Best Mutual Funds to Invest in if You Want to Buy a Property

Factors to Remember Before Investing in Mutual Funds to buy a Property

Don't simply follow returns. Before choosing a fund that will support your investment objective.

It would be best if you kept in mind the following before investing in any Mutual Fund:

• Different Mutual Fund Categories Have Different Risk and Return Trade-Offs

One of the most important things to remember is that mutual fund segments typically have additional risk and return trade-offs. Because the risk that comes with each unique category of Mutual Funds is different, it is very challenging to determine the various levels of risk in any specific components of Mutual Funds through specific factors or scales.

• Choose the Alternative That Is Most Suitably and Properly Suitable For YOU!

Your search for the best Mutual Fund should start with assessing your risk tolerance and investment and financing objectives. For investments and capital gains that last longer than a year, invest in long-term Mutual Funds, where your money will accumulate over at least a year, but if you prefer current income, be sure to invest in short-term and hurried schemes.

• Check the Mutual Funds' Performance Consistency as the Uniformity of Return Is the Definition of Quality Funds

Before seriously considering investing in any Mutual Fund, it is also essential to assess the quality, consistency, and performance period. Consider how the scheme has performed over the past 1 to 5 years rather than focusing on how much money it has recently made. This shows whether it can provide you with steady returns or just erratic ones.

• Keep In Mind That Excessive Diversification Can Be Dangerous

It is common knowledge that "diversification reduces risk," but over-diversification does not necessarily result in greater risk mitigation. Gains won't be increased by funds beyond a minimal level of diversification.

Beginner investors should begin with the fundamentals before moving up. You run the risk of adding similar funds to your portfolio in haste, which will result in lower returns.

• It Is Highly Unlikely for You to Receive the Same Returns Every Year

Annualized returns are typically what people mean when they discuss Mutual Fund returns. This might give the impression that your returns will remain constant over time. However, consider a specific mutual fund scheme with annualized returns of 8%; this does not necessarily mean that you will earn 8% annually.

This is a result of inconsistent returns from mutual funds. For instance, a Mutual Fund scheme may offer you +10% returns in 2021 but -2% returns in 2023. There might also be instances where there aren't any returns. Therefore, you should also anticipate this variability in your annual returns.

Performance of The Above Listed Mutual Fund for Buying Property  

The performance statistics, investment goals, and other critical information about the aforementioned Mutual Funds are listed below- 

1) Axis BlueChip Fund

Axis BlueChip Fund Direct Plan-Growth is an Equity Mutual Fund Scheme launched by Axis Mutual Fund. This scheme was made available to investors on 04 Sep 2009. The scheme aims to generate long-term capital growth by investing in a diversified portfolio predominantly consisting of equity & equity-related instruments of large-cap companies.

Axis Blue Chip Fund-Direct (Growth), being an equity fund, is suitable for investors aiming for long-term capital appreciation, ideally with an investment horizon of more than five years. There is no lock-in period in this fund, however.

2) Mirae Asset Large Cap Fund

Mirae Asset Large Cap Fund Direct-Growth is an Equity Mutual Fund Scheme launched by Mirae Asset Mutual Fund. This scheme was made available to investors on 26 Apr 2019.

The scheme aims to maximize long-term capital appreciation by finding investment opportunities resulting from Indian economic growth and its structural shifts through investing in equity and equity-related securities.

3) Parag Parikh Long Term Equity Fund

Parag Parikh Flexi Cap Fund Direct-Growth is an Equity Mutual Fund Scheme launched by PPFAS Mutual Fund. This scheme was made available to investors on 10 Oct 2012.

The scheme aims to achieve long-term capital appreciation by investing primarily in equity and equity-related instruments. Bearing moderately-high risk, Parag Parikh Long Term Equity Fund Direct Plan is suitable for those looking to invest for a tenure of more than 3 to 4 years, as equity funds show their wealth creation potential in the longer run. 

4) UTI Flexi Cap Fund

UTI Flexi Cap Fund Direct-Growth is an Equity Mutual Fund Scheme launched by UTI Mutual Fund. This scheme was made available to investors on 14 Nov 2002.

The scheme seeks to generate long-term capital appreciation by investing predominantly in equity and equity-related securities of companies across the market capitalization spectrum.

5) Axis Mid Cap Fund

Axis Midcap Direct Plan-Growth is an Equity Mutual Fund Scheme launched by Axis Mutual Fund. This scheme was made available to investors on 04 Sep 2009. The scheme seeks to achieve long-term capital appreciation by investing predominantly in equity & equity-related instruments of Mid Cap companies.

As it is rated moderately high in risk, Axis mid-cap fund-direct plan is suited for investors who do not have short-term capital requirements and are ready to remain invested for at least five years or so.

6) SBI Equity Hybrid Fund

SBI Equity Hybrid Fund Direct Plan-Growth is a Hybrid Mutual Fund Scheme launched by SBI Mutual Fund. This scheme was made available to investors on 29 Jun 1987.

The scheme seeks to provide investors with long-term capital appreciation along with the liquidity of an open-ended scheme by investing in a mix of debt and equity. The scheme will invest in a diversified portfolio of equities of high-growth companies and balance the risk by investing the rest in fixed-income securities.

Conclusion

To conclude, we once again reiterate – Mutual funds are right! Be it wealth creation, fulfilling financial objectives such as children’s education or buying a house or car or any other goal such as retirement, a mutual fund is one of the instruments that fit all.

Considering the past three decades and any twenty years from it, the worst performance has been around 12-13%. Thus, it very well depicts that equities offer the best way to grow your capital compared to any other instrument.

By adopting the investment strategy detailed above, there is a high probability that you will be able to save enough to provide the desired level of capital that can fulfil your goal of home buying.

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Research Analyst - Bavadharini KS