Mutual funds give readymade investment options for people who don't want to take too much trouble over the details.
Investment Consultant Sanjay Matai agrees as he tells moneycontrol, "Mutual funds is the best option available to such investors wanting to invest in equities. Apart from being very flexible and convenient, it offers other key benefits such as professional management, diversification and variety in terms of schemes."
"An ideal investment strategy for a couch potato investor would be to invest in index funds, as they allow a well-balanced, low cost and well-diversified portfolio", says Investment Advisor Hemant Rustagi.
"If one wants to track the fortune of bluechip stocks, one can invest in an index fund that tracks BSE Sensex. Likewise, one can look at index funds tracking other indices. The key, however, is to have a close look at the 'tracking error', as index funds cost an investor less, compared with an actively managed equity fund," he adds.
| Top Performers based on 5 yr Abs Returns |
| Equity Diversified |
% |
| Reliance Growth Fund (G) |
763.0 |
| Reliance Vision Fund (G) |
697.4 |
| Magnum Contra Fund (G) |
696.9 |
| Franklin India Prima Fund (G) |
672.4 |
| Magnum Global Fund (G) |
500.4 |
| Equity Tax Saving |
% |
| HDFC Long Term Advantage (G) |
610.3 |
| Pru ICICI Tax Plan (G) |
509.9 |
| HDFC Tax Saver (G) |
499.9 |
| Magnum Tax Gain Scheme |
491.3 |
| Birla Equity Plan |
440.6 |
Matai says that investors can also choose the most consistent performers over the last 3-5 years, such as Franklin India Prima Fund, Reliance Growth Fund, Reliance Vision, Magnum Global, Magnum Contra, HDFC Top 200 and Franklin India Bluechip. Some Equity Linked Saving Schemes, ELSS, schemes that look good are Magnum Taxgain, HDFC Taxsaver, Prudential ICICI Tax Plan and Sundaram Taxsaver.
However, he cautions that the returns in future may not be in the range of 50 -60 per cent as in the past, but should most likely outperform the returns from fixed-income securities and give decent post-inflation returns.
Giving a more specific outline, Ajay Bagga, CEO of Lotus India AMC outlines the following investment prescription:
For really lazy couch potato investors - Put 75 per cent in a top performing large cap fund, 10 per cent in a mid-cap fund and 10 per cent in a dividend yield/opportunities/flexible investment fund and 5 per cent in an ELSS fund. Rebalance once a year.
For the slightly aggressive couch potato investor - Put 50 per cent in a large cap fund, 35 per cent in a mid-cap fund and 10 per cent in a dividend yield/opportunities/flexible investment fund and 5 per cent in an ELSS fund. Again, rebalance once a year.
With this kind of a portfolio, there is a high probability of making 15 per cent plus tax-free returns on a five-year horizon, says Bagga.
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