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    Best mutual fund SIP portfolios to invest in 2020

    Synopsis

    Here is our update on the recommended mutual fund SIP portfolios in November. We have updates on two schemes that have been underperforming for a while.

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    Here is a monthly update on our recommended mutual fund SIP portfolios. There are no changes in our recommended SIP portfolios in October. If you are investing in these portfolios, you may continue with your investments. Similarly, if you are looking for a ready-made SIP portfolios to achieve your long-term financial goals, you may invest in one of these portfolios, based on your risk profile and investment amount.

    These best mutual fund SIP portfolios are meant for investors looking to invest in a mix of mutual funds to achieve their various long-term financial goals. If you are looking for a ready-made mutual fund portfolio to achieve your long-term financial goals, you are at the right place. You can choose a portfolio, based on your risk profile and the SIP amount you plan to invest regularly.

    ETMutualFunds.com launched its recommended mutual fund portfolios to invest through SIPs in October 2016. Since then, we have been closely monitoring the schemes in these portfolios and coming up with an update on them regularly.

    We came up with these portfolios to help investors who find it extremely difficult to put together to a few schemes (or create a mutual fund portfolio, in technical parlance) that would help them to meet their various long-term financial goals. This is especially true for new investors.

    Indeed, creating a mutual fund portfolio involves several steps. To begin with, you should shortlist some schemes with a consistent long-term performance record. Next, you should pick the schemes that are in line with your risk profile and investment goals.

    Then you would hit the next roadblock: how to fix the composition of the portfolio? The task is not finished yet. You should also need to monitor and review the performance of the portfolio regularly and take remedial steps if needed. Many investors find the task a bit too difficult to handle.

    That is why we launched these SIP portfolios. ETMutualFunds.com's best mutual fund SIP portfolios are meant for three different individual risk profiles: conservative, moderate and aggressive. We have also considered three SIP baskets – between Rs 2,000-5,000, between Rs 5,000-10,000 and above Rs 10,000 – while creating these portfolios. Take a look at our recommended portfolios.

    A word about the underperformance of Aditya Birla Sun Life Regular Savings Fund, a conservative hybrid fund, that is part of our recommended list. Aditya Birla Sun Life Regular Savings Fund has been in the fourth quartile for the last seven months. The scheme was in the third quartile two months before that.

    Motilal Oswal Multicap 35 Fund, a multi cap scheme that is part of these portfolios, has been in the last quartile for the last two months. It has been in the third quartile for three months, in fourth quartile for two months before that.

    Mirae Asset Emerging Bluechip Fund has imposed fresh restrictions on SIP investments. It has capped SIP investments at Rs 2,500.

    Keep an eye for our monthly updates. We would keep a close watch on these schemes and update to you about their performance every month.

    We will keep a close track of the performance of these schemes and update you regularly every month.

    Recommended portfolio for conservative investors
    SIP amount Scheme namePercentage (%)
    Rs 2,000 to 5,000 Axis Bluechip Fund - G50
    ICICI Prudential Regular Savings - G50
    Rs 5,000 to 10,000 Axis Bluechip Fund - G30
    ICICI Prudential Bluechip Fund - G20
    Aditya Birla Sun Life Regular Savings Fund - G50
    Above Rs 10,000Axis Bluechip Fund - G25
    ICICI Prudential Bluechip Fund - G15
    Motilal Oswal Multicap 35 Fund - G10
    Aditya Birla Sun Life Regular Savings Fund -G50

    Recommended portfolios for moderate investors
    SIP amountScheme namePercentage (%)
    Rs 2,000 to 5,000Axis Bluechip Fund- G65
    ICICI Prudential Regular Savings - G35
    Rs 5,000 to 10,000 Axis Bluechip Fund- G40
    Motilal Oswal Multicap 35 Fund - G25
    ICICI Prudential Regular Savings - G35
    Above Rs 10,000ICICI Prudential Bluechip Fund - G30

    Axis Bluechip Fund- G15
    Motilal Oswal Multicap 35 Fund - G20
    ICICI Prudential Regular Savings Fund -G35

    Recommended portfolios for aggressive investors
    SIP amountScheme namePercentage (%)
    Rs 2,000 to 5,000 SBI Magnum Multicap - G50
    ICICI Prudential Bluechip Fund - G50
    Rs 5,000 to 10,000 Motilal Oswal Multicap 35 Fund - G30
    Axis Bluechip Fund- G20
    ICICI Prudential Equity and Debt Fund - G15
    Mirae Asset Emerging Bluechip Fund- Regular Plan -G35
    Above Rs 10,000ICICI Prudential Bluechip Fund - G35
    SBI Magnum Multicap - G10
    Mirae Asset Emerging Bluechip Fund- Regular Plan -G 30
    ICICI Prudential Equity and Debt Fund - G10
    Tata Equity PE Fund - G15

    Note, we have assumed that the investor is investing with an investment horizon of at least five years.

    Here is our methodology:

    Methodology for equity funds:
    ETMutualFunds.com has employed the following parameters for shortlisting the equity mutual fund schemes.

    1. Mean rolling returns: Rolled daily for the last three years.

    2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.
    i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.
    ii) When H is less than 0.5, the series is said to be mean reverting.
    iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

    3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.
    X =Returns below zero
    Y = Sum of all squares of X
    Z = Y/number of days taken for computing the ratio
    Downside risk = Square root of Z

    4. Outperformance: It is measured by Jensen's Alpha for the last three years. Jensen's Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the market.
    Average returns generated by the MF Scheme =
    [Risk Free Rate + Beta of the MF Scheme * {(Average return of the index - Risk Free Rate}

    5. Asset size: For Equity funds, the threshold asset size is Rs 50 crore

    Methodology for debt funds:
    1. Mean rolling returns: Rolled daily for the last three years.

    2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.
    i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.
    ii) When H is less than 0.5, the series is said to be mean reverting.
    iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

    3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.
    X =Returns below zero
    Y = Sum of all squares of X
    Z = Y/number of days taken for computing the ratio
    Downside risk = Square root of Z

    4. Outperformance: Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund.

    5. Asset size: For Debt funds, the threshold asset size is Rs 50 crore

    Methodology for hybrid funds:
    1. Mean rolling returns: Rolled daily for the last three years.

    2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.
    i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.
    ii) When H <0.5, the series is said to be mean reverting.
    iii) When H>0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

    3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.
    X = Returns below zero
    Y = Sum of all squares of X
    Z = Y/number of days taken for computing the ratio
    Downside risk = Square root of Z

    4. Outperformance
    i) Equity portion: It is measured by Jensen's Alpha for the last three years. Jensen's Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the market.
    Average returns generated by the MF Scheme =
    [Risk Free Rate + Beta of the MF Scheme * {(Average return of the index - Risk Free Rate}
    ii) Debt portion: Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund.

    5. Asset size: For Hybrid funds, the threshold asset size is Rs 50 crore

    (Disclaimer: past performance is no guarantee for future performance.)

    ( Originally published on Jan 08, 2019 )
    The Economic Times

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