On KYI: Choosing the best mutual fund to suit your needs

With the market sailing stormy seas, investors are having a tough time finding an entry point for investment. Opinion at the Street seems divided on where the Nifty will go towards end of this calendar year. In such a scenario, mutual funds come across as a harbinger of hope to investors who are wary of the fluctuation at the market. But, here too, your options are many. Which fund should you choose? What is the best option available to protect your investment to the maximum extent possible?

PV Subramanyam, an experienced financial trainer answers the queries you sent us on our facebook page on this series of Moneycontrol's initiative, Know Your Investment. Check out his comments!

Fardin Khan, 22, student: Which is the best mutual funds to invest in? How much return do they give?

Ans: Mutual funds are of many types. Broadly they are divided into debt and equity. Generally, equity is for the longer term whereas debt could be for short term or long term also.

Yez Zar, 22, Programmer: I would like to invest in mutual funds. Can you recommend some names that I can look at for the long-term?

Ans: It will depend on your age, risk profile, how long is long term, tax benefits, etc. please consult an advisor who is willing to work with you.

Mahendra Ravjani, 25, Self Employed: My father (52) has taken a home loan of Rs 5 lakh in 2006 from SBI, after pre-paying Rs 50 thousand last month; the loan amount currently stands at Rs 3.58 lakh at 12.25% per annum on PLR. We have applied for the base rate and we hope it will soon change to 10.75% per annum. Our current EMI is Rs 15000 of which around Rs 4000 goes towards the interest. Every year, we can take out Rs 1 lakh from our business. Is it advisable to do the part-payment towards the home loan or should we look for some other investment taking into account the tax benefit we get on the home loan interest every year?

Ans: Let the loan continue, start doing a SIP in an equity fund - like ICICI Prudential Discovery, but please have a seven to eight year view.

Kunal Patel, 31, Businessman: I am invested in Tata Indo Global Infra Fund at 10 NAV. Should I hold it or exit it at current market price?

Ans: Exit

Hari Hara, 29: I want to invest Rs 2.5 lakh (Lumpsum) for my niece. What are your recommendations?

Ans: If you have a five-seven year view, put Rs 2 lakh in HDFC Prudence and Rs 50,000 in Franklin India Bluechip. Have at least a five-eight year view.

Umakant B Nimkar, 49: I am investing in HDFC Prudential Fund at about Rs 10,000/- every month since the last two-and-half years regularly, but have made 5% loss. Should I continue?

Ans: Yes...have a seven-nine year view at least.

Sushil Bhandari, 29: I am investing Rs 5000 a month. I have invested in SIPs of L&T and HDFC Top 200 for the last one year. Do you think I should continue this or move to other mutual funds?

Ans: L&T?? Shift to HDFC Top 200 or HDFC Prudence or even Franklin India Bluechip.

Bibekananda Panda, 22, Software Engineer: I have invested in UTI Gold and pay Rs 3,000 a month. Please tell me more details about this and what are the risks?

Ans: Gold is a single commodity, market price volatility is the risk.

Adi Bhardwaj, 20 Student: I am investing in HDFC Top 200 Growth Fund SIP at Rs 1,500 per month. Is this the best fund to invest in the long-term?

Ans: It is difficult to say 'best', but it is a very good fund with a decent track record.

Saranya Vendan, 24, Homemaker: I want to invest Rs 4,000 in four SIPs for 10 years. I have looked at HDFC Top 100 and others like midcap funds, banking, gold and pharma funds. Are these sector SIPs safe to invest in for 10 years and which fund is best to go with?

Ans: If it is Rs 4000, stick with HDFC Top 200.