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    Best mutual fund SIP portfolios to invest in 2022

    Synopsis

    Here are some mutual fund portfolios based on different risk profiles and investment amounts. You can invest in a suitable portfolio to achieve your long-term goals.

    High Risk Stock IdeasAgencies
    Many investors keep looking for a ready-made mutual fund portfolio to achieve their long-term goals. Well, putting together a bunch of schemes, based on risk profile, can be a daunting task for most investors. Many investors also find regular reviews and remedial actions even more tedious.

    This is the reason why ETMutualFunds.com decided to launch 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 updates on them regularly. We also inform our readers about poorly performing schemes and replacements for them.

    Simply put, you don’t have to shortlist consistent performers in categories that are suitable for your risk profile and goals. You can leave the job to us. You can also choose a ready made portfolio, based on your risk profile and your investment amount. Look for our monthly updates to find out how the schemes and portfolio fared.

    Here are some updates for you. Some of the schemes in the portfolio have been underperforming the short term. Mirae Asset Hybrid Equity Fund was in the second quartile in the last month. It had been in the third quartile for three months. Axis Bluechip Fund has been in the fourth quartile for four months. The large cap scheme had been in the third quartile for the last two months before that. SBI Small Cap Fund was in the second quartile in the last month. The scheme had been in the third quartile for five months earlier. Axis Small Cap Fund has also been in the third quartile for the last three months. Invesco India Midcap Fund has been in the third quartile for the last ten months. Axis Mid Cap Fund also has been in the third quartile for three months. We are closely watching the performance of these schemes. Watch out for our monthly updates.

    We will inform about the performance of these schemes regularly. However, we believe it is not wise to dump schemes based on their short underperformance. We wait for a long time before suggesting replacing the scheme.

    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.

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


    Recommended portfolio for conservative investors:

    sip portfolio conservativeET Online

    Recommended portfolio for moderate investors:

    sip portfolio 2ET Online

    Recommended portfolio for aggressive investors:

    sip portfolio aggressiveET Online

    Here is our methodology:

    Methodology for equity funds:
    ETMutualFunds 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.he 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 06, 2022 )
    The Economic Times

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