5 good mutual funds for the long term

How much can you expect from your mutual fund investments if you have a time horizon of 15 years? How much of your income should you invest in mutual funds?

Should you invest in mutual funds for the long term or the short term? Should you have a look at a mutual fund's rating before investing money in it?

Which are the best mutual funds available today that can give you good returns?

In a chat with readers on August 16, Get Ahead mutual fund expert T Srikanth Bhagavat discussed these and other mutual fund-related issues affecting the investors.

For those of you who missed the chat, here is the transcript.

Part II: First time investor? Opt for a mutual fund SIP

michael asked, Hello Srikanth, I am 46 yrs old and I have too many funds. I want to trim it and start SIPs on long term basis. My funds are: DSPML Opportunity, Fidelity Equity, Franklin Flexicap, FT Balance; HDFC-Equity, Top200, Prudence; HSBC-Equity, Opportunity, Midcap; ICICIPRU-Discovery, Dynamic, Emerging Star, Equity/Derivative Wealth Optimiser Growth, Fusion 5 yr close end, Power, Infrastructure, and last Reliance Vision. Please give your best advice. Many thanks.

Srikanth Bhagavat answers, You have 13 equity funds and the others in balanced etc! That is way too many. Choose the top one or two in each category. Example, in large Cap Fidelity or HDFC Equity & Vision. Then among Flexicap, Opportunities and Dynamic, you may choose DSP Opportunities and PruDynamic. Both are aggressive.

Among mid cap funds (HSBC Mid cap, Emerging Star) both are not among the top. Reliance Growth may be a better one in this category. Pru Discovery has been an underperformer. As a value fund, it is a call you have to take as to when the value will unlock. Templeton India Growth Fund has been better in the value category. Why do you need to have balanced funds? Do away with them - they do not offer much protection as they have close to 70% in equity.

shivanand asked, In mutual funds investments whether long term OR short term is preferred.. if both then on what basis we need to plan to get maximum benefit.. especially by short term investments??

Srikanth Bhagavat answers, MFs are better for long term investments. For short term, the debt funds are better than leaving money in a bank deposit. Mutual funds are not very suited to short term speculative investments.

moneysh asked, Hi! should we keep in mind funds' ratings while investing ? How much preference u give to CRISIL top rated funds?

Srikanth Bhagavat answers, Fund ratings are useful for the retail investor to judge which are the better performers on a risk adjusted basis. Apart from CRSISL, the Value Research ratings are useful, too.

moneysh asked, I want to invest in DSP ML TIGER fund through SIP. How u rate this fund?

Srikanth Bhagavat answers, There are only three INfrastructure funds with a longer track record. Tata, Pru and DSPML. All three are reasonable, but DSP is better on a risk adjusted return basis.

Jitendra asked, Now since market is going down is it wise to take mutual funds?

Srikanth Bhagavat answers, This is the best time to buy funds! Some of them are sitting on cash which they would use to buy good stocks at lower prices.

pintu asked, Hello Shrikant From return point of view how does tax plan mutual fund differ from non tax plan mutual fund?

Srikanth Bhagavat answers, The lock in of 3 years is actually useful to the fund manager to plan better and buy stocks where s/he is confident of long term gains. This has helped them deliver higher gains.

Shaik asked, please suggest which mutual fund is good for long term and where can i get more returns let us say for 15 years. Tell me the smallest starting amount how much should be invested?

Srikanth Bhagavat answers, A good diversified fund like HDFC Equity, Franklin Bluechip, Prima Plus, Fidelty and DSPML Equity should be ok. Starting from Rs 500 per month.

priya asked, i had invested in JM Contra. what is future of that? shall i invest more in that now NFO, last date passed away. or tell me which fund i can invest more?

Srikanth Bhagavat answers, Not necessary to look at NFOs only. Funds with long track records of succcess like Franklin Bluechip, Prima Plus, HDFC Equity may be considered.

mamu asked, Sir, what kind of returns can I expect if invest in MFs with an investment horizon of 15 years?

Srikanth Bhagavat answers, Equities have the potential of returning about 15% pa in the long run.

Muraleedharan asked, What percentage of my income should I put into mutual funds?

Srikanth Bhagavat answers, Upto 100%! But split that 100% among liquid funds and equity funds carefully.

sanjeev asked, hi, which are the 5 best ELSS funds if I have to Invest Rs. 1,00,000 per year for the next 10 years?

Srikanth Bhagavat answers, SBI Magnum Tax Gain, HDFC Tax Saver, Franklin Taxshield. But you do not have to choose all -- that would be too much diversification. Any one would do.

rashmi asked, Hi!I want to invest Rs 5k p.m in mf and rs.1L lump sum. pls advice where i should put?

Srikanth Bhagavat answers, If it is for long term and only equity - HDFC Equity Fund, DSPML Equity, Reliance Growth, Bluechip. Choose any one or two for your monthly plan. The lump sum can be done in three installments in any of them over the next few days.

akbasu asked, I have invested in SBI One India? should i redeem my units?

Srikanth Bhagavat answers, It is too new a fund to pass judgement. But personally I do not think the concept holds water.

timus asked, I want to invest in MF (don't need tax benefits). I would prefer a fund from SBI... can u suggest a few funds that could give me good returns in a 3-5 year period? Thanks.

Srikanth Bhagavat answers, Magnum Contra and Magnum Global.

ajju_sharma2@rediffmail.com asked, I have Rs 1 lakh in hand. Wanna invest for 8-12 months, with good returns? Is it right to invest now in MF or SIP plans? Suggest 2-3 good SIP plans?

Srikanth Bhagavat answers, 8 to 12 months will be an unpredictable period as far as equity goes. Given the correction, there are good chances of positive returns from here on. SIP works well for the long term.

Bimal asked, Hi Srikanth, Could you tell me about the timing to buy MFs?

Srikanth Bhagavat answers, Timing does not work well when it comes to MFs. Since they have a mix of stocks, different stocks perform at different periods giving the fund performance over a longer time frame. Funds are great when it comes to long term savings.