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Mutual Fund Corner: Where should I invest Rs 50 lakh for 3-5 years?

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Want to invest in mutual funds but don’t know how to go about it? Get all your mutual fund related queries answered by our expert, Manoj Nagpal, managing director and chief executive officer, Outlook Asia Capital, on our show Mutual Fund Corner.

Mutual Fund Corner: Where should I invest Rs 50 lakh for 3-5 years?
Want to invest in mutual funds but don’t know how to go about it?
Get all your mutual fund related queries answered by our expert, Manoj Nagpal, managing director and chief executive officer, Outlook Asia Capital, on our show Mutual Fund Corner.

Q: 48-year-old Guntur Prasad writes us from Pune. I want to invest around Rs 50 lakh one time in mutual funds for around 3-5 years. Please advise. I am looking at an annual return of 15-19 percent. I would like to know if there exists an insurance for my investment amount and if so, what would be the annual premium for the same.
A: Equity mutual funds have delivered returns of around 20 percent plus compounded over the last 20-25 years. Future returns cannot be extrapolated based on this as inflation and interest rates now are considerably lower. There is no formal insurance to protect capital in equity markets.
However astute investors can use derivatives but that is complex. Ideally, keep it simple, have patience, think long-term in the equity markets. Since your horizon is 3-5 years only, ideally do not take aggressive bets and prefer a balanced fund like Mirae India Hybrid Equity Fund or a large cap fund like ICICI Pru Bluechip.
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