India is the home of some well-known mutual funds and fund houses that painstakingly provide well-researched funds to invest for retail and institutional investors. As an investor, you would essentially like to earn higher and positive returns compared to traditional investment opportunities like interest on your savings account, fixed deposits, and gold. Moreover, considering the current situation of increasing inflation, your investment should fetch a return higher than the inflation rate to earn an inflation-adjusted net return.
You should know that a fund manager professionally manages mutual funds. It works more like a trust where several investors like you with a common investment objective invest. Based on adequate and well-crafted research, the fund manager invests the proceeds in asset classes like equities, bonds, money market securities, and other investment securities. The income or gains earned from it are then proportionately distributed among investors like you. In that case, mutual funds are ideal for you if you are an investor with surplus cash in hand and do not have the time to research the financial markets.
On that note, let us discuss two evergreen mutual funds of India, namely SBI Bluechip Fund and Axis Long Term Equity Fund
If you are a conservative investor who likes to play it safe, this mutual fund is ideal for you. If you hold onto your investment for over 5 years, the investment strategy says that you can beat the inflation from the gains derived from SBI Bluechip Fund. Like all other investments, you must be aware that this fund is subject to market risk representing the highs and lows of the financial market.
The fund manager of SBI Bluechip Fund provides an opportunity for investors like you to enjoy long-term capital growth. The fund and the fund manager undertake active management of a pool of investments and invest in a basket of large cap equity. The fund invests nearly 80% of its pool of investments in large-cap stocks, the well-known companies with a proven business model and track record. Moreover, these companies have earned and built good brand equity for themselves, and hence there is widespread confidence in generating higher and positive returns from these large-cap stocks. Hence these large-cap stocks can be understood as a safe bet to gamble.
The fund manager invests the remaining 20% of its pool of investments into debt, money market securities and other instruments with certain flexibility and discretion. The fund manager follows a top-down approach while allocating and cherrypicking stocks based on fundamental research. It is also a blend of value and growth style of investing wherein industries with good potential and companies with good demand drivers form a part of this approach.
SBI Bluechip Fund posted an AUM of Rs 31965.44 crores on 31st March 2022, and its return stood at 11.38% on 31st March 2022. You can invest a minimum of Rs 5000 and a minimum of Rs 1000 as an additional investment.
Axis Long Term Equity Fund is an equity-linked savings scheme with a statutory and mandatory lockin period of 3 years. You need to note that if you have an immediate requirement of cash or need to unwind your investment in a period of fewer than 5 years, you shouldn’t invest in this saving scheme.
This mutual fund is designed and structured in a way that it invests the pool of investments in large-cap stocks and a few select mid-cap stocks. The long-term goals of Axis Long Term Equity Fund are to beat inflation and create long-term wealth for investors like you who need wealth to fund their children’s education, meet their retirement expenses, and secure the future.
In addition, you can claim tax benefits under Section 80C of the Indian income tax laws for investments up to Rs 1.5 lakhs in a financial year for eligible securities. You must also note that this fund is exempt from tax. However, if you earn a dividend exceeding Rs 5000 from this fund, the fund house will deduct a TDS of 10% before distributing you the dividend.
The risk of investing in Axis Long Term Equity Fund is very high. The fund holds an AUM of Rs. 29583.87 crores on 31st May 2022. You can consider investing in this fund with a lump sum investment of Rs 500 if this fund matches your long-term financial goals and risk appetite.
There are plenty of mutual funds, savings schemes, and investment opportunities available at your disposal. It would help if you did not fall prey to lucrative investment opportunities and instead understood the inherent risk factors of such investments. A good practice is understanding your financial goals, risk-bearing capacities, and appetite and then making an informed decision before investing.