Final Up to date on March 25, 2026 at 12:29 pm
These are the freefincal handpicked checklist of mutual funds. New and previous traders can use it in accordance with their particular wants. The checklist, titled “PlumbLine,” has been printed since September 2017 to assist newbies use the freefincal robo advisor software.
Most significantly, Plumbline is a mixture of my opinions, pores and skin within the recreation (the place I make investments), and quantitative picks (performance-based). For a portfolio replace, see Portfolio Audit 2025: The annual assessment of my goal-based investments or Auditing my retirement portfolio for Mint Newspapers Guru Portfolio or 17 years of mutual fund investing: My Journey and classes realized.
It’s not meant to fulfill everybody! It’s meant to match up with my integrity. Readers new to Plumbline ought to learn the next two sections fastidiously earlier than continuing to the fund names.
The target is to establish “some” funds for each potential funding period and embody them in a diversified portfolio.
If you wish to select fairness mutual funds within the classes of your selection based mostly solely on constant efficiency, or select debt funds based mostly on the standard of their portfolios, you should utilize our month-to-month fairness mutual fund, mutual debt fund, index fund, or ETF screeners.
What’s Plumbline, and the way ought to I exploit it?
A plumb line is an alignment gadget that fixes the vertical or horizontal alignment. This checklist, referred to as Plumbline, signifies the necessity for fund decisions to align with particular necessities.
1: PlumbLine is a boring checklist of mutual funds up to date each quarter. There are many good mutual funds that aren’t a part of Plumbline. In case your funds are completely different, you’re in all probability higher off. Don’t worry about it.
2: Don’t use PlumbLine to verify your decisions! PlumbLine is supposed for traders who’ve used the freefincal robo advisor software.
3: If the funds within the checklist change tomorrow, you’ll have to take a name on what you might want to do based mostly on the fund efficiency from the date you invested. I can not show you how to right here by speaking about the way to assessment.
4: This can be a handpicked checklist and can be topic to my biases. I make investments with a bias to get issues accomplished and analyse with out bias to current info. So please bear this distinction in thoughts.
5: This can be a goal-based checklist and never a category-based checklist. That’s, you’ll not discover a fund for every class. You can find no less than one fund per want (purpose and risk-taking capacity)
Disclaimer: The suggestions on this article are meant just for instructional functions. It neither constitutes analysis nor funding recommendation.
This checklist has no which means except you view it from the correct perspective and context; in any other case, it may be useful. The hope is that the robo-advisor software will present such a perspective that you simply nonetheless should course of and interpret. Lastly, I’m solely human and greater than able to making errors.
Additionally, I’m a below-average investor, fund picker or analyst. I’m not a fan of wanting into the fund portfolio. I favor funds with a slender funding mandate. I’m positive you’ll agree that almost all picks are lame and apparent; this checklist isn’t any exception and lacks any actual specialness. If the funds right here cease performing sooner or later or have credit score default points, all I can do is modify the checklist (if required). Notice: All statements about low or excessive danger are relative to different sorts of funds and never absolute.
The creator/editor of freefincal isn’t chargeable for your funding decisions, capital positive aspects, or losses. If a PlumbLine fund is current in your portfolio, it means nothing. It means nothing if none of your funds is on the PlumbLine checklist. Mutual funds (and mutual fund suggestions) are topic to ignorance and market dangers. Please learn and perceive all scheme-related paperwork earlier than investing.
FAQ on Plumbline
1. “Why are X, Y or Z funds not a part of Plumbline?” —> Plumbline is my checklist. Don’t anticipate me to make a listing that matches your expectations.
2. “The funds you’ve got listed will not be even 4-star funds”. —> I don’t care. Star rankings are injurious to your psychological and monetary well being. Comparisons with Plumbline are injurious to peace of thoughts.
3. “Plumbline doesn’t characteristic the highest funds out of your month-to-month screener “. Yeah, as a result of I don’t all the time seek the advice of it. Plumbline is a qualitative + quantitative evaluation of a fund’s funding technique, mandate and efficiency.
4. “Your checklist is biased and keen on sure funds and sure AMCs”. –> Okay then, thanks for not utilizing it.
5. If you’re a brand new mutual fund investor, obtain this Free e-book: Mutual Fund FAQ 100 important Q & A for brand spanking new traders!
Warning: By no means select any product solely as a result of its taxation is decrease. All the time take into account dangers.
Liquid Fund
Though FDs and RDs after tax make way more sense than most short-term debt funds, liquid funds and different cousins can be utilized to diversify the emergency fund or to park cash for an unknown period. Don’t anticipate an excessive amount of return, although.
- Funding Period: A Few months and above
- Fund title: Quantum Liquid Fund Direct Plan-Progress Possibility, Parag Parikh Liquid Fund
- You may as well select funds from established AMCs resembling ICICI, SBI, or HDFC.
- Nature Conservative: These funds spend money on short-term bonds as much as 91 days in maturity.
- Rate of interest danger: low. The NAV can fall if there’s a sudden mismatch between market demand and provide. For instance, in March 2020, the demand fell under the provision. The NAV also can fall if the RBI price all of a sudden will increase considerably (e.g., July 2013). In each instances, restoration would often be swift.
- Credit score danger: low
- Appropriate for Use for parking cash
- Returns: a bit greater than an SB account
- Caveats: Debt fund portfolios change every month; whereas each funds are inclined to keep away from credit score danger, traders can sometimes test the credit score high quality of the portfolio
- Disclosure: Invested in Quantum Liquid for emergencies. A tiny money phase of my retirement portfolio is right here as effectively.
- Additionally, can I exploit liquid funds for long-term objectives with fairness MFs?
- Professional tip: If the star ranking of a liquid fund bothers you, test the portfolio’s credit score high quality. Sometimes, the upper the credit score high quality, the decrease the return and, subsequently, the star ranking. There won’t be a lot distinction in returns between a five-star-rated fund and a one-star-rated fund on this class. So select correctly.
Fairness Arbitrage
Arbitrage funds can be utilized as a tax-efficient manner of parking cash. Nonetheless, they’ve some dangers which will not be simple to understand. Additionally, these funds want bond help to bolster returns, because the Indian market has matured.
- Period 1Y and above (by no means use for shorter-term). Don’t anticipate a lot return from these simply because the tax is beneficial!
- Nature: These are hybrid funds now! They will make investments as much as 35% in bonds! Nearly all of the portfolio (65% plus) is arbitrage-like, resembling “money and carry arbitrage” (linked under). The funds have debt fund-like volatility by development. Risky for lower than a yr. Quarterly returns could be detrimental. Risky when the market is turbulent.
- Replace Feb 2026: Publicity in debt devices shall be restricted to the federal government securities with a maturity of lower than 1 yr, in addition to repo of
authorities bonds solely - The fund talked about under is nothing particular. It’s talked about greater than a suggestion as a result of it’s what I exploit. For alternate options, use our debt mutual fund screener.
- Fund title: ICICI Fairness Arbitrage Fund-Direct Plan Progress Possibility. (There’s nothing particular about this.) You may as well take into account the Parag Parikh Arbitrage Fund Direct Plan Progress possibility.
- Notice: There won’t be a lot distinction in danger and reward between a 5-star arbitrage fund and a 3-star rated one.
- Rate of interest danger: low. Relevant to the bond a part of the portfolio.
- You should use our debt fund screener to test the portfolio of those funds.
- Different dangers: Unsure durations, resembling after a crash, might cut back arbitrage alternatives and returns. For those who select the funding period proper, the primary danger would be the fund delivering a lower-than-expected return. So anticipate much less!
- Appropriate for parking cash, medium-term objectives and producing revenue. See: Producing tax-free revenue from arbitrage mutual funds.
- Returns are anticipated to be about 4-6% ish pre-tax.
- Con: Advanced product. You have to perceive how the product works. Do this: How Arbitrage Mutual Funds Work: A easy introduction.
- Disclosure: ICICI Fairness Arbitrage is a part of my son’s schooling purpose’s debt portfolio. My spouse additionally makes use of it individually as a part of our emergency fund.
Passive Debt Fund
This can be a good selection for even long-term portfolios for traders who want to keep away from an excessive amount of volatility (from, for instance, gilt funds)
- Period: Not less than 5 years (with some primary consciousness of debt funds). Skilled and risk-aware traders can take into account shorter durations.
- Conservative possibility for long run objectives. Those that favor decrease volatility than gilt funds can select this. This additionally means truthful, reasonable returns about 7%-ish
- Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Quick Period Index Fund
- Not appropriate for 1Y or 2Y objectives! May very well be unstable.
- Edelweiss Quick Period Index Fund: Who can make investments?
Cash market
- Period 1Y and above
- Funds: ICICI Pru Cash Market Fund. See Evaluate: When & the way to use it. HDFC Cash Market Fund.
- That is one class the place the fund portfolios’ credit standing profiles differ little. So, there may be nothing particular concerning the above funds.
- Nature: Conservative. Anticipate day-to-day NAV fluctuations pushed by demand and provide. These funds are invested within the cash market, the place money is the commodity. The bonds are short-term (low rate of interest danger).
- Credit score danger is comparatively low, however defaults are potential.
- Rate of interest danger: low (resulting from traders pulling out from the debt market, these funds fell about 1% from Eleventh- twenty fifth March however recovered when the RBI eliminated extra liquidity by shopping for bonds and reducing charges by March 27 2020)
- Appropriate for saving cash, producing revenue, and for short- to medium-term objectives
- Returns A bit extra return than liquid funds, typically akin to arbitrage funds
- Disclosure: I’ve not invested as it’s pointless for my wants.
Gilt Lengthy-Time period
Traders should recognize that these funds are additionally dynamic bond funds and may have variable rates of interest, durations, and demand-supply dangers. This may take a look at the endurance of most traders, particularly these used to good FD-like returns.
- HDFC Gilt Fund Direct Plan-Progress Possibility
- ICICI Pru Gilt Fund Direct Plan-Progress Possibility
- SBI Gilt Fund Direct Plan-Progress Possibility
- Every fund on this class would have its personal model. So, traders should research the funding model historical past within the factsheets earlier than investing. See: How to decide on a gilt mutual fund.
- Appropriate just for long-term objectives. For first-time traders, take into account a 10-year or long term. The NAV will fluctuate quickly.
- It can provide years of poor returns! Solely for many who are affected person!
- Disclosure: I’m invested within the ICICI Gilt fund. See: Why I partially switched from ICICI Multi-Asset Fund to ICICI Gilt Fund.
Debt-oriented hybrid funds
This can be a good selection for long-term objectives if traders are prepared to tackle extra danger than the passive funds or gilt funds advised above.
- Parag Parikh Conservative Hybrid Fund Direct Plan-Progress Possibility (taxed as per slab)
- It may be used as a substitute for gilt funds* as a debt part in a long run portfolio. We propose utilizing it for 5Y or longer durations.
- *This fund invests in long-term state authorities bonds + a small quantity of fairness + a small quantity in REITs. Throughout inventory market crashes, the NAV will fall! So be ready for this. The NAV can be unstable even on regular days!
- Additionally see: Who ought to spend money on Parag Parikh Conservative Hybrid Fund?
- Parag Parikh Dynamic Asset Allocation Fund (Features from models bought on or earlier than 2Y are short-term positive aspects and taxed as per the slab, and positive aspects from older models are taxed at 12.5%)
- This may increasingly or might not outperform the conservative hybrid fund. See: Can I exploit Parag Parikh Dynamic Asset Allocation Fund as a debt fund for a long-term purpose?
- Disclosure: I’m invested within the conservative hybrid fund for each my retirement and my son’s future objectives. Nonetheless, after the latest tax legislation modifications, I’ve redirected future investments into the dynamic asset allocation fund for my retirement portfolio.
Hybrid Funds (equity-oriented)
- Period: Deal with all such funds as pure fairness funds, so they’re strictly long-term. Use our robo software for allocation.
- The next funds have a constant observe file in opposition to the Crisil Hybrid 65:35 Index.
- ICICI Prudential Fairness & Debt Fund – Direct Plan-Progress
- Canara Robeco Fairness Hybrid Fund – Direct Plan-Progress
- Mirae Asset Hybrid Fairness Fund
- SBI Fairness Hybrid Fund Direct Plan-Progress possibility
- ICICI Multi-asset Fund Direct Plan-Progress possibility (this holds a minimal of 10% of gold (or Silver or commodity derivatives) and 10% of bonds always, however is equity-oriented resulting from legacy; I’ve been an investor on this fund because it was ICICI Dynamic Fund. The fairness allocation can be decided utilizing an in-house mannequin just like that used of their month-to-month reality sheets and for funds like ICICI Balanced Benefit.
- Those that wish to spend money on gold for “diversification” can take into account this multi-asset fund.
- Danger is barely decrease than that of diversified fairness funds, so deal with them as pure fairness.
- Disclosure: I’m invested in ICICI Multi-asset for my son’s future portfolio.
Flexi-cap
- Fund title: Parag Parikh Flexicap Fund (legacy entry)
- Notice: This suggestion is for present traders solely! They will proceed to carry till the efficiency is passable. We suggest that new traders go for index funds.
- For those who select an energetic fund on this class, a big midcap or large-cap-oriented flexicap can be higher. Nonetheless, anticipate durations of underperformance. Our month-to-month energetic fairness fund screener may also help you select a constant performer.
- Disclosure: I’ve been invested within the Parag Parikh Flexicap Fund since its NFO stage for retirement. For a portfolio replace, see 17 years of mutual fund investing: My Journey and classes realized.
- Danger: There’s an excessive amount of reliance on the fund supervisor. All funds expertise ups and downs in efficiency. This fund is simply too younger to have seen a dip in efficiency. Like all funds, it should inevitably expertise a tough patch.
- Warning: The fund’s AUM has elevated considerably. Whether or not this impacts the efficiency instantly or not, it limits the fund supervisor’s capacity to churn (whether or not he needs to or not is one other matter). So don’t anticipate this fund’s previous efficiency to repeat!
- See: Will Parag Parikh Flexi Cap Fund’s giant AUM have an effect on its efficiency?
- If the final two factors fear you, persist with an index fund.
Giant Cap
- Period: Strictly long-term with correct asset allocation. Use our robo software for allocation.
- UTI Nifty Index Fund-Direct Plan-Progress Possibility or
- HDFC Sensex Index Fund-Direct Plan-Progress Possibility or
- HDFC Index Fund-NIFTY 50 Plan(G)-Direct Plan
- Traders also can select Nifty 100, Nifty 500, or Nifty LargeMidcap 250 index funds. Nonetheless, they should have the correct expectations. See:
- You may as well choose an index fund from our month-to-month index fund monitoring error screener.
- Who ought to use it? For those who want to undertake a passive investing technique (remove fund supervisor dangers) and wish to observe a much less unstable large-cap index.
- Energetic funds present draw back safety extra typically than they beat the index. Index funds don’t present draw back safety (falling under the index) or upside efficiency (rising above the index). Whether or not that is necessary or not is as much as you. I goal to undertake a extra balanced method to passive investing. Energetic or passive, what issues is an efficient monetary plan, the correct asset allocation and the correct danger administration technique. See: Energetic vs passive investing: the bottom actuality
- What we do know for positive is that about 50% of funds in every class battle to beat the index. On the very least, this situation is prone to proceed in future. Due to this fact, select passive funds provided that you recognize that selecting future energetic fund winners is not possible.
It must be no shock that there aren’t any energetic giant cap funds on our checklist: Solely 5 Giant Cap funds have comfortably crushed the Nifty 100. So there is no such thing as a level in utilizing an energetic giant cap fund anymore.
Mid cap & Small Cap
Small cap funds could be fairly irritating to carry. They lose virtually all of the positive aspects from a bull run within the subsequent bear run. So our suggestion is to keep away from them altogether. See:
Sadly, opposite to fashionable opinion, mid cap mutual fund managers battle to beat the index. See:
Due to this fact, we don’t suggest any particular funds right here. I consider that almost all traders require little publicity to those classes from a Versatile-Cap or aggressive hybrid fund.
Seek the advice of the newest fairness mutual fund screener for constant performers amongst energetic mid-cap or small-cap funds.
- For those who want to spend money on energetic small cap funds, we consider blind SIPs are inefficient. Periodic profit-booking could also be crucial. As well as, you might take into account tactical entry.
- Period: Strictly long-term with correct asset allocation. Use our robo software for general allocation.
- Allocation: Don’t exceed 40-50% inside the fairness portion. Your midcap + smallcap allocation mustn’t exceed 40-50% of your fairness allocation. For instance, 60% giant cap + 30% midcap + 10% small cap (in the event you should!). A big cap-dominated portfolio is advisable.
What a couple of passive mid cap or small cap possibility?
- A passive small cap index fund is a horrible thought. The index underperforms the mid cap index more often than not. See: Nifty vs Nifty Subsequent 50 vs Nifty Midcap 150 vs Nifty Smallcap 250: Return Comparability Sep 2025
- So then a midcap index fund? In precept, sure, however these funds haven’t been examined in turbulent markets. Additionally, how they behave when their AUM will increase is one thing I’ve questioned. Will probably be arduous to purchase and promote giant mid cap (or small cap shares), particularly in unstable situations, because the impression prices can be excessive.
- So I might suggest utilizing a Nifty Subsequent 50 index fund because it behaves like a mid cap index. See: Warning! Nifty Subsequent 50 is NOT a big cap index!
- You may select funds like UTI Nifty Subsequent 50 Direct Plan Progress Possibility or ICICI Nifty Subsequent 50 Direct Plan-Progress Possibility.
Closing Remarks
The fund names talked about above are of little use in case your investments will not be aligned along with your objectives and also you have no idea the way to consider them systematically. We suggest that traders establish their objectives, select an appropriate asset allocation plan, and take into account their funding choices. Here’s a information to performing a portfolio audit.
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Dr M. Pattabiraman (PhD) is the founder, managing editor and first creator of freefincal. He’s an affiliate professor on the Indian Institute of Know-how, Madras. He has over 13 years of expertise publishing information evaluation, analysis and monetary product growth. Join with him through Twitter(X), LinkedIn, or YouTube. Pattabiraman has co-authored three print books: (1) You could be wealthy too with goal-based investing (CNBC TV18) for DIY traders. (2) Gamechanger for younger earners. (3) Chinchu Will get a Superpower! for youths. He has additionally written seven different free e-books on varied cash administration subjects. He’s a patron and co-founder of “Payment-only India,” an organisation selling unbiased, commission-free, AUM-independent funding recommendation.
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