The top 5 mutual funds!

Financial product distributors play a key role in selling mutual funds to investors. Business Standard spoke to select distributors about their top five recommendations this month with reasons for suggesting the same.

Hemant Rustagi, CEO at Wiseinvest Advisors:

Before recommending the schemes, my advice would be to do a mix of one-time investment as well as a systematic transfer plan (STP), whereby a fixed sum is transferred to an equity fund from say a floating rate fund, regularly.

The ratio could be 50:50. Even though the market looks good from the long-term view, it may not be prudent to try to time the market with the entire sum.

Our recommendations are:

• Franklin India Prima Fund
• Magnum Global
• Tata Growth Fund
• DSPML Equity Fund, and
• Reliance Growth Fund.

These schemes offer a well-diversified portfolio across industries and have been consistent performers. Besides, by constructing a portfolio with the help of these schemes, one can get a very balanced exposure to large and mid-cap companies, a must for a long-term investor.

I also recommend that investors should opt for dividend payout option as that would ensure automatic booking of profits periodically.

J Rajagopalan, managing director at Bluechip Corporate Investments:

• For conservative investors: J M Equity & Derivative Fund: The only fund which takes advantage of arbitrage opportunities available between the derivative and cash markets. The fund is ideal for investors who want to preserve capital along with above-market returns.
• For moderate investors: HDFC Prudence Fund : The fund, incorporated in January 1994, has generated 40 per cent returns in the last three years.
• For aggressive investors: DSPML T.I.G.E.R Fund: The fund has generated absolute returns of 45 per cent since its inception in May 2004.
• Birla Dividend Yield Plus: The fund invests only in high-dividend yield stocks and has declared nine dividends, totalling to 100 per cent since its inception in February 2003.
• Sundaram S.M.I.L.E: The fund invests in lower mid-cap and small cap stocks which have a huge potential to generate good returns. Launched in January 2005, it has generated absolute returns of 3.50 per cent.
• We strongly advice retail investors should invest

  in equity funds through SIPs only. The equity investments should be for a minimum of three to five years.

Smita Vermani, assistant V-P at IDBI Capital Market Services:

We hold a positive outlook on the equity market on a medium to long term. However, short-term volatilities cannot be ruled out and, hence, the best way to invest in equity is through SIPs. We have shortlisted five schemes with a decent 'history' of performance.

Our recommended funds:

• Franklin India Prima Fund (mid cap): The scheme, which had assets of Rs 1278.45 crore (Rs 12.784 billion) as on February 28, 2005, invests largely in mid-caps.
• Reliance Growth (mid-cap): Reliance Growth was launched in September 1995 and invests in mid-cap companies that offer a good growth potential. The scheme had a corpus size of almost Rs 1064.49 crore (Rs billion)s as on February 28, 2005.
• HDFC Top 200 Fund (Large cap): The scheme generally invests in the shares of BSE-200, which is a well-diversified index of large cap shares. The scheme had a corpus of Rs 606.95 crore (Rs 6.069 billion) as on February 28, 2005.
• HSBC Equity Fund (large cap): This flagship equity fund of HSBC Mutual Fund has been one of the best performing funds in the diversified equity fund category during the last two years since its inception in December 2002. The scheme has assets worth Rs 1622.67 crore (Rs 16.226 billion) under management as on January 31, 2005.
• Tata Equity Opportunities Fund (Blend of large and mid cap): This scheme endeavours to identify stocks at their growing phase and benefits from their relatively high performance potential. The scheme had a corpus of Rs 299.60 crore (Rs 2.996 billion).

Rajendra Naik, managing director at Centrumdirect:

Analysis of historic returns show that mid-cap funds have always outperformed large-cap funds in delivering returns. Investor should discount short-term volatility and market corrections. Instead, he should look at investing for the long term and expect annualised returns in the range of 15-20 per cent.

Going forward, our pick for investments are in the following schemes:

• SBI Magnum Global Fund
• Reliance Growth Fund
• Franklin India Prima Fund
• Sundaram Select Midcap Fund, and
• HDFC Capital Builder Fund.