Topic: Looking for best mutual funds with maximum returns, I am an NRI & willing to take risk,

can invest for 2-3 years?

On an average, diversified equity funds have delivered approx 12% year on year returns since last 5 years. Before deciding on which fund to invest in, you should know your risk taking ability and the time horizon of investment.

- If you are seeking more than 18% returns, this comes by taking more risk and investing for a long term horizon.

- You can consider investing in a set of diversified Equity Schemes, Large Cap Schemes and Balanced Schemes. You can invest in a combination of any two funds but avoid investing in one go. Invest your money in decided funds at different time intervals.

- Also, don’t diversify too much by investing in large number of funds because over diversification eats away the portfolio returns due to the presence of some laggard funds

Further, for an investor with moderate – high risk appetite, combination of funds such as DSP BlackRock Balanced Fund in Balanced Fund category and Sundaram BNP Paribas Select Focus Fund in the large cap category can be considered NRIs/PIOs should consider investing in Indian mutual funds directly because of the following reasons:

- Diversification – The basket of stocks available to India dedicated ETFs is limited where as Indian mutual funds can invest in large number of stocks listed on the stock exchange

- Performance – Since mid 2006, Indian mutual funds have outperformed India dedicated ETFs with a significant margin

- Taxation – There is no tax on dividend income and long term capital gains tax is zero in India when investing in Indian equity mutual funds

Invest in alternative investments(commodities etc.). they might offer better diversification and returns.

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