BackHow to choose the right MF for long-term investment success?
The performance of a fund is based on how it is managed, and process followed by an AMC and the fund managers.
PremiumI invested around ₹1.4 lakh in ICICI mutual funds (MF) through systematic investment plan (SIP), in 2021. Unfortunately, in the past 1.5 years, this MF has been underperforming, and my current investment value is around ₹1.1 lakh. Could you please provide guidance on which MF I should consider shifting to for long-term investment?
—Name withheld on request
Over the last one and a half years, since October 2021, the stock market has been range bound. The BSE Sensex had peaked back then to around 61,000 and at present is again near the 61,000 mark. During this time the market has been volatile too. Hence, the returns are likely to be less compared to your expectation. However, you should continue to have faith in the Indian stock market.
If I had the name of the mutual fund scheme you have invested in, it would have been helpful to share more insights. There is a myth a few investors follow: simply going by a name or the brand of an asset management company (AMC) at the time of investing. Each AMC has many different kinds of funds that are following different objectives. The performance of a fund is based on how it is managed, and process followed by an AMC and the fund managers. Diversifying your investment is a better way to reduce the risk of underperformance and avoid over-dependence on a fund. If you continue to invest through SIPs, which is a very good way to build wealth over the long term, you can consider a few of the below-mentioned funds:
• Parag Parikh Flexicap Fund
• SBI Large & Mid Cap Fund
• 360 One Focused Equity Fund
• HDFC Flexicap Fund
• Kotak Emerging Equity Fund
You must consider your investment in equity funds for the long-term, that is, more than five years to deliver good returns, considering that in the long term equity will typically outperform the other asset classes.
Harshad Chetanwala is co-founder at MyWealthGrowth.com.
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