Best Mutual funds to invest in 2014

by Manikaran Singal on January 1, 2014


Searching for Best never ends. You find it difficult to settle for good or average. You want best food, best clothes, best car, best home…and so on. While searching for investment products also you look out for the best instruments. This is why you invested in Mutual funds which are promoted as best mutual funds to invest in 2013. But What is best? As per me Best is what is most suitable to your personal requirement /goals and risk profile. As I am not aware of your goals or risk profile, so keeping that separate, I present you a list of best Mutual funds to invest in 2014 as per my parameters.

Best Mutual funds to invest in 2014

Parameters to select the Best Mutual funds to invest in 2014

 

In my post published in Money control.com I have discussed about various parameters while selecting best mutual funds to invest in. Let me summarize those here:

1. Performance ranking  – Quartile ranking

As per these rankings Mutual funds are divided in 4 quartiles based on the returns they have generated. Quartile 1 carries top 25% of funds and Quartile 4 carries 25% of funds given least return.

2. Ratio analysis – Alpha , Standard deviation

Alpha denotes the extra return that the fund manager has generated as compared to benchmark. Standard deviation denotes how risky or volatile the fund is.

3. Fund manager tenure and experience

Fund manager tenure tells us that since how long the fund is being managed by same fund manager. Recent change in the fund manager should make the investor wary about the future of the fund.

4. Expense ratio and Scheme Asset size.

High expenses means less returns, but expense ratio is the factor of scheme asset size. SEBI has put restrictions on the Expense ratio which depends on the funds asset size. Higher the asset size lower will be the expenses. Though we can look out for a minimum expected scheme asset size but if the fund is consistently performing and fund manager is experienced and generating Alpha, so many time expense ratio does not matter. But higher the Asset size is always better.

So based on above mentioned parameters, to find out best mutual funds to invest in 2014,we have filtered out the funds which should fall into Quartile 1 ranking for 1 and 3 year performance, Should have generated Positive Alpha in last 1 and 3 year and fund manager tenure should be at least of 1 year.

Before going ahead, I would like to reiterate that consider the below list of funds as something you should look at after understanding your risk profile, and decided on a suitable asset allocation. Zeroing onto specific funds in your particular case might require understanding of funds Risk parameters too. Also keep in mind the standard disclaimer that fund houses give :

Mutual funds investments are subject to market risks, read all scheme related documents carefully before investing”

Best Mutual funds to invest in 2014 – Large Caps

best mutual funds to invest in 2014

Best Mutual funds to invest in 2014 – Large Caps (Performance)

best Mutual funds to invest in 2014

Best Mutual funds to invest in 2014 – Large and Midcap

best mutual funds to invest in 2014

Best Mutual funds to invest in 2014 – Large and Midcap (Performance)

best mutual funds to invest in 2014

Best Mutual funds to invest in 2014 – Mid and Small Cap

best mutual funds to invest in 2014

 Best Mutual funds to invest in 2014 – Mid and Small Cap (Performance)

best mutual funds to invest in 2014

Best Mutual funds to invest in 2014 – ELSS

best mutual funds to invest in 2014

Best Mutual funds to invest in 2014 – ELSS (Performance)

I have included Franklin India Tax shield in the performance comparison, since few months back when i did the same filtering on Tax saving funds, Franklin India tax shield came out as clear winner (Tax saving mutual funds for 2013). Just wanted to figure out what went wrong now.

best mutual funds to invest in 2014

Best Mutual funds to invest in 2014 – Multi Cap

best mutual funds to invest in 2014

As there’s nothing much to show on Multi cap funds, so i have not made any performance comparison of these funds

Best Mutual funds to invest in 2014 – Equity Oriented hybrid

best mutual funds to invest in 2014

Best Mutual funds to invest in 2014 – Equity oriented Hybrid (performance)

best mutual funds to invest in 2014

Data Source: the complete data above has been generated from FE analytics as on 31/12/2013

Every new year brings another opportunity to review the things and take corrective actions as and when required. So this post on “Best Mutual funds to invest in 2014″ will help you in making an opinion on your Mutual funds portfolio.

I have covered only equity and equity oriented hybrid funds in the article. As selecting parameters of debt mutual funds are bit different so that will be covered in a separate article.

Do share, how did you like the article above.

Manikaran Singal

Founder and Chief Financial Planner at Good Moneying Financial Solutions
He’s MBA ( Finance) gold medalist and a CERTIFIED FINANCIAL PLANNER. An ex banker , having a decade long experience in financial services industry he manages clients across the globe. He’s an active member of Financial Planners’ Guild India ( An association of practicing SEBI registered Investment advisers). He's very passionate in the financial planning space and with a view to spread financial literacy among masses he writes blog articles and also contributes and quoted in various media publications like Money control, Indian express, Business Bhaskar, Dainik Bhaskar, Money mantra magazine etc. He also delivers training on Various personal finance topics to various corporate houses. You may get in touch with him at info@goodmoneying.com

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{ 10 comments… read them below or add one }

bemoneyaware January 2, 2014 at 6:56 am

Very helpful post.
Could you explain the color codes used ex: green signifies what,what does blue mean etc?

Reply

Manikaran Singal January 3, 2014 at 5:57 am

Hi
Thanks for liking my post.
Color codes depict the quartile performance ranking of particular fund in particular month. Blue – quartile 1 (top 25%) , Green quartile 2, yello quartile 3 and Red quartile 4(lowest 25%).

Hope it helps

Reply

Pushp January 2, 2014 at 6:56 am

Hello Sir
I am investing in HDFC Equity, IDFC premiur equity plan A(G), UTI opportunities and ICICI prufoccussed bluchip equity from last 15 months;2500/m in each. kindly share your views and advice.
Thanks in advance

Reply

Manikaran Singal February 24, 2014 at 7:22 am

Pushp 15 months is too short a time to make changes in a equity portfolio. Among your funds 1 is mid cap oriented and 1 is large cap fund the other 2 are diversified (large and Mid cap). Except HDFC equity , all the funds are doing good in their respective category. and HDFC equity is showing signs of improvement too. so i would advise you to stay invested and continue with your SIPs and review the things again after 6 months. by that time election fever will also settle down.
Also always look at your portfolio in toto and follow asset allocation approach. This will help you in rebalancing the portfolio year on year and also lead to timely profit booking or purchasing more in low markets.

Reply

bhanu saxena February 26, 2014 at 10:20 am

Good post, the parameters set by you are good. A little incomplete.

One needs to also look at other factors both macro and micro to then finally choose a fund. Am sure you must be doing it already, may have not posted on the blog.

The FII inflows, currency and balance of payments will also have a huge impact on the performance of the market and hence the funds.

But really like your assessment criteria.

Regards,

Bhanu saxena

Reply

Manikaran Singal February 27, 2014 at 9:13 am

Bhanu, thanks for liking the post.
Franklly i think that rather than FII flow i should be bothered about Investor’s personal cash flow and goals targeted , Personal networth should be considered before looking at country’s balance sheet. The macro factors that you are mentioning is no doubt important but is funds manager job, and if he’s tracking and formulating his investment strategies well then it will definitely reflect in the alpha he generates and quartile ranking of funds. macro and Micro factors of economy keeps on changing and one cannot change the funds so frequently.
What do you think?

Reply

Bhanu Saxena March 1, 2014 at 2:24 am

Investor goals and financial flows would have already been taken into account by a good financial planner. I meant that as a FP one needs to also have a very good idea in both the macro and the micro picture of the markets other than the fund manager view. If we only depend on fund manager to be able to determine the various factors then this could be dangerous for the investor. The macro factors of the country need to be taken into consideration by the FP before investing in the asset class, otherwise we will have a 2008 situation with clients money. If a FP is aware of situations then the loss can be mitigated. Eg like some good FPs in 2008 at the height of the market crash were everybody had negative returns had given very high positive returns by investing in gilt funds.

It is important to have a own view on all factors enabling one to choose the investment better and yes the using the details shared by you earlier to really make a good strong portfolio in an investment plan.

Regards,

Bhanu Saxena

Reply

Jaya Kumaran March 20, 2014 at 3:19 am

Hi all, First of all I would like to introduce myself. I’m Jaya Kumaran from Malaysian Indian. I heard mutual fund india are doing better ….I want diversify my investment to india via mutual funds….

Well, will be appreciate if you can e-mail me the details or direct it to the respective person.

Regards
Jaya

Reply

Satish April 11, 2014 at 11:08 am

Hi

Nice article. Want your advice on the following. I am 38 and investing in equity diversified MF via sip growth option since from 2005 in few top funds for long term to meet my financial goals. Do my funds generate sufficient wealth in the long run say 10-20 yrs. L&T Equity fund, DSPBR Top 100, FT India Blue chip fund, IDFC premier equity- plan A, Quantum LTE. Please comment

Reply

Manikaran Singal April 19, 2014 at 5:58 am

Yeah sure satish. Your choice of funds is good and it is properly diversified in equity segment. Moreover since you are continuing from 2005 so you must have already generate good corpus with good returns.
Do remember the basic mantra, your portfolio should be adequately allocated between debt, equity and gold. Do invest in products like PPF and Debt Mutual funds too, so in volatile phases you should not be bothered about the overall value of total investments , though you have already seen and even stay intact with your investments. Good Luck

Reply

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