How do you choose a mutual fund (MF) that suits you? There are 1,660 MF schemes out there in the market, spread across 37 categories. For constructing your portfolio of 8-12 funds, here is help on the way.
Moneycontrol’s MC30 is rising on the horizon. It is a curated basket of 30 MF schemes that we have put together after much analysis. We have narrowed down the choices to just 30 schemes.
Simple product choices
MC30 is designed to help you pick MF schemes across equity, debt, gold and international categories. Our list will consist of simple, easy-to-understand schemes that are fairly diversified. MC30 is meant for a new investor as well as for those who have already been investing. Hence, we have kept things simple and avoided risky sectoral and thematic funds. Contra or value schemes have also been avoided, given the subjectivity in deciding the various criteria across fund houses.
All the schemes that are a part of MC30 now have gone through numerous hoops to make sure they come with a vintage. Speaking of vintage, all MC30 schemes have been around for a reasonably long time. At least seven years, to be precise. They’ve been curated based on a thorough risk-return analysis. We checked for their consistency in returns, volatility and portfolio concentration risks.
Our debt schemes in MC30, too, have been selected with care. We drew lessons from episodes of the blow-up in credit funds in recent years. None of our debt funds are exposed to either bad securities or have large exposures to any single group. In MC30, five spots will be permanently reserved for passively-managed funds. So index and exchange-traded funds (ETFs) will feature prominently. Passive funds, at times, offer avenues that may not be available in actively-managed schemes.
But apart from the past performance, MC30 also checks how future-ready these schemes are. No scheme would enter MC30 without a detailed discussion with the fund manager. The fund manager’s philosophy plays a crucial in our comfort levels with the scheme. How the fund has performed in rising and falling markets also plays a key part.
MC30 gives a manageable list of 30 schemes. But you should not invest in all these 30 funds. The limited choice of MC30 is to make your task simpler by choosing the right MF scheme from a curated basket. Our list will also be accompanied by a detailed rationale of why these schemes made it to the MC30. Pick and choose schemes based on your risk profile and do make sure you invest as per your asset allocation.