Best Mutual Fund for Long Term Investment - IIFL India Growth Fund

Nutan Gupta

01 Mar 2017

IIFL India Growth Fund is an open ended equity fund. The investment objective of the scheme is to generate long term capital appreciation for investors from a portfolio of equity and equity related securities. Launched on October 30, 2014, the fund has given returns of 12.36% since its inception.

IIFL India Growth Fund has outperformed its benchmark Nifty50 over a 1-month, 3-month and 1-year period. Managed by Prashasta Seth, the total assets under management (AUM) of the fund stands at Rs. 272 crore as on 31st January, 2017. The fund has a total of 20 stocks in its portfolio. The top 5 holdings include HDFC Bank, Power Grid Corporation of India, Castrol India, HCL Technologies and Tata Motors.

Trailing Returns (%)
  1-month 3-month 6-month 1-year
Fund 8.3 10.45 5.90 36.58
Nifty50 6.35 9.97 2.45 23
Category 6.72 10.82 4.88 31.08

The investment philosophy which the fund manager follows is to look for companies which are growing at a CAGR of 15-20% and are trading at a reasonable valuation. The scheme invests in 20-25 high conviction stocks rather than typical 50-70 stocks in a mutual funds portfolio. This philosophy has generated significant alpha. Moreover, the scheme has no exit load along with lowest expense ratio, ensuring liquidity, flexibility and higher return to investors.

The fund invests around 65% of its corpus in large-cap stocks, while 33% is invested in mid-cap stocks. As far as the sector allocation is concerned, the fund has a higher exposure to the finance sector. Since its inception, the fund has outperformed its benchmark on yearly basis for 99% of the weeks.

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Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Best Mutual Fund for Long Term Investment - IIFL India Growth Fund

Nutan Gupta

01 Mar 2017

IIFL India Growth Fund is an open ended equity fund. The investment objective of the scheme is to generate long term capital appreciation for investors from a portfolio of equity and equity related securities. Launched on October 30, 2014, the fund has given returns of 12.36% since its inception.

IIFL India Growth Fund has outperformed its benchmark Nifty50 over a 1-month, 3-month and 1-year period. Managed by Prashasta Seth, the total assets under management (AUM) of the fund stands at Rs. 272 crore as on 31st January, 2017. The fund has a total of 20 stocks in its portfolio. The top 5 holdings include HDFC Bank, Power Grid Corporation of India, Castrol India, HCL Technologies and Tata Motors.

Trailing Returns (%)
  1-month 3-month 6-month 1-year
Fund 8.3 10.45 5.90 36.58
Nifty50 6.35 9.97 2.45 23
Category 6.72 10.82 4.88 31.08

The investment philosophy which the fund manager follows is to look for companies which are growing at a CAGR of 15-20% and are trading at a reasonable valuation. The scheme invests in 20-25 high conviction stocks rather than typical 50-70 stocks in a mutual funds portfolio. This philosophy has generated significant alpha. Moreover, the scheme has no exit load along with lowest expense ratio, ensuring liquidity, flexibility and higher return to investors.

The fund invests around 65% of its corpus in large-cap stocks, while 33% is invested in mid-cap stocks. As far as the sector allocation is concerned, the fund has a higher exposure to the finance sector. Since its inception, the fund has outperformed its benchmark on yearly basis for 99% of the weeks.

Have Referral Code?