE Ltd
- APL Apollo Tubes Ltd
- P I Industries Ltd
- Jamna Auto Industries Ltd
- KEI Industries Limited
- Raymond Limited
- Spicejet Limited
- Tata Global Beverages Ltd
- Hikal Limited
- Ambika Cotton Mills Ltd
- Persistent Systems Limited
- Motilal Oswal Financial Services Limited
- Alankit Ltd
- Aurobindo Pharma Ltd
- Navneet Education Ltd
- Byke Hospitality Ltd
- Trigyn Technologies Ltd
- Bharat Bijlee Ltd
- Nesco Ltd
- Pondy Oxides and Chemicals Ltd
- Gujarat Narmada Valley Fertilisers & Chemicals Ltd
- Anjani Portland Cement Ltd
- Majestic Research Services and Solutions Ltd
- Strides Shasun Ltd
- Karnataka Bank Limited
- L&T Finance Holdings
- Dilip Buildcon Ltd
- Century Plyboards India Ltd
- Vikas Ecotech Ltd
- Centrum Capital Ltd
- Oriental Carbon and Chemicals Ltd
- Time Technoplast Limited
- Sanwaria Agro Oils Limited
- Eimco Elecon Ltd
- Sharda Cropchem Ltd
- Fineotex Chemicals Limited
- Accelya Kale Solutions Ltd

Every week, Ill be updating you with more and more companies prepared by Friends and Investors.

Enjoy the Read. Let us know you thoughts.


If you happened to like this work and want to continue learning, please subscribe for free email updates by clicking on the box below



Good luck,
Fundamental Investor

Saturday, 5 August 2017

Retire Early with Financial Independence !!!

Retiring early !!! Financial Freedom by 35. Sounds like a Dream, isn't it? Can this really be achieved? Can we start from Zero and still achieve it? If yes, HOW? Read on...

Saturday, 8 April 2017

One Night Stand in the Stock Market !!!

How many of us have a one night stand with a stock, then move on to date another and then another and never settle down? How many of us even end up blind dating a business due to excitement? How many of us marry an evolving stock and live with it, take its support, use its strengths, remain in downs and ups and value it? In our investing journey, we always have a dating phase. But many of us remain in the dating phase and never move to the next level which actually makes us wealthy. Read on...

Sunday, 19 March 2017

Fundamental vs Technical Stock Picking

Ever wondered what is the difference between Fundamental and Technical approaches to Stock Picking? Is Technical Analysis a form of betting your money? Is only investing with Fundamentals in mind enough? Read on to get more clarity...

Saturday, 21 January 2017

Diversified vs Concentrated Portfolio !!!

Portfolio Structuring is key to Wealth Creation. Which Portfolio works better? Is it Diversified Portfolio or Concentrated Portfolio? What are the advantages and risks associated with either? Read on..