Table of Contents
Mutual Funds Vs Stocks
Mutual Funds or stock markets directly – where to invest, is one of the oldest debates when it comes to personal Wealth Management. Mutual funds allow you to invest a certain amount in a fund where the fund managers use their expertise to invest a client’s money in a variety of stocks to achieve the highest rate of return. Investing in stock markets gives you greater control over the investment on shares is made by the user. However, it makes them more prone to risks as they have to directly deal with the markets.
Difference: Mutual Funds Vs Stocks/Shares
1. Understanding Mutual Funds and Stocks
When compared on a risk Factor, stocks happen to be far riskier than mutual funds. The risk in mutual funds is spread across and hence reduced with the pooling in of diverse stocks. With stock,s one has to extensive research before investing, especially if you are a novice investor. Visit fincash for more details on the various areas of investments. In the case of mutual funds, the research is done, and the fund is managed by a mutual fund manager.
This service though is not free and comes with an annual Management Fee that is charged by the fund house under Total Expense Ration (TER).
2. When investing as a beginner
If you are a new investor with little or no experience in the financial markets, it is advisable to start with mutual funds as not only the risk is comparatively lesser but also because the decisions are made by an expert. These professionals have the insight to analyze and interpret financial data to gauge the outlook of a prospective investment.
3. Associated Costs
Though you have to pay a fee to mutual fund managers unlike in the case of stocks that you buy individually, the Economies of Scale also come into play. It is true that active management of funds is an affair that does not come free of cost. But the truth is that due to their large size, mutual funds pay only a small fraction of the brokerage charges that an individual shareholder pays for brokerage. Individual investors also have to pay the charges for DEMAT which is not needed in the case of mutual funds.
4. Risk and Return
It is already established that mutual funds have the advantage of reducing the risk by diversifying a Portfolio.
Stocks on the other hand are vulnerable to the Market conditions and the performance of one stock can’t compensate for the other.
5. Short Term Capital Gain
Remember when investing in stocks, you will be liable to pay 15 percent tax on your short term Capital gains (STCG) if you sell your stocks within a span of one year. On the other hand, there is no tax on capital gains on the stocks that are sold by the fund. This can mean substantial benefits for you. The tax saved is also available for you to invest it further thus making way for further Income generation through investment. But you will have to hold on to your equity for more than a year in order to avoid paying that short-term capital gains tax.
6. Long Term Capital Gain
Long Term Capital Gain (LTCG) is taxed at 10% for gains exceeding 1 Lakh gain (As announced in Budget of 2018). which means one has to pay tax on gains incurred in period over an year (Long term) if amount exceeds 1 Lakhs in a year at a Flat rate of 10%.
7. Control on your investment
In the case of mutual funds, the decision pertaining to the choice of stocks and their trading is solely in the hands of the funds manager. You do not have control over which stock is to be picked and for what duration. As an investor, if you invest in Mutual Funds you do not have the option to exit from some stocks that are in your portfolio. The decisions pertaining to the fate of the stocks rest in the hands of the fund manager. This way, an individual investing in stocks has more control over their investment than an investor who invests in mutual funds.
8. Diversification
A well-diversified portfolio should include at least 25 to 30 stocks but that would be a huge ask for a small investor. With mutual funds, investors with small funds can also get a diversified portfolio. Buying units of a fund allows you to invest in multiple stocks without having to invest a huge corpus.
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9. Time and Research
When you invest directly, you will need to invest a lot more time and research into your stock while in the case of mutual funds you can be passive. The fund manager is the one who invests his time to manage your portfolio.
10. Investment Tracking
With an investment in mutual funds, you have the benefit of a fund manager who has extensive expertise and experience in the field. Whether it is picking the stocks or monitoring them and making allocations, you do not have to worry about any of it. This service is not available in the case of stock investments. You are responsible for picking and tracking your investment.
11. Investment Horizon
When investing in mutual funds, remember that you will have to give the funds at least 8-10 years to generate good returns as these have a longer-term growth trajectory. In the case of stocks, you can get quick and good returns if you choose the right stocks and sell them at the right time.
Despite all of this if the stock market and its intricacies are something that an individual is familiar with, they can invest directly. They must be ready to play a long term game where a stock doesn’t provide immediate returns and must also have an increased appetite for risk. Unlike investors in mutual funds, they do not have the expertise on Smart investment which fund managers can provide. Even in the best of times, investment in stocks is a risk. In comparatively tougher times, it is better to invest in mutual funds due to the advantage of portfolio diversification, professional management and constant monitoring.
The choice between mutual funds or stocks generally boils down to personal factors like trust and an individual’s ability to take risks. It is a decision to be taken with the utmost of thought with all the options carefully weighed down. However what is important for an individual is the decision to plunge into personal wealth management and attempt to make their savings useful through either mutual funds or stocks, rather than simply sitting on it.
Top Equity MF investments FY 24 - 25
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2023 (%) Nippon India Small Cap Fund Growth ₹180.917
↑ 0.99 ₹61,027 0.7 15.2 35.3 30.2 36.9 48.9 Motilal Oswal Midcap 30 Fund Growth ₹112.297
↑ 0.63 ₹20,056 9.1 29.3 63.4 36.6 33.6 41.7 L&T Emerging Businesses Fund Growth ₹91.3015
↑ 0.34 ₹17,306 4 16.7 34.4 28 32.4 46.1 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 6 Dec 24
*Below is the list of best mutual funds based on 5 year CAGR/Annualized and AUM > 100 Crore.
The primary investment objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related instruments of small cap companies and the secondary objective is to generate consistent returns by investing in debt and money market securities. Nippon India Small Cap Fund is a Equity - Small Cap fund was launched on 16 Sep 10. It is a fund with Moderately High risk and has given a Below is the key information for Nippon India Small Cap Fund Returns up to 1 year are on (Erstwhile Motilal Oswal MOSt Focused Midcap 30 Fund) The investment objective of the Scheme is to achieve long term capital appreciation by investing in a maximum of 30 quality mid-cap companies having long-term competitive advantages and potential for growth. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved. Motilal Oswal Midcap 30 Fund is a Equity - Mid Cap fund was launched on 24 Feb 14. It is a fund with Moderately High risk and has given a Below is the key information for Motilal Oswal Midcap 30 Fund Returns up to 1 year are on To generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity related securities, including equity derivatives, in the Indian markets with key theme focus being emerging companies (small cap stocks). The Scheme could also additionally invest in Foreign Securities. L&T Emerging Businesses Fund is a Equity - Small Cap fund was launched on 12 May 14. It is a fund with High risk and has given a Below is the key information for L&T Emerging Businesses Fund Returns up to 1 year are on 1. Nippon India Small Cap Fund
CAGR/Annualized return of 22.6% since its launch. Ranked 6 in Small Cap category. Return for 2023 was 48.9% , 2022 was 6.5% and 2021 was 74.3% . Nippon India Small Cap Fund
Growth Launch Date 16 Sep 10 NAV (06 Dec 24) ₹180.917 ↑ 0.99 (0.55 %) Net Assets (Cr) ₹61,027 on 31 Oct 24 Category Equity - Small Cap AMC Nippon Life Asset Management Ltd. Rating ☆☆☆☆ Risk Moderately High Expense Ratio 1.55 Sharpe Ratio 2.23 Information Ratio 0.95 Alpha Ratio 6.45 Min Investment 5,000 Min SIP Investment 100 Exit Load 0-1 Years (1%),1 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 30 Nov 19 ₹10,000 30 Nov 20 ₹12,157 30 Nov 21 ₹21,339 30 Nov 22 ₹24,664 30 Nov 23 ₹34,135 30 Nov 24 ₹45,838 Returns for Nippon India Small Cap Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Dec 24 Duration Returns 1 Month 0.9% 3 Month 0.7% 6 Month 15.2% 1 Year 35.3% 3 Year 30.2% 5 Year 36.9% 10 Year 15 Year Since launch 22.6% Historical performance (Yearly) on absolute basis
Year Returns 2023 48.9% 2022 6.5% 2021 74.3% 2020 29.2% 2019 -2.5% 2018 -16.7% 2017 63% 2016 5.6% 2015 15.1% 2014 97.6% Fund Manager information for Nippon India Small Cap Fund
Name Since Tenure Samir Rachh 2 Jan 17 7.84 Yr. Kinjal Desai 25 May 18 6.44 Yr. Data below for Nippon India Small Cap Fund as on 31 Oct 24
Equity Sector Allocation
Sector Value Industrials 26.53% Financial Services 13.41% Basic Materials 12.59% Consumer Cyclical 12.01% Technology 9.17% Consumer Defensive 8.08% Health Care 7.17% Communication Services 1.91% Utility 1.83% Energy 0.83% Real Estate 0.59% Asset Allocation
Asset Class Value Cash 5.18% Equity 94.82% Top Securities Holdings / Portfolio
Name Holding Value Quantity Multi Commodity Exchange of India Ltd (Financial Services)
Equity, Since 28 Feb 21 | MCX2% ₹1,206 Cr 1,851,010 HDFC Bank Ltd (Financial Services)
Equity, Since 30 Apr 22 | HDFCBANK2% ₹1,154 Cr 6,650,000 Tube Investments of India Ltd Ordinary Shares (Industrials)
Equity, Since 30 Apr 18 | TIINDIA2% ₹1,120 Cr 2,499,222 Apar Industries Ltd (Industrials)
Equity, Since 31 Mar 17 | APARINDS1% ₹905 Cr 899,271 Kirloskar Brothers Ltd (Industrials)
Equity, Since 31 Oct 12 | KIRLOSBROS1% ₹864 Cr 4,472,130 ELANTAS Beck India Ltd (Basic Materials)
Equity, Since 28 Feb 13 | 5001231% ₹827 Cr 614,625 Tejas Networks Ltd (Technology)
Equity, Since 30 Jun 17 | TEJASNET1% ₹773 Cr 5,763,697 State Bank of India (Financial Services)
Equity, Since 31 Oct 19 | SBIN1% ₹746 Cr 9,100,000 Voltamp Transformers Ltd (Industrials)
Equity, Since 30 Sep 16 | VOLTAMP1% ₹745 Cr 642,476
↓ -7,968 Dixon Technologies (India) Ltd (Technology)
Equity, Since 30 Nov 18 | DIXON1% ₹720 Cr 512,355 2. Motilal Oswal Midcap 30 Fund
CAGR/Annualized return of 25.1% since its launch. Ranked 27 in Mid Cap category. Return for 2023 was 41.7% , 2022 was 10.7% and 2021 was 55.8% . Motilal Oswal Midcap 30 Fund
Growth Launch Date 24 Feb 14 NAV (06 Dec 24) ₹112.297 ↑ 0.63 (0.56 %) Net Assets (Cr) ₹20,056 on 31 Oct 24 Category Equity - Mid Cap AMC Motilal Oswal Asset Management Co. Ltd Rating ☆☆☆ Risk Moderately High Expense Ratio 0.66 Sharpe Ratio 2.88 Information Ratio 1.19 Alpha Ratio 19.69 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-1 Years (1%),1 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 30 Nov 19 ₹10,000 30 Nov 20 ₹10,587 30 Nov 21 ₹16,512 30 Nov 22 ₹19,659 30 Nov 23 ₹25,566 30 Nov 24 ₹40,921 Returns for Motilal Oswal Midcap 30 Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Dec 24 Duration Returns 1 Month 5.1% 3 Month 9.1% 6 Month 29.3% 1 Year 63.4% 3 Year 36.6% 5 Year 33.6% 10 Year 15 Year Since launch 25.1% Historical performance (Yearly) on absolute basis
Year Returns 2023 41.7% 2022 10.7% 2021 55.8% 2020 9.3% 2019 9.7% 2018 -12.7% 2017 30.8% 2016 5.2% 2015 16.5% 2014 Fund Manager information for Motilal Oswal Midcap 30 Fund
Name Since Tenure Ajay Khandelwal 1 Oct 24 0.08 Yr. Niket Shah 1 Jul 20 4.34 Yr. Santosh Singh 1 Oct 24 0.08 Yr. Rakesh Shetty 22 Nov 22 1.94 Yr. Sunil Sawant 1 Jul 24 0.34 Yr. Data below for Motilal Oswal Midcap 30 Fund as on 31 Oct 24
Equity Sector Allocation
Sector Value Consumer Cyclical 28.84% Technology 25.23% Industrials 22.07% Financial Services 9.82% Health Care 5.2% Basic Materials 3.46% Real Estate 2.4% Communication Services 0.59% Asset Allocation
Asset Class Value Cash 2.4% Equity 97.6% Top Securities Holdings / Portfolio
Name Holding Value Quantity Coforge Ltd (Technology)
Equity, Since 31 Mar 23 | COFORGE10% ₹1,982 Cr 2,600,000
↑ 350,000 Kalyan Jewellers India Ltd (Consumer Cyclical)
Equity, Since 29 Feb 24 | KALYANKJIL9% ₹1,905 Cr 28,983,719
↑ 3,583,719 Polycab India Ltd (Industrials)
Equity, Since 30 Sep 23 | POLYCAB9% ₹1,863 Cr 2,875,000
↑ 325,000 Persistent Systems Ltd (Technology)
Equity, Since 31 Jan 23 | PERSISTENT8% ₹1,612 Cr 3,000,000
↑ 300,000 Jio Financial Services Ltd (Financial Services)
Equity, Since 31 Aug 23 | JIOFIN8% ₹1,612 Cr 50,000,000
↑ 3,226,841 Bajaj Auto Ltd (Consumer Cyclical)
Equity, Since 31 Oct 24 | 5329777% ₹1,346 Cr 1,367,958
↑ 1,367,958 Tube Investments of India Ltd Ordinary Shares (Industrials)
Equity, Since 31 Jul 20 | TIINDIA6% ₹1,210 Cr 2,700,000
↑ 232,189 Mahindra & Mahindra Ltd (Consumer Cyclical)
Equity, Since 31 Oct 24 | M&M5% ₹1,038 Cr 3,805,755
↑ 3,805,755 Voltas Ltd (Industrials)
Equity, Since 31 Oct 17 | VOLTAS4% ₹825 Cr 5,000,000 Zomato Ltd (Consumer Cyclical)
Equity, Since 30 Apr 23 | 5433204% ₹786 Cr 32,500,000
↑ 7,500,000 3. L&T Emerging Businesses Fund
CAGR/Annualized return of 23.3% since its launch. Ranked 2 in Small Cap category. Return for 2023 was 46.1% , 2022 was 1% and 2021 was 77.4% . L&T Emerging Businesses Fund
Growth Launch Date 12 May 14 NAV (06 Dec 24) ₹91.3015 ↑ 0.34 (0.37 %) Net Assets (Cr) ₹17,306 on 30 Sep 24 Category Equity - Small Cap AMC L&T Investment Management Ltd Rating ☆☆☆☆☆ Risk High Expense Ratio 1.73 Sharpe Ratio 2 Information Ratio 0.27 Alpha Ratio 0.52 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-1 Years (1%),1 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 30 Nov 19 ₹10,000 30 Nov 20 ₹10,894 30 Nov 21 ₹19,240 30 Nov 22 ₹21,023 30 Nov 23 ₹29,366 30 Nov 24 ₹38,725 Returns for L&T Emerging Businesses Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 6 Dec 24 Duration Returns 1 Month 3.4% 3 Month 4% 6 Month 16.7% 1 Year 34.4% 3 Year 28% 5 Year 32.4% 10 Year 15 Year Since launch 23.3% Historical performance (Yearly) on absolute basis
Year Returns 2023 46.1% 2022 1% 2021 77.4% 2020 15.5% 2019 -8.1% 2018 -13.7% 2017 66.5% 2016 10.2% 2015 12.3% 2014 Fund Manager information for L&T Emerging Businesses Fund
Name Since Tenure Venugopal Manghat 17 Dec 19 4.88 Yr. Cheenu Gupta 1 Oct 23 1.09 Yr. Sonal Gupta 1 Oct 23 1.09 Yr. Data below for L&T Emerging Businesses Fund as on 30 Sep 24
Equity Sector Allocation
Sector Value Industrials 32.47% Consumer Cyclical 15.46% Basic Materials 13.32% Financial Services 12.83% Technology 8.01% Real Estate 5.56% Health Care 3.49% Consumer Defensive 3.47% Energy 1.41% Asset Allocation
Asset Class Value Cash 1.98% Equity 98.02% Top Securities Holdings / Portfolio
Name Holding Value Quantity Apar Industries Ltd (Industrials)
Equity, Since 31 Mar 17 | APARINDS3% ₹482 Cr 505,400
↓ -130,000 Aditya Birla Real Estate Ltd (Basic Materials)
Equity, Since 30 Sep 22 | 5000403% ₹458 Cr 1,607,279 Trent Ltd (Consumer Cyclical)
Equity, Since 31 Jan 17 | 5002513% ₹440 Cr 580,400 Brigade Enterprises Ltd (Real Estate)
Equity, Since 31 Jul 19 | 5329292% ₹410 Cr 2,891,084
↓ -138,011 Techno Electric & Engineering Co Ltd (Industrials)
Equity, Since 31 Jan 19 | TECHNOE2% ₹396 Cr 2,473,042
↓ -100,000 Neuland Laboratories Limited
Equity, Since 31 Jan 24 | -2% ₹348 Cr 281,022
↓ -20,000 NCC Ltd (Industrials)
Equity, Since 28 Feb 21 | NCC2% ₹341 Cr 11,291,100 Dixon Technologies (India) Ltd (Technology)
Equity, Since 31 Jul 20 | DIXON2% ₹329 Cr 238,273 K.P.R. Mill Ltd (Consumer Cyclical)
Equity, Since 28 Feb 15 | KPRMILL2% ₹314 Cr 3,286,897 Supreme Petrochem Ltd (Basic Materials)
Equity, Since 30 Sep 16 | SPLPETRO2% ₹309 Cr 3,565,768
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