It is the time of the year you are contemplating how to do your financial planning for next year and reflecting on how your investments performed in 2016. This post is written to help you reflect on your investments of 2016 and help you build up the right investment portfolio for 2017.
In this post, we will look at the best mutual funds to invest in 2017. Before we get to the list of funds let us understand a little bit on how you should approach the whole financial planning process in 2017. Here are few tips before we get to list of top mutual funds in 2017 lets look at the process of choosing the right fund.
Create a financial goal if you have not done it already
If you read my posts and read my quora answers the golden rule I suggest for your investments is:
So if you did not set up your financial goals in 2016, now is the right time to do it talk to your financial advisor or just go to Bodhik to create appropriate financial goals. Any S-M-A-R-T financial goal should have following key features.
- Reward you
- Time Frame
The next big elephant to address as far as financial goal setting is Inflation.
Inflation is a big beast which can send all your great financial plan to cleaners, ensure you make a careful assumption on average inflation during the time period your money is invested. Inflation decides how much money you actually end up making. Be very particular about the inflation you
Set up your return Expectation
It might look a trivial exercise to do but setting up return expectation is a very important part in deciding on which funds will work for you if you looking at
Allocating Assets to your Portfolio
Before you go to next step you need to figure out the portfolio that will help you achieve your financial goals. You can use Bodhik’s portfolio designer to build your portfolio but here are thumb rules to help you do it yourself
- If your time horizon is less than 5 years try to avoid equity funds
- If your time horizon is less than 3 years, absolutely avoid equity funds
- Debt to Equity is dependent on your Age, Risk profile and time horizon in general for folks less than 30 years, moderate risk profile and time horizon of 10 years+ can start with 20/80 Debt to equity
- Your asset allocation has to evolve with time.
- Debt funds are not risk-free they carry interest rate risks
Ok now that we have our asset allocation done let us try to figure out which funds we need to pick up to make the best possible portfolio allocation
Top 10 Mutual Funds for 2017
Ok no more wait here is the list of top 10 mutual funds for 2017
|S.No||Fund Name||Fund Type||10 Year Return||5 Year Return|
|1||SBI Blue Chip||Large Cap||11.17 %||19.97%|
|2||Birla Sunlife Equity Fund||Large Cap||13.99%||16.55%|
|3||Quantum long term equity Fund||Large Cap||14.73 %||17.2 %|
|4||Mirae Asset Emerging Bluechip Fund||Mid-Cap||NA||28.95%|
|5||Franklin India Prima plus fund||Mid-cap||13.87 %||17.10 %|
|6||DSP Black Rock small companies fund||Small Cap||28.88 %||NA|
|7||Franklin India smallercompanies fund||Small Cap||15.57%||25.80 %
|8||ICICI Pru Value Discovery Fund||Multi cap||16.74%||23.34%|
|9||DSP Black Rock tax saver fund||ELSS||NA||21.19%|
|10||Birla Sunlife Tax Plan||ELSS||11.76%||19.78%|
The list includes funds across different categories like large cap, mid/small cap, multi-cap, and Tax saving funds.the list has been created based on the framework which I discuss later in the post.
Top Large Cap Mutual Fund SIP for 2017
The funds are not placed in particular order,a ll of these are winners in large cap category.
|Fund Name||10 Year Return||5 Year Return||3 Year Return|
|1||SBI Blue Chip Fund|
|2||Birla Sunlife Frontline Equity Fund|
|3||Quantum Long Term equity Fund|
|4||Franklin India Blue Chip fund|
Top Mid Cap Mutual Fund SIP for 2017
|S.NO||Fund Name||3 Year Return||5 Year Return||10 Year Return|
|1||Mirae asset emerging bluechip fund||42.93%||28.95%||NA|
|2||SBI Magnum Mid cap Fund||40.04%||27.91%||13.87%|
|3||HDFC Mid cap opportunities fund||33.74%||23.39%|
Top Small cap Mutual Fund SIP for 2017
|S.NO||Fund Name||10 Year Return||5 Year Return||3- Year Return|
|1||DSB Black rock Micro Fund||NA||29.80%||52.14%|
|2||Franklin India Small Companies Fund||15.57%||25.80%||36.16%|
Top ELSS Mutual Fund SIP For 2017
I wrote a separate post on top ELSS Mutual fund SIPs for 2017
Best ELSS mutual fund SIPS to invest in 2017
How did I arrive at these Funds
Here is the brief methodology is used for arriving at these funds
Shortlisting of top funds
- This was based on looking at the top rated funds on value search basically short list all the 5/4/3 star rated funds
- Sort these funds based on 10 year/5 year /3-year return
- Shortlist the consistent performers across time frames
User Risk-Return Framework for final selection
Following parameters were used to analyze risk-return for the funds in the shortlist
- Beta : It is the measure of the volatility of a security in our case the security is the mutual fund scheme, It is measured by dividing covariance of the security return to the variance of market return.
- Alpha: Alpa measures the returns on assets after accounting for the risk involved so it essentially tries to look at risk-adjusted returns on securities. In simple words how much risk a security took to deliver a particular return.
- Standard Deviation: Standard deviation is a statistic measure to understand how much a data point varies from the mean
- Sharpe Ratio: Sharpe ratio is a statistical measure to calculate risk-adjusted returns, It measures the is the average return earned in excess of the risk-free rate per unit of volatility or total risk. It was developed by Nobel laureate William Sharpe
- Sortino Ratio: Sortino ratio is a variant of Sharpe ratio , just that it only penalizes only those returns which fall below a particular user-specific number
- Treynor Ratio: It is the measure of excess returns over the risk-free returns available in the market ( like government securities, bonds etc)
- Downside Deviation
- Upside Potential
Other Factors considered for selection of funds
- Expense ratio of the Mutual funds: This measures the cost of running the fund, in includes expenses like administrative expense, marketing expenses, staff expenses etc, distribution expenses etc. Lower expenses funds are running an efficient ship.
- Track record of the fund manager also has a large impact on mutual fund performance
- Track record of the Asset management company.
These are the best mutual funds to invest based on my analysis, they might not be the best performing funds in future, but based on historic analysis, I have to bet on some funds these are the ones I will bet on.
You can post comments in this post.
Hey Jagdish. This is a decent portfolio for the long term. You have funds to take care of different opportunities in the market.Keep reviewing your portfolio every year and you should be good.
Sarab 6 years ago
I have invested following in the funds:
1. Mirae Asset Emerging Bluechip : 8000 Rs
2. SBI Bluechip Fund : 4000 Rs
3. HDFC Mid Cap Fund : 8000
4. SBI Magnum Multicap Fund : 10000 Rs
Is this portfolio good for 10 years ?
Jagdish Kochar 6 years ago
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