Where should first-time mutual fund investors put their money2 min read . Updated: 11 Apr 2021, 01:33 PM IST
- For first-time investors, large-cap mutual funds, index mutual funds are better suited, say experts
Mutual fund calculator would give you a projection as to how your money will grow in a particular period but it won't give you which mutual fund plan to buy. So, to get ideal money-making strategy for one's mutual fund investments is important. According to tax and investment experts, if someone is planning to start mutual fund investments, then large-cap funds should be the first choice. Then one can look at index funds. So, for first time mutual fund investors, large-cap and index funds are the most suitable investment option to make money with less risk. After all 'mutual fund investments are subject to market risk.'
Speaking on small-cap vs mid-cap vs large-cap mutual funds; SEBI registered tax and investment expert Jitendra Solanki said, "If you are first time mutual fund investor, then you should go for the large-cap mutual funds. In these funds, the fund manager invests in top 100 listed company stocks and these stocks deviate very little in comparison to small-cap and mid-cap mutual funds." Solanki said that if we compare the deviation in these funds due to volatility in the stock market, then large-cap funds change least followed bu mid-cap and small-cap.
Asked about the major large-cap funds that one can look at while starting mutual fund investment Solanki listed out Mirae Asset Large Cap Direct Growth Fund, Axis Blue Chip Direct Growth Fund and Canara Rebeco Bluechip Direct Growth Fund. He advised investors to buy direct growth plan as they negate the broker's role and in then long-term, it helps the investor reap around one to one and half per cent additional mutual fund interest. He said that one can invest in Systematic Investment Plan (SIP) mode too if the investor lacks one time lump-sum amount for investing.
Suggesting first time mutual fund investors to look at index funds; Manikaran Singhal, founder at goodmoneying.com said, "For first time mutual fund investors, index funds are better option as it has least risk as the return is basically linked to the index performance. Due to this nature of return in index fund, if someone is not known about the equity investment rules, he or she can get mutual fund returns at par with the stock market indices like Nifty, Sensex, Bank Nifty, etc.
Asked about the major index mutual fund plans that a first time investor can look at Singhal listed out UTI Nifty 50, HDFC Nifty 50 and HDFC Sensex. He advised investors to look at expense involved in the index fund offered by various mutual fund houses as higher will be the expense, lower will be the return.
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