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 ₹181.148
↑ 0.86 ₹60,373 18.4 26.3 45.7 32.1 39.1 48.9 Motilal Oswal Midcap 30 Fund Growth ₹103.465
↑ 0.20 ₹14,446 21.5 34.4 60.6 37.3 34.6 41.7 Kotak Small Cap Fund Growth ₹280.271
↓ -1.61 ₹17,507 14.4 29.6 38.4 21.8 33.9 34.8 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 5 Sep 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 (Erstwhile Kotak Midcap Scheme) The investment objective of the Scheme is to generate capital appreciation from a diversified portfolio of equity and equity related securities. Kotak Small Cap Fund is a Equity - Small Cap fund was launched on 24 Feb 05. It is a fund with Moderately High risk and has given a Below is the key information for Kotak Small Cap Fund Returns up to 1 year are on 1. Nippon India Small Cap Fund
CAGR/Annualized return of 23% 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 (05 Sep 24) ₹181.148 ↑ 0.86 (0.48 %) Net Assets (Cr) ₹60,373 on 31 Jul 24 Category Equity - Small Cap AMC Nippon Life Asset Management Ltd. Rating ☆☆☆☆ Risk Moderately High Expense Ratio 1.55 Sharpe Ratio 2.9 Information Ratio 1.08 Alpha Ratio 8.7 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 31 Aug 19 ₹10,000 31 Aug 20 ₹11,586 31 Aug 21 ₹22,211 31 Aug 22 ₹25,577 31 Aug 23 ₹34,589 31 Aug 24 ₹51,405 Returns for Nippon India Small Cap Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 5 Sep 24 Duration Returns 1 Month 5.9% 3 Month 18.4% 6 Month 26.3% 1 Year 45.7% 3 Year 32.1% 5 Year 39.1% 10 Year 15 Year Since launch 23% 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 7.58 Yr. Kinjal Desai 25 May 18 6.19 Yr. Data below for Nippon India Small Cap Fund as on 31 Jul 24
Equity Sector Allocation
Sector Value Industrials 29.83% Financial Services 13.04% Basic Materials 11.72% Consumer Cyclical 11.64% Technology 9.44% Consumer Defensive 7.8% Health Care 7.02% Communication Services 1.59% Utility 1.45% Energy 1% Real Estate 0.31% Asset Allocation
Asset Class Value Cash 4.08% Equity 95.92% Top Securities Holdings / Portfolio
Name Holding Value Quantity HDFC Bank Ltd (Financial Services)
Equity, Since 30 Apr 22 | HDFCBANK2% ₹1,074 Cr 6,650,000 Kirloskar Brothers Ltd (Industrials)
Equity, Since 31 Oct 12 | KIRLOSBROS2% ₹1,068 Cr 4,384,076 Tube Investments of India Ltd Ordinary Shares (Industrials)
Equity, Since 30 Apr 18 | TIINDIA2% ₹1,034 Cr 2,499,222 Voltamp Transformers Ltd (Industrials)
Equity, Since 30 Sep 16 | VOLTAMP2% ₹908 Cr 672,268
↓ -121,261 Apar Industries Ltd (Industrials)
Equity, Since 31 Mar 17 | APARINDS1% ₹891 Cr 965,116 Bharat Heavy Electricals Ltd (Industrials)
Equity, Since 30 Sep 22 | 5001031% ₹867 Cr 27,500,000
↑ 2,500,000 Multi Commodity Exchange of India Ltd (Financial Services)
Equity, Since 28 Feb 21 | MCX1% ₹794 Cr 1,851,010 NLC India Ltd (Utilities)
Equity, Since 31 Oct 22 | NLCINDIA1% ₹783 Cr 27,190,940 ELANTAS Beck India Ltd (Basic Materials)
Equity, Since 28 Feb 13 | 5001231% ₹765 Cr 614,625 Karur Vysya Bank Ltd (Financial Services)
Equity, Since 28 Feb 17 | 5900031% ₹734 Cr 31,784,062 2. Motilal Oswal Midcap 30 Fund
CAGR/Annualized return of 24.8% 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 (05 Sep 24) ₹103.465 ↑ 0.20 (0.19 %) Net Assets (Cr) ₹14,446 on 31 Jul 24 Category Equity - Mid Cap AMC Motilal Oswal Asset Management Co. Ltd Rating ☆☆☆ Risk Moderately High Expense Ratio 0.66 Sharpe Ratio 3.25 Information Ratio 1.18 Alpha Ratio 16.06 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 31 Aug 19 ₹10,000 31 Aug 20 ₹10,283 31 Aug 21 ₹16,564 31 Aug 22 ₹20,787 31 Aug 23 ₹26,281 31 Aug 24 ₹42,866 Returns for Motilal Oswal Midcap 30 Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 5 Sep 24 Duration Returns 1 Month 7.1% 3 Month 21.5% 6 Month 34.4% 1 Year 60.6% 3 Year 37.3% 5 Year 34.6% 10 Year 15 Year Since launch 24.8% 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 Niket Shah 1 Jul 20 4.09 Yr. Rakesh Shetty 22 Nov 22 1.69 Yr. Sunil Sawant 1 Jul 24 0.08 Yr. Data below for Motilal Oswal Midcap 30 Fund as on 31 Jul 24
Equity Sector Allocation
Sector Value Technology 24.02% Industrials 22.62% Consumer Cyclical 16.87% Financial Services 7.62% Health Care 4.86% Basic Materials 4.39% Real Estate 2.94% Asset Allocation
Asset Class Value Cash 16.83% Equity 83.17% Top Securities Holdings / Portfolio
Name Holding Value Quantity Polycab India Ltd (Industrials)
Equity, Since 30 Sep 23 | POLYCAB10% ₹1,440 Cr 2,100,000
↑ 1,200,000 Persistent Systems Ltd (Technology)
Equity, Since 31 Jan 23 | PERSISTENT9% ₹1,329 Cr 2,750,000
↑ 32,243 Kalyan Jewellers India Ltd (Consumer Cyclical)
Equity, Since 29 Feb 24 | KALYANKJIL8% ₹1,115 Cr 19,250,000 Jio Financial Services Ltd (Financial Services)
Equity, Since 31 Aug 23 | 5439408% ₹1,100 Cr 33,500,000 Coforge Ltd (Technology)
Equity, Since 31 Mar 23 | COFORGE7% ₹946 Cr 1,500,000
↑ 350,000 Tube Investments of India Ltd Ordinary Shares (Industrials)
Equity, Since 31 Jul 20 | TIINDIA6% ₹890 Cr 2,150,000
↑ 55,138 Balkrishna Industries Ltd (Consumer Cyclical)
Equity, Since 28 Feb 23 | BALKRISIND5% ₹748 Cr 2,250,000
↑ 850,000 Dixon Technologies (India) Ltd (Technology)
Equity, Since 31 Mar 23 | DIXON4% ₹605 Cr 500,000
↑ 300,000 Zomato Ltd (Consumer Cyclical)
Equity, Since 30 Apr 23 | 5433204% ₹574 Cr 25,000,000
↓ -20,000,000 KPIT Technologies Ltd (Technology)
Equity, Since 31 Jan 23 | KPITTECH4% ₹553 Cr 3,000,000 3. Kotak Small Cap Fund
CAGR/Annualized return of 18.6% since its launch. Ranked 23 in Small Cap category. Return for 2023 was 34.8% , 2022 was -3.1% and 2021 was 70.9% . Kotak Small Cap Fund
Growth Launch Date 24 Feb 05 NAV (06 Sep 24) ₹280.271 ↓ -1.61 (-0.57 %) Net Assets (Cr) ₹17,507 on 31 Jul 24 Category Equity - Small Cap AMC Kotak Mahindra Asset Management Co Ltd Rating ☆☆☆ Risk Moderately High Expense Ratio 1.67 Sharpe Ratio 2.18 Information Ratio -0.4 Alpha Ratio 2.48 Min Investment 5,000 Min SIP Investment 1,000 Exit Load 0-1 Years (1%),1 Years and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Aug 19 ₹10,000 31 Aug 20 ₹11,657 31 Aug 21 ₹23,467 31 Aug 22 ₹25,645 31 Aug 23 ₹30,517 31 Aug 24 ₹42,877 Returns for Kotak Small Cap Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 5 Sep 24 Duration Returns 1 Month 6.2% 3 Month 14.4% 6 Month 29.6% 1 Year 38.4% 3 Year 21.8% 5 Year 33.9% 10 Year 15 Year Since launch 18.6% Historical performance (Yearly) on absolute basis
Year Returns 2023 34.8% 2022 -3.1% 2021 70.9% 2020 34.2% 2019 5% 2018 -17.3% 2017 44% 2016 8.9% 2015 7.4% 2014 74% Fund Manager information for Kotak Small Cap Fund
Name Since Tenure Arjun Khanna 30 Apr 22 2.26 Yr. Harish Bihani 20 Oct 23 0.78 Yr. Data below for Kotak Small Cap Fund as on 31 Jul 24
Equity Sector Allocation
Sector Value Industrials 35.8% Consumer Cyclical 22.37% Basic Materials 15.06% Health Care 10.05% Financial Services 3.59% Consumer Defensive 2.91% Technology 2.84% Communication Services 2.19% Real Estate 1.48% Asset Allocation
Asset Class Value Cash 3.71% Equity 96.29% Top Securities Holdings / Portfolio
Name Holding Value Quantity Techno Electric & Engineering Co Ltd (Industrials)
Equity, Since 31 Dec 18 | TECHNOE3% ₹608 Cr 3,559,792 Cyient Ltd (Industrials)
Equity, Since 31 Dec 19 | CYIENT3% ₹558 Cr 3,174,852 Blue Star Ltd (Industrials)
Equity, Since 31 May 18 | BLUESTARCO3% ₹543 Cr 3,151,576 Ratnamani Metals & Tubes Ltd (Basic Materials)
Equity, Since 31 Jan 18 | RATNAMANI3% ₹481 Cr 1,328,764 Carborundum Universal Ltd (Industrials)
Equity, Since 30 Jun 18 | CARBORUNIV3% ₹467 Cr 2,718,155
↓ -250,000 Century Plyboards (India) Ltd (Basic Materials)
Equity, Since 31 Oct 18 | 5325483% ₹450 Cr 6,353,571 Alembic Pharmaceuticals Ltd (Healthcare)
Equity, Since 31 Jan 22 | APLLTD2% ₹406 Cr 3,441,355 Great Eastern Shipping Co Ltd (Industrials)
Equity, Since 31 Aug 18 | GESHIP2% ₹396 Cr 2,851,787 V-Guard Industries Ltd (Industrials)
Equity, Since 31 Oct 18 | VGUARD2% ₹379 Cr 8,244,156 Galaxy Surfactants Ltd (Basic Materials)
Equity, Since 31 Jan 18 | GALAXYSURF2% ₹376 Cr 1,268,161
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