Diversify smartly

By Morningstar |  11-07-18 | 

I need to invest Rs 5,000 to 6,000 per month in mutual funds through SIP. My time horizon is up to 20 years for wealth creation and savings. Already I am saving Rs 10,000 per month in my PPF.

Can you suggest 4 to 6 best mutual funds through SIP for long period?

- Sridharan

Our first suggestion to you is to get your asset allocation in place. Going by the information supplied, it appears that you have already done so and have decided how much to allocate to equity.

Once that is done, depending on your goals and appetite for risk, you will have to decide what sort of funds to invest in. There are various fund categories ranging from large-cap to small-cap. Since your investment horizon is two decades, it is an excellent time frame to build wealth. And your decision to invest systematically will hold you in good stead.

Diversify smartly. We suggest a mix of equity funds across categories and fund houses. You can go with around three funds, since your monthly SIP amount is Rs 6,000.

Do take a look at our analyst views here. The funds are rated Gold, Silver, Bronze and Neutral.

You can compare performance of funds here.

When selecting funds, it is advisable to consider their performance over at least the previous three years to five years. This along with studying calendar-wise performance vis-à-vis benchmark indices (like Sensex, Nifty, etc.) and peer group would indicate consistency across time frames and market cycles. Additionally, you could consider the fund’s AUM (AUM should be greater than Rs 500 crore.) and period of existence (longer the better).

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