Year 2014 was very good for equity mutual funds especially after underperformance for few years. There was broad based buying across all the sectors and funds including underperformed sectors like infrastructure have done well…if we consider market caps , small caps or micro caps have provided returns of more than 100% in last year.
But now one should be careful in 2015 about fund selection and mere past last one year performance may not help. Fund portfolio will be more important now rather than performance in last one year.One should not concentrate on small or mid caps just based on performance in last year.
Long term investor should continue with diversification strategy and can start investing in following funds:
- ICICI Prudential Focused Bluechip Equity fund (50%) : Large cap oriented fund which invests predominantly in established companies. Avg market cap of stocks held by this fun is more than 96,000crore.
- HDFC Mid Cap Opportunities(25%): This is Mid cap oriented fund and invests in quality mid cap stocks.
- Franklin India Prima Fund(25%):Franklin India Prima Fund is mid cap oriented fund which invests in quality mid cap stocks.
One can invest 50% in bluechip fund and 25% each in two mid cap funds. Means if any one is looking to invest Rs.10,000 per month then invest Rs.5000 in bluechip fund and Rs,2500 each in rest mid cap funds.
A long term investor can avoid investment in pure small cap fund. and rather prefer to invest in funds having some exposure towards small cap (market cap less than 5000 crore) like above mentioned funds.
