Yes, mutual funds fulfill our dreams and these dreams can be of any type. Be it paying out loans, education of children or retirement planning. Systematic planning through mutual funds helps us fulfill these tasks without causing any pain.
As the per capita of India is expanding at a healthy rate, so are the aspirations and standard of living of the people in our country.
When it comes to discretionary spending, we are being influenced by western culture. The holidays and trips we aspire for, are one of the prime examples.
Yes, we might have heard that mutual funds can help you fulfill a long-term/medium term goal like a getaway to an exotic location.
But in this article, we will give you a detailed, step-by-step version on how they can help you plan a fabulous vacation across the world.
For the sake of simplicity, I have taken 10 cities in the world which are favorite tourist spots and are most visited. Also, I have taken into account the factor that we will stay invested in a particular fund for at least five years; post which the amount can be withdrawn to fulfill your dream vacation.
Here is our list:
- New York
- London
- Tokyo
- Shanghai
- Singapore
- Paris
- Prague
- Zurich
- Madrid
- Dubai
The cost involved in each trip would be huge and therefore, it would require substantial planning for the dream to become a reality.
In subsequent sections, I have identified an estimated cost that will be required for each of these trips and I have recommended five best mutual funds that will help you provide the adequate returns for executing the plan.
Let’s begin!
Below, I have shown a statement of expense that will be required for the trip.
Based on this analysis, the cost of traveling to these cities and staying for a week will cost the individual an average of INR 1.5 lakhs.
I have estimated this to be a one month trip and the cost of which will approximately be 15 lakhs. Let’s look at the chart below to understand better
| City / Cities covered | Year | Cost | Cost after accounting for inflation |
| New York | Beginning of 6th year | 2 lakhs | 2.43 lakhs |
| London | Beginning of 7th year | 2 lakhs | 2.53 lakhs |
| Tokyo & Shanghai | Beginning of 8th year | 2.25 lakhs | 2.96 lakhs |
| Singapore | Beginning of 9th year | 1.5 lakhs | 2.05 lakhs |
| Paris, Prague, Zurich and Madrid | Beginning of 10th year | 2.75 lakhs | 3.91 lakhs |
| Dubai | Beginning of 11th year | 1 lakhs | 1.48 lakhs |
| TOTAL | 11.5 Lakhs | 15.35 lakhs (app.) |
Note: We have assumed inflation at an average of 4 percent for the next 10 years. The assumption seems reasonable given the situation that has panned out in the last few years.
Now that the first part of the task is over, let’s jump to find out the amount you should invest to achieve this number.
Based on the analysis, we have decided to suggest starting an SIP in six mutual funds from renowned fund houses and exceptional past record to accumulate this amount.
Let us get into the economics of it and try to decipher the calculation. Though there are some assumptions that have been accounted for to reach the goal, but these assumptions are on returns that have already been provided by these funds. Not just this, we have made sure to diversify the funds across categories so as to gain full leverage.
In this article
The Estimate
I have made two estimates. One showing the SIP route and the other showing the lumpsum route. You can choose what suite you best.
But SIP is what most investors prefer to achieve long term goals such as this.
If you follow the SIP route:
| Fund Name | City Targeted | Amount required | Investment Time Period | Expected returns | Approximately SIP Amount (INR) | Accumulated Amount |
| ICICI Prudential Bluechip Fund – Direct – Growth | New York | 2.43 lakhs | 5 years | 14.9% | 2900 | 2.50 lakhs |
| Kotak Emerging Equity Scheme – Direct – Growth | London | 2.53 lakhs | 6 years | 19.1% | 2000 | 2.53 lakhs |
| HDFC Small Cap Fund – Direct – Growth | Tokyo & Shanghai | 2.96 lakhs | 7 years | 19.2% | 1800 | 2.96 lakhs |
| Parag Parikh Long Term Equity Fund – Direct – Growth | Singapore | 1.71 lakhs | 8 years | 17.6% | 1000 | 1.95 lakhs |
| ICICI Prudential Banking and Financial Services Fund – Direct – Growth | Paris, Prague, Zurich and Madrid | 3.91 lakhs | 9 years | 19.2% | 1500 | 3.92 lakhs |
| L&T Midcap Fund | Dubai | 1.48 lakhs | 10 years | 21.2% | 500 | 1.62 lakhs |
If you follow the lumpsum route:
| Fund Name | City Targeted | Amount required | Investment Time Period | Expected returns | Approximately Lump Sum Amount (INR) | Accumulated Amount |
| ICICI Prudential Bluechip Fund – Direct – Growth | New York | 2.43 lakhs | 5 years | 14.9% | 122000 | 2.44 lakhs |
| Kotak Emerging Equity Scheme – Direct – Growth | London | 2.53 lakhs | 6 years | 19.1% | 90000 | 2.57 lakhs |
| HDFC Small Cap Fund – Direct – Growth | Tokyo & Shanghai | 2.96 lakhs | 7 years | 19.2% | 87000 | 2.97 lakhs |
| Parag Parikh Long Term Equity Fund – Direct – Growth | Singapore | 1.71 lakhs | 8 years | 17.6% | 47000 | 1.72 lakhs |
| ICICI Prudential Banking and Financial Services Fund – Direct – Growth | Paris, Prague, Zurich and Madrid | 3.91 lakhs | 9 years | 19.2% | 81000 | 3.94 lakhs |
| L&T Midcap Fund | Dubai | 1.48 lakhs | 10 years | 21.2% | 22000 | 1.50 lakhs |
Note: To avoid any biases, we have taken the returns that these funds have generated since inception
1.ICICI Prudential Bluechip Fund – Direct
Launched in 2013 and led by one of the pioneers in the asset management industry Mr. S Naren, ICICI Prudential Bluechip Fund can be considered as one of the few best large-cap funds present in the industry.
This fund has a strong track record of robust performance. It has beaten its benchmark NIFTY 100 TRI since inception.
Key Information
| Launch Date | 01 – Jan – 2013 |
| AUM (Size) | 20,101 crores |
| Minimum SIP | 100 |
| Minimum for First Investment | 100 |
| Performance w.r.t its benchmark | Has beaten the benchmark NIFTY 100 TRI over consistent periods of time |
| Age of the fund | 6 years |
| Expense Ratio | 1.26% |
| Turnover | 98% |
| Exit Load | If the fund is redeemed between 0 to 12 months, exit load is 1% |
| Type | Large Cap |
| Fund Manager | Anish Tawakley, Rajat Chandak, Priyanka Khandelwal |
Top 10 Holdings
| Name | Sector | Instrument | % of Assets |
| HDFC Bank Ltd. | Financial Services | Equity | 6.9% |
| ICICI Bank Ltd. | Financial Services | Equity | 5.9% |
| RBI | Financial Services | T-Bills | 5.0% |
| Infosys Ltd. | IT | Equity | 4.9% |
| Axis Bank Ltd. | Financial Services | Equity | 4.4% |
| HDFC Ltd. | Financial Services | Equity | 4.1% |
| ITC Ltd. | FMCG | Equity | 4.0% |
| Bharti Airtel | Communication | Equity | 3.6% |
| ONGC | Energy | Equity | 3.4% |
| NTPC | Energy | Equity | 3.3% |
Holding Analysis
2.Kotak Emerging Equity Scheme – Direct
Though the fund is in the mid-cap space, the volatility for the fund is lower than that of the benchmark. The expense ratio for the fund is one of the lowest at just 0.80 percent.
The fund size is also low reflecting that there is still a long way to go. Now that mid and small cap space have corrected, we can look to invest in this scheme as the number of units allocated would be more.
Key Information
| Launch Date | 01 – Jan – 2013 |
| AUM (Size) | 3,535 crores |
| Minimum SIP | 1000 |
| Minimum for First Investment | 5000 |
| Performance w.r.t its benchmark | Has beaten the benchmark S&P BSE Mid Cap TRI over consistent periods of time |
| Age of the fund | 6 years |
| Expense Ratio | 0.80% |
| Turnover | 24% |
| Exit Load | If the fund is redeemed between 0 to 12 months, exit load is 1% |
| Type | Mid Cap |
| Fund Manager | Pankaj Tibrewal |
Top 10 Holdings
| Name | Sector | % of Assets |
| IndusInd Bank | Financial Services | 3.7% |
| Schaeffler India Ltd. | Engineering | 3.5% |
| Atul Ltd. | Chemicals | 3.0% |
| RBL Bank Ltd. | Financial Services | 2.9% |
| The Ramco Cements Ltd. | Cements | 2.8% |
| Bata India Ltd. | FMCG | 2.6% |
| Finolex Cables Ltd. | Engineering | 2.5% |
| Supreme Industries Ltd. | Chemicals | 2.5% |
| Solar Industries Ltd. | Chemicals | 2.3% |
| Godrej Agrovet Ltd. | FMCG | 2.3% |
Holding Analysis
3. HDFC Small Cap Fund – Direct
Though the fund has not given exceptional returns over the last one year; let us look at the performance of the fund as compared to the benchmark.
Over the long term, it has handsomely beaten its benchmark.
Key Information
| Launch Date | 01 – Jan – 2013 |
| AUM (Size) | 6,312 crores |
| Minimum SIP | 500 |
| Minimum for First Investment | 5000 |
| Performance w.r.t its benchmark | Has beaten the benchmark S&P BSE Smallcap TRI over consistent periods of time |
| Age of the fund | 6 years |
| Expense Ratio | 0.87% |
| Turnover | 37% |
| Exit Load | If the fund is redeemed between 0 to 12 months, exit load is 1% |
| Type | Small Cap |
| Fund Manager | Amar Kalkundrikar, Chirag Setalvad |
Top 10 Holdings
| Name | Sector | % of Assets |
| NIIT Technologies Ltd. | Technology | 3.9% |
| Sonata Software Ltd. | Technology | 3.7% |
| Aurobindo Pharma Ltd. | Healthcare | 3.6% |
| Chambal Fertilizers & Chemicals Ltd. | Chemicals | 3.2% |
| Balkrishna Industries Ltd. | Automobiles | 3.2% |
| Sharda Cropchem Ltd. | Chemicals | 3.1% |
| Bajaj Finance Ltd. | Financial Services | 2.8% |
| NRB Bearings Ltd. | Engineering | 2.8% |
| Indian Bank Ltd. | Financial Services | 2.5% |
| United Spirits Ltd. | FMCG | 2.4% |
Holding Analysis
4. Parag Parikh Long Term Equity Fund-Direct
Given the volatility of the market and constant pressure to deliver returns, the portfolio is diversified by not just restricting to Indian stocks, but also taking exposure to global stocks some of them being Alphabet Inc., Suzuki (Japan), Facebook Co. etc.
The fund managers have varied experience in fund management and equity research.
Key Information
| Launch Date | 24 – May – 2013 |
| AUM (Size) | 1,619 crores |
| Minimum SIP | 1000 |
| Minimum for First Investment | 1000 |
| Performance w.r.t its benchmark | Has beaten the benchmark S&P BSE 500 TRI over consistent periods of time |
| Age of the fund | 6 years |
| Expense Ratio | 1.40% |
| Turnover | 172% |
| Exit Load | Exit load of the fund is 2% if redeemed within 365 days. However, exit load is 1% if redeemed after 365 days but on or before 730 days |
| Type | Multi Cap |
| Fund Manager | Raj Mehta, Rajeev Thakkar, Raunak Onkar |
Top 10 Holdings
| Name | Sector | % of Assets |
| Alphabet Inc Class C | Technology | 9.7% |
| HDFC Bank Ltd. | Financial Services | 7.9% |
| Bajaj Holdings & Investment Ltd. | Financial Services | 6.6% |
| Persistent Systems Ltd. | Technology | 5.7% |
| HDFC Ltd. | Financial Services | 4.7% |
| Suzuki (Japan) | Automobile | 4.5% |
| Hero Moto Corp Ltd. | Automobiles | 4.4% |
| Facebook Co. | Technology | 4.3% |
| Balkrishna Industries Ltd. | Automobile | 3.8% |
| Axis Bank Ltd. | Financial Services | 3.3% |
Holding Analysis
5.ICICI Prudential Banking and Financial Services Fund – Direct
ICICI Prudential Banking and Financial Services Fund is one of the funds that should be considered in your portfolio.
Reason?
The Indian economy is set to grow and to sustain this growth the banking and financial services industry is the backbone. Also, the portfolio mix of the fund is such that private sector banks are more as compared to the public ones.
Key Information
| Launch Date | 01 – Jan – 2013 |
| AUM (Size) | 2,604 crores |
| Minimum SIP | 500 |
| Minimum for First Investment | 5000 |
| Performance w.r.t its benchmark | Has beaten the benchmark S&P BSE Finance TRI over consistent periods of time |
| Age of the fund | 6 years |
| Expense Ratio | 1.20% |
| Turnover | 162% |
| Exit Load | Exit load is 1% if redeemed within 15 days |
| Type | Sectoral/ Thematic |
| Fund Manager | Roshan Chutkey, Priyanka Khandelwal |
Top 10 Holdings
| Name | Sector | % of Assets |
| HDFC Bank Ltd. | Financial Services | 9.8% |
| ICICI Bank Ltd. | Financial Services | 9.3% |
| State Bank of India | Financial Services | 6.2% |
| Yes Bank Ltd. | Financial Services | 5.2% |
| Bajaj Finserv Ltd. | Financial Services | 4.0% |
| ICICI Bank Ltd. | Financial Services | 4.0% |
| HDFC Ltd. | Financial Services | 3.5% |
| IndusInd Bank Ltd. | Financial Services | 3.2% |
| Federal Bank Ltd. | Financial Services | 3.1% |
| Muthoot Finance Ltd. | Financial Services | 3.0% |
Holding Analysis
6.L&T Midcap Fund – Direct
Another 5 star rated fund in the mid-cap category is L&T Midcap fund.
Having consistently beaten the benchmark index and companies in the portfolio that are strong in fundamentals (RBL Bank, City Union, Emami Ltd., Divi’s Laboratories, Kajaria Ceramics) show that the fund managers are firm believer in India’s growth story.
Key Information
| Launch Date | 01 – Jan – 2013 |
| AUM (Size) | 3,733 crores |
| Minimum SIP | 500 |
| Minimum for First Investment | 5000 |
| Performance w.r.t its benchmark | Has beaten the benchmark S&P BSE Mid Cap TRI over consistent periods of time |
| Age of the fund | 6 years |
| Expense Ratio | 0.93% |
| Turnover | 46% |
| Exit Load | Exit load is 1% if redeemed within 1 year |
| Type | Equity – Mid Cap |
| Fund Manager | Vihang Naik, Soumendra Nath Lahiri |
Top 10 Holdings
| Name | Sector | % of Assets |
| RBL Bank Ltd. | Financial Services | 3.3% |
| City Union Bank Ltd. | Financial Services | 3.0% |
| Emami Ltd. | FMCG | 2.6% |
| Torrent Pharma Ltd. | Healthcare | 2.2% |
| The Ramco Cements Ltd. | Construction | 2.1% |
| Divi’s Laboratories Ltd. | Healthcare | 2.1% |
| Cholamandalam investment & Finance Co. | Financial Services | 2.0% |
| Kajaria Ceramics Ltd. | Construction | 2.0% |
| Abbott India Ltd. | Healthcare | 2.0% |
| Indian Hotels Co. Ltd. | Services | 2.0% |
Holding Analysis
Conclusion
Though it seems a mammoth task to travel around the world and we do think that it requires a whole lot of cash, if you plan smartly, you will be able to achieve this dream through your investments.
You should also keep in mind that there might be times in the market, when these funds might not provide adequate returns as shown. The best thing to do in this scenario is to stick with the investment.
Happy Investing!
Disclaimer: The views expressed in this post are that of the author and not those of Groww
