With the markets touching new high every day, experts recommend investing in diversified equity funds that are overweight on growth-oriented and cyclical sectors such as infra, automobile, engineering and capital goods. HDFC Top 200, ICICI Prudential Value Discovery Fund and Franklin India Prima Fund are some schemes that investors are looking at.
HDFC Top 200: It is a large-cap fund with a well-defined universe of top 200 companies by the market capitalisation. The fund, one of the flagship schemes of HDFC MF, made a comeback in October last year after struggling since the start of the year. The fund is overweight on sectors such as financial and energy, with more than 30% of its allocation towards the former. A stable government and hopes of a turnaround in the economy gave a boost to the banking stocks in 2014, thereby, yielding better returns on this fund. It is one of the best-performing funds in this category, said Hemant Rustagi, CEO, Wiseinvest Advisors.
ICICI Prudential Value Discovery Fund: It is an aggressive mid- and small-cap fund and is suitable for long-term investors. Those with an investment horizon of seven years or more should invest in this fund as there can be bouts of volatility, said Rustagi. According to Vidya Bala, head, mutual fund research at Fundsindia.com, the scheme had the right mix of cyclical and growth stocks in its portfolio in March, the month it was recommended by fundsindia.com. However, she says, the good thing about the fund is that it keeps a close eye on valuations, which can prove useful at a time when the markets have run up significantly.
Franklin India Prima Fund: It is a stable non-aggressive fund. In the mid-cap space, it invests at the top end of the market capitalisation spectrum. The less-aggressive stance could mean the fund may at time lose out to aggressive peers in scoring on returns.