Make the Growth Fund Work for You
India has now more than 30 mutual funds actively doing business. The Association of Mutual Funds of India and its regulatory body The Securities and Exchange Board of India (SEBI) are the two main bodies that oversee the functioning of these high earning mutual funds. In the event of a fund company not abiding by the rules or not being transparent enough for the benefit of the investor, the SEBI reserves the right to debar them. Every investor would like to invest in a top performing fund which is able to generate the best rate of return and NAV(Net Asset Value)To know about the top performing mutual funds in India, you can refer to some of the reputed financial websites or even read financial newspapers Having said that, on the basis of consistency over years, the best performing growth funds have been from mutual funds houses of Reliance, SBI, HDFC, Templeton - Franklin India, UTI, Sundaram and ICICI Prudential.
Even though some of the famous names mentioned above have been distinguished for giving very good returns, nothing is guaranteed in the mutual fund market, more so in the equity-growth field which is quite volatile. So during the bullish periods, you can be expected to get fantastic returns but when the market is low, you can be in loss. So an equity growth mutual fund is entirely dependent on market performance. However, you can definitely safeguard your investment and reduce the risk factor by going for an SIP (Systematic Investment Plan) where you will be investing a part of the investment amount like Rs. 5000 or so every month instead of a lump sum amount. To further reduce the risk, you can select three or four growth funds if you have an appetite for risk. If you select three or four good equity funds, you will be able to diversify risk. To offset the risk you can also invest a part of your money in a debt fund, so that you have a balanced portfolio. When you invest in growth funds through SIP, you can invest monthly as well as quarterly in various funds. Compared to SIP, the lump sum route is more risky because should the stock market incur a loss, a substantial part of your investment can be eroded. Though SIP, however, the cost of your investments is averaged out.
Once you have chosen some of the best performing growth funds, your next job as a smart investor is to watch out for market behavior. When the market is bullish, say the equity market touches Rs. 20000; you can park your funds in a good debt or balanced fund. Then you can do an STP (Systematic Transfer Plan) where you can transfer the money from this debt fund to an equity growth fund of your choice. This is nothing but money working for money.