Want to invest in mutual funds but don't know how to go about it?

Get all your mutual fund related queries answered by our expert, Feroze Azeez of Anand Rathi Financial Services.

Q) Mukund Deshpande writes to us from Mumbai. He wants to invest about Rs 50,000-70,000 for about a year in a liquid fund. Please suggest a good liquid fund for this investment.

A) Instead of liquid fund, I would suggest arbitrage fund. A major advantage of an arbitrage fund is the tax efficiency it brings on the table. Arbitrage funds behave like debt investment, but invest into stocks, thereby, having an exposure of over 65 percent in the equity market. Therefore, when it comes to taxation, arbitrage funds get the benefit of being treated as an equity fund. In contrast, a liquid fund is a debt fund and will be taxed at 33 percent (tax-slab), when it is invested for less than a year. This will affect your returns and you will earn a lesser rate of return on your investment on post tax basis. An arbitrage fund offers you both – low risk and better post tax returns, making it a wise choice.

Q) Rajiv Maken writes to us from Delhi. I work with the United Nations and covered medically as well as have the life coverage. I have 10 years to my retirement and now wish to start SIP in mutual fund. Would like to invest Rs 10,000-15,000 per month. Please suggest best mutual funds I should invest in and how much to allocate in each.

A) Mirae Asset India Opportunity to your portfolio. The fund in terms of risk adjusted returns measured by sharpe ratio, it is evident that the risk calls taken by the fund manager Nilesh Surana has paid off as the fund scores high vis-à-vis benchmark on this parameter across time frames. The fund has a diversified portfolio of 58 stocks with almost 84 percent into large cap companies. The fund manager, Neelesh Surana, is of the view that global economies are managing well and the outlook for equity looks positive. He aims to build a portfolio with high quality stocks that would add value going forward.

Kotak Standard Multicap: The fund manager Harsha Upadhyay uses a top down approach to identify the stocks. The fund portfolio is diversified across 67 stocks with 86 percent invested into LargeCap stocks and 14 percent invested into MidCap stocks. Though, the fund performance has dipped in the last one year, the fund has consistently outperformed the Nifty and category average across time frames. Thus, we recommend investing in the fund as it has been a consistent performer

HDFC midcap opportunity fund: The fund manager Chirag Setalvad follows a quality based approach to investing, with emphasis on companies having strong management teams, sustainable competitive advantages and robust business models. He uses a bottom up approach to target companies which have reasonable cash flows and a high return on equity (ROE). Looking at the fund manager’s quality based stock picking approach, and his consistency in delivering superior returns over the benchmark and category average over the short as well as long time frames, we recommend to invest in this fund.

Q) Darshan Mehta writes to us from Mumbai. I have invested in Franklin India Prima Fund Direct Growth Plan, Aditya Birla Sun Life Pure Value Fund Direct Plan and HDFC Small Cap Fund. All SIP are of Rs 2,000 every month. I want to know whether I have invested in right fund or not. My time horizon is five years.

A) All your investments are into mid and small cap space, which makes your portfolio risky. Aditya Birla Sun life has generated good returns, however the fund is risky. We would suggest you to invest in Aditya Birla large cap fund. On pure return basis, the fund has been a consistent alpha generator as is visible in it being in the top quartile across the longer time frames and on a monthly rolling return basis, it has outperformed its benchmark 83 percent of the times. The fund manager, Anil Shah, is of the opinion that we are currently in the midst of a liquidity driven rally and holds a three to five year ‘Buy’ and ‘Hold’ perspective on the portfolio. He looks to identify the companies with good management, ownership and healthy balance sheets that would add value to the portfolio from a longer term perspective.

Q) 23-year-old Kuppusame wants aggressive portfolio for mutual fund and his horizon is 15 years. I have chosen Reliance Small Cap Fund 1000, Principal Emerging Bluechip Fund 1000, Mirae Asset India Equity Fund 1000, L&T Emerging Business Fund 1000, Motilal Oswal Focused 25 Fund 1000, SBI Small Cap 1000 and Public Provident Fund of Rs 150,000 per year. All the funds are direct growth option. I will increase SIP amount every year by at least Rs 1,000. I have started SIP from July 2018 for at least 15 years. Whether, my portfolio is good or not. Whether, I want to make any alteration to my portfolio. I am bachelor and my parents are settled and there is no financial need for them. Therefore, I don't want money in between and has sufficient money for any emergency. My horizon is at least 15 years and may increase to 20 years. I will increase my mutual fund exposure to Rs 15,000-20,000.

A) We would only suggest exit Motilal Oswal Focused 25 Fund 1000 as the fund has not been performing from quiet sometime. Instead, invest in Kotak Standard Multicap.

Q) Jagan writes to us on Twitter. Aditya Birla Sun Life Frontline Equity, Aditya Birla Sun Life Pure Value Fund-Dividend, HDFC midcap top, 100 capital fund, UTI Mid Cap Fund, Franklin small & large company pension plan. Each have LargeCap, MidCap and SmallCap diversified fund as I am investing in it for three years.

A) We would suggest you to instead of Aditya Birla Frontline Equity, invest in Birla Sun Life Equity. The fund has been a consistent performer. UTI mid cap has been underperforming from the last three years and has been in the third quartile. We would suggest you to exit from the fund. You can increase your investment in the existing HDFC mid cap fund.

Q) Annie writes to us on Twitter. She wants to start investing in mutual funds with good returns in next three years. Can you suggest me a good fund and can make 10,000 per month.

A) You can invest in Mirae Asset India Equity in large cap and Franklin India Primia in mid cap space.

Q) Rajesh Shahi writes to us on Twitter. Kotak Select Focus Fund Direct Growth and Axis Multi Cap Fund Direct Growth having SIP of Rs 1,000 each. Should I look for one LargeCap? Time horizon is 15 years.

A) Both your funds have generated good returns and you can continue investing in them.

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

First Published:Aug 14, 2018 2:56 PM IST