18 Sep , 2021 By : Kanchan Joshi
Most of the mutual funds on offer in India are more or less possess same flavour, forcing investors to look at the ratings given by various reputed rating agencies like Morningstar, Value Research, Crisil, ICRA, etc. In fact, mutual funds' ratings work as composite measure of both risk and return because it gives an idea about the risk and reward involved in a mutual fund plan. Investors strongly believe that a mutual fund with more stars to its credit is always better. However, it is always advisable to look at the fund rating instead of past performance only. As previous performance may turn out a recipe for disaster, looking at the current fund rating may help an investor to pick a better option.
Here we list out two mutual fund SIP plans that have been awarded 5-star rating by Value Research and Crisil:
1] Mirae Asset Emerging Blue-chip Fund: This mutual fund mainly invests in a combination of large and medium-sized companies, giving reasonable degree of flexibility to the fund managers. As per the Value Research data, if an investor had invested Rs1 lakh in this mutual fund plan three years ago. The absolute value of one's Rs1 lakh investment would have been Rs1.91 lakh today. However, if an investor had started Rs10,000 monthly SIP in this regular plan 3 years ago, the absolute value of one's investment would have been Rs6.17 lakh today.
If this Rs1 lakh investment had been done 5 years ago, then Rs1 lakh lump sum investment would have turned to Rs2.65 lakh today while Rs10,000 monthly SIP would have turned to an absolute investment value of Rs11.40 lakh.
Value Research recommends mutual fund investors to invest in this plan through monthly SIP mode if the investor has time-horizon of 5 years or more.
2] Canara Robeco Blue-chip Equity Fund: This fund invests in large-cap companies. Compared to those funds that invest in small and medium-sized companies, such funds tend to fall less in a bearish market. As per the Value Research data, if an investor had invested Rs1 lakh lump sum in this fund 3 years ago, the absolute value of one's investment would have become Rs1.82 lakh. However, if an investor had invested in this plan through monthly SIP of Rs10,000, the absolute value of one's investment today would have been Rs5.73 lakh.
Likewise, if an investor had invested Rs1 lakh lump sum 5 years ago, the absolute value of one's investment had been Rs2.36 lakh today. However, in the case of Rs10,000 monthly investments started in this direct plan 5 years ago would have turned to an absolute value of Rs10.79 lakh today.
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