Chasing returns via mutual funds? Anil Singhvi wants you to focus on these 3 categories now

In view of the expensive valuations as well as the risk of earnings downgrade, Zee Business Managing Editor Anil Singhvi suggests taking mutual fund route instead of betting on individual stocks for decent returns. Further from the different available mutual fund categories, the market wizard recommends opting  for three 3 mutual funds:

Large and Midcap Funds

Flexicap Mutual Funds

Multicap Funds

Here's in brief about the different mutual fund categories:

Large and Midcap Funds:

Post the SEBI's 2017 circular concerning mutual fund categorisation, a new category that was a mix of large and midcap funds was introduced known as large and midcap funds. Furthermore, these funds as per the SEBI ruling are required to allocate 35 per cent each in large-cap and mid-cap companies. The large-caps provide stability to the portfolio, while mid-caps offer growth potential.

So, as the name suggests these funds invest in a combination of large and midcap companies. Also, these funds as against the independent large cap funds or midcap funds serve well as fund managers have ample room to channelise the corpus or funds across market caps. Say in a rising market condition, fund manager has the leeway to put a higher proportion of capital towards midcaps and smallcaps for boosting the total return.

Flexicap Mutual Funds:

Singhvi is of the view that in the current market landscape, flexicap equity mutual funds will be the best. These mutual funds can invest across any market cap without any pre-specified limit, nonetheless, the minimum allocation to equities and equity-related securities has to be 65 per cent.

So, based on the market movement, these funds have the flexibility to allocate or deploy funds across market cap as well as stocks basis the investment strategy and style suiting the given market condition.

Multicap funds: 

Singhvi added that in case one has full confidence in the fund manager then multicap funds can be another good investment option to consider. Multicap funds are equity mutual funds that invest most of their money in stocks of companies with different market caps. They invest in large-cap, mid-cap and small-cap companies.

These funds help in diversification, offer a higher risk-adjusted return as welll as are professionally managed.