Best Diversified Funds to Invest

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A diversified fund invests in equities and equity related instruments irrespective of their market capitalization or sectoral affiliation. A diversified fund has the flexibility to increase or decrease its exposure to large-caps, mid-caps, and small-cap investments depending on the fund manager’s perception of the market conditions and future market expectations. Given below is a list of best diversified funds in 2020.

Best Diversified Mutual Funds

Fund Page	AUM (Cr)	1-Year	3-Year	5-Year
Parag Parikh Long Term Equity Fund – Direct Plan – Growth	2,925	-1.30%	6.66%	8.05%
Kotak Standard Multicap Fund – Direct Plan – Growth	26,049	-14.44%	-0.75%	6.35%
Canara Robeco Equity Diversified – Direct Plan – Growth	1,587	-5.78%	3.28%	5.77%
Edelweiss Multi-Cap Fund – Direct Plan – Growth	489	-14.91%	-1.01%	5.00
Mirae Asset India Equity Fund	15,347	-14.83%	0.34%	6.24%
Motilal Oswal Multicap 35 Fund	10,237	-17.72%	-4.47%	4.83%
SBI Magnum Multicap Fund	7,912	-16.59%	-1.86%	5.08%
Aditya Birla Sun Life Equity Fund	9,861	-15.39%	-2.62%	5.13%
IDFC Focused Equity Fund	1,206	-11.08%	-0.99%	3.92%

(Data as on May 18, 2020; Source: Value Research)

Parag Parikh Long Term Equity Fund – Direct Plan

Parag Parikh Long term equity fund generated a return of 8.05% over the benchmark of 3.27% in the 5 year period.

• The fund performed exceptionally well in the 3 year period yielding returns of 6.66%. Both the returns exceeded their benchmarks by around 2% and 3% in the 3 year and 5 year periods.
• The fund has invested over 96% of its assets in equity, 3.5% in cash and cash equivalents and the remaining in debt and other securities.
• 66.48% of the fund’s assets have been invested in large cap stocks, while the remaining in mid cap and small cap stocks.
• Major allocation of funds has been done in the financial sector (27.21%), followed by Technology (29.61%) and Automobile (12.85%). The 3 top holdings include companies like Alphabet Inc Class C (9.8%), HDFC Bank (7.8%), and Bajaj Holdings & Inv (5.9%). 

(Data as on May 18, 2020, Source: Value Research)

Kotak Standard Multicap Fund- Direct Plan

During the 5 year period, the fund gave a return of 6.35%, against a benchmark return of 3.27%. And in the 7 years period, the fund generated remarkable returns of 12.90%; around 3% higher than its benchmark.

• The fund has invested around 92.7% of its assets in equity while the remaining has been allocated to debt, cash and cash equivalents.
• Around 72.66% of the fund’s stocks are invested in large cap, 25.46% in mid cap and the remaining 1.9% in small cap stocks.
• The top 3 holdings of the fund are ICICI Bank, Reliance Industries, and HDFC Bank. The fund seems to be inclined towards the financial sector, by having investments of around 29.36% in the finance, followed by 15.78% in energy and 12.17% in construction.

(Data as on May 18, 2020, Source: Value Research)

Canara Robeco Equity Diversified Fund- Direct Plan

Canara Robeco Equity Diversified Fund has been observed to yield remarkable returns over 5 year and 7 year time periods. The fund generated a return of 3.28% in the 3 year period, which is almost 5% more than its benchmark.

• Over the 5 year time period, the fund generated a return of 5.77% against its benchmark return of 3.27%. During the 7 year period, the fund’s returns (10.17%) were around 4% more than what its benchmark offered.
• The fund has around 74.55% of its stocks invested in large cap, 22.5% in mid cap and the remaining in small cap stocks.
• Top sectoral holdings of the fund include major investment in the financial sector (27.3%), Healthcare (9.9%), and Energy (9.9%).
• Top holdings include HDFC Bank (6.9%), ICICI Bank (5.9%) and Infosys (4.7%). The fund has invested around 95% of its assets in Equity, while the remaining 5% has been invested in cash and cash equivalents.

(Data as on May 18, 2020, Source: Value Research)

Edelweiss Multicap Fund- Direct Plan

The fund generated a return of -14.91% over the 1 year period and -1.01% over the 3 year period, against the benchmark return of -16.72% and -2.13% respectively.

• Edelweiss Multicap Fund aims to generate long term capital appreciation from a diversified portfolio that constitutes 96% of equity and equity-related securities. The remaining assets have been invested in debt.
• The fund’s 68.2% of the stocks have been invested in large cap, 22.16% in mid cap and the remaining 9.55% in small cap.
• The fund has invested about 32.5% of its assets in the financial sector, 10.74% in the construction sector, and 8.6% in the FMCG sector.
• Edelweiss Multicap fund has been inclined majorly towards the financial sector, corresponding to which the fund’s top 3 holdings include HDFC Bank (9.9%), ICICI Bank (5.9%), and Reliance Industries (6.2%).

(Data as on May 18, 2020, Source: Value Research)

Should you Invest in Diversified Funds?

The key benefit of a diversified fund is its potential to contain volatility as a result of its diversified investment portfolio which helps distribute the equity investment risk across multiple investments. Additionally, as these schemes invest primarily in equities, they have the potential of delivering high returns, especially in the long term. Since equity investments are inherently risky in nature, you must consider investing in diversified funds if you have moderate to high-risk tolerance. Know more about mutual fund investment risks.