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Best Mutual Funds in India

Today, mutual funds have become a very popular investment tool and a preferred choice for people in India. It is because these funds get professionally managed by fund managers and have been fetching better returns in the last two decades for the investors compared to other investment options like bank FDs, PPF, NSC, etc. The mutual fund performances get continuously monitored by the specific fund managers and changes get made in the investment portfolio to ensure the fund performance is at its best to get lucrative returns at all times for the investors.

AMC or Asset Management Companies control mutual fund schemes. The company gathers money from a group of investors or individual investors and invests the same in the market-related financial instruments like equities, bonds, and securities. The investments are made as per the investment motive of the fund like capital growth, regular income etc. The mutual funds can be purchased or sold as per the current prevailing NAV (Net Asset Value), which gets updated by the AMC on daily basis.

Below are the details of some of the best performing mutual funds in India.

How to Select the Best Mutual Funds to Invest

Mutual funds that an investor should opt for differ from another investor based on several factors. An investor has to thoroughly evaluate the suitability of a mutual fund scheme to his/her unique requirements before investing in it. These factors are:

  • Investment objective: The reason behind the investment is one of the primary parameters that determine the type of mutual funds you should invest in. Are you looking for a short term gain or stable returns over the long term? If it is it for an immediate financial need, your mutual fund investments should be widely different from another investor who is planning for long term financial objectives like wealth creation, child’s education and marriage, retirement planning, etc.

  • Risk appetite: If you have a high risk appetite, you can consider equity-based mutual funds that are accompanied by high risk but high returns. However, if you have a low risk appetite, it is best that you focus more on debt mutual funds that are exposed to lesser capital market risks and yield comparatively lower returns.

  • Type of fund: After being clear about the investment objective and risk appetite, it will become easier for you to decide on the type of fund you should invest in. While equity mutual funds are accompanied by the highest risk, debt mutual funds are exposed to the least risk, and, therefore, generate the lowest returns as well. Hybrid or balanced mutual funds are balance of equity and debt mutual funds, offering medium risk and medium returns. Not just the fund type, the fund house is as important. An Asset Management Company (AMC) of repute and with a healthy claim settlement ratio assures you of your mutual fund investments being in safe hands.

  • Fund performance: One of the factors that investors often oversee is the fund performance in the last 3 years to 5 years and the estimated future performance. Though the future growth is vulnerable to market risks, the estimated future predictions of investment experts will give you a fair idea of the direction it is expected to follow.

  • Expense Ratio and Exit Load: A high Expense Ratio and Exit Load are additional charges claimed over your mutual fund investments. Hence, they eat into the profit margin generated on your investment returns. Therefore, it is best to look for mutual fund schemes that have low expense ratio and no exit load. Otherwise, you should invest in a scheme that is estimated to offer the desired returns over the time and stay invested in it during the entire tenure of its exit load.

Top Mutual Funds in India 2018

Here are some of the high performing mutual funds of 2018:

Birla SL Frontline Equity Fund

The primary goal of this mutual fund is long term growth through investment in equity. The secondary objective is to generate returns to source regular income for the investors. The estimated return on the fund is -81% after 1 year, 6.8 % after 3 years and 13.8% after 5 years. The asset under management as on 31st March 2018 is Rs.15075.08 crores.

ICICI Prudential Value Discovery Fund

The goal of this fund is to achieve income and capital appreciation through investment in diversified financial instruments. The expected return on the fund is -4.2% after1 year, 9% after 3 year and 14.1% after 5 years. The asset under management as on 31st March 2018 is Rs. 14066.47 crores.

HDFC Mid-cap Opportunities Fund

The goal of the fund is to provide capital appreciation and generate income by investing in mid cap companies. The expected return on the fund is -11.2% after 1 year, 9% after 3 years and 22.5% after 5 years. The asset under management as on 31st March 2018 is Rs.17638.27 crores.

DSP Micro Cap Fund

This fund aims to provide long term capital appreciation by investing in stocks of small cap companies. The estimated return on the fund is -19.6% after 1 year, 6% after 3 years and 26.4% after 5 years. The asset under management as on 31st March, 2018 is Rs. 5400.17 crores.

Axis Long Term Equity Fund

The objective of this fund is to generate long term capital appreciation by investing in diverse equity related securities. The estimated return on the fund is 1.2% after 1 year, 7.7% after 3 years and 19.8% after 5 years. The asset under management as on 31st March, 2018 is Rs.14939.31 crores.

Let’s have a look at the estimated fund performances of the top 10 mutual funds in the illustration below (as per Oct 26, 2018):

Names of Mutual Fund SchemesMutual Fund Category1-Y Return %3-Y Return %5-Y Return %
Birla SL Frontline Equity FundLarge Cap Fund-8.16.813.8
ICICI Pru Value Discovery FundValue Fund-4.29.014.1
HDFC Mid Cap Opportunities FundMid Cap Fund-11.29.022.5
DSP Micro Cap FundSmall Cap Fund-19.66.026.4
Axis Long Term Equity FundELSS -1.27.719.8
SBI Nifty Index FundIndex Funds/ETFs-2.47.110.4
L & T Tax Advantage FundLong Duration Fund-7.49.916.1
Canara Robeco Gilt PGSSGilt Fund0.97.28.9
Reliance Dynamic Bond FundDynamic Bond Fund0.25.97.8

Best Mutual Funds to Invest in India

Based on Performance Top Mutual Funds for 2018

Reliance Small-Cap Fund

The primary objective of this scheme is to generate long term capital growth by investing in equity related securities of small cap companies. The secondary objective is to generate regular income by investing in debt securities and money market instruments. The return on the fund overtime is 1 year 7.9%, 3 year 19.4% and 5 year is 35.1%. The asset under management as on 31st March, 2018 is INR 5565.14 crores.

Mirae Asset Emerging Bluechip Fund

The basic investment objective is to generate long term growth and income by investing in securities of large and mid-cap companies. The return on the fund overtime is 1 year 4.5%, 3 year 16.8% and 5 year is 30.6%. The asset under management as on 31st March, 2018 is INR 4371.48 crores.

Most Focused Multi-cap 35 Fund

  • HDFC Mid-Cap Opportunities Fund: The prime investment objective of this fund is to generate long term capital appreciation and income by investing in mid-cap companies. The return on the fund overtime is 1 year 6.5%, 3 year 14.5% and 5 year is 26.4%. The asset under management as on 31st March, 2018 is INR 17638.27 crores.

  • Mirae Asset India Opportunities Fund: The basic investment objective of this scheme is to generate long term capital appreciation by investing in equity and equity related securities. The return on the fund overtime is 1 year 9.6%, 3 year 13% and 5 year is 21.4%. The asset under management as on 31st March, 2018 is INR 4873.89 crores.

Reliance Tax Saver Fund

The basic investment objective for this scheme is to generate long term capital growth by investing in equity related securities and also provide tax rebate. The return on the fund overtime is 1 year -7.3%, 3 year 5.2% and 5 year is 20.1%. The asset under management as on 31st March, 2018 is INR 9729.27 crores.

Birla Sun life Tax Relief 96

This ELSS scheme investment objective is to provide long term capital appreciation by having an investment portfolio of 80% investment in equity related securities and 20% in debt and money market instruments. The return on the fund overtime is 1 year 13.4%, 3 year 13.5% and 5 year is 22.7%. The asset under management as on 31st March, 2018 is INR 4539.51 crores.

FAQs on Best Mutual Funds to Invest

Can ELSS investments be done through SIP?

Yes, you can invest in an ELSS scheme through SIP, if you plan to pay the premiums in easy instalments. Alternatively, you can pay a lump sum amount at the time of making the investment.

Can I buy mutual funds without a broker?

Yes, you can invest in mutual fund without a broker. This is possible through the offline as well as the online platforms. If you prefer the offline platform, you can visit any branch of your selected fund house to make a mutual fund investment. For online mutual fund investment, you can do the same through the official portal or mobile application of your chosen fund house.

Can you day trade mutual funds?

Mutual funds can be traded not more than once a day, as opposed to stocks and ETFs. In case you wish to enter a trade to purchase or sell mutual fund shares, your trade can only be completed at the next available NAV (Net Asset Value) after the market closes.

How do beginners invest in mutual funds?

Keep in mind the following guidelines while selecting your mutual fund:

  • Assess your investment objective; equity mutual funds meet short term financial goals, while debt and money market instruments are long term investment instruments.
  • Analyse your risk appetite; short term equity mutual funds are best suited for investors with a high risk appetite and debt funds are a good choice for investors with a low risk appetite. Hybrid mutual fund, which is a mix of debt and equity mutual funds, is designed for investors with a medium risk appetite.
  • Decide on then type(s) of fund according to your objective and risk appetite
  • Choose the fund house carefully to be assured of their efficiency and claim settlement ratio
  • Fund performance of the past 3 years to 5 years and the estimated future returns
  • Check for additional charges like Exit Load and Expense Ratio

How do I choose the best mutual fund?

Here are the tips you have to consider while selecting mutual funds that are best suited for your unique financial requirements:

  • Assess your investment objective; equity mutual funds meet short term financial goals, while debt and money market instruments are long term investment instruments
  • Analyse your risk appetite; short term equity mutual funds are best suited for investors with a high risk appetite and debt funds are a good choice for investors with a low risk appetite. Hybrid mutual fund, which is a mix of debt and equity mutual funds, is designed for investors with a medium risk appetite.
  • Decide on then type(s) of fund according to your objective and risk appetite
  • Choose the fund house carefully to be assured of their efficiency and claim settlement ratio
  • Fund performance of the past 3 years to 5 years and the estimated future returns
  • Check for additional charges like Exit Load and Expense Ratio

How much money do you really need in order to start a mutual fund?

Mutual fund investments are very flexible. You can start with an amount as small as Rs. 500 by investing in a mutual fund scheme through ELSS or SIP. There is usually no upper cap to mutual fund investments.

Is it safe to invest in mutual funds?

No mutual fund investment is completely safe because they are exposed to capital market risks. However, the degree of exposure to capital market risks in varied proportions. While mutual fund investments like equity is vulnerable to high risk, debt instruments are accompanied by the lowest risk. Hybrid funds, being a mix of equity and debt fund instruments, balance out the mutual fund portfolio, exposing the investments to medium risk.

Which ELSS is best to invest in 2018?

The following are some of the leading ELSS investments of 2018:

  • Aditya Birla Sun Life Tax Relief
  • Axis Long Term Equity Fund
  • L&T Tax Advantage Fund
  • Motilal Oswal Long Term Equity Fund
  • HDFC Long Term Advantage Fund
  • Invesco India Tax Plan

Which is best mutual fund to invest?

Here are some of the top mutual funds of 2018:

  • ICICI Prudential Focused Bluechip Equity Fund
  • Aditya Birla Sun Life Small & Midcap Fund
  • Tata Equity PE Fund
  • HDFC Monthly Income Plan – MTP
  • L&T Tax Advantage Fund
  • SBI Nifty Index Fund
  • Canara Robeco Gilt PGS
  • DSP BlackRock Balanced Fund
  • Axis Liquid Fund

Which is better - ELSS or SIP?

ELSS and SIP are vastly different from each other. ELSS or Equity Linked Savings Scheme is a mutual fund category that invests in equity mutual funds and other equity related instruments. Investment towards an ELSS is eligible for tax benefits of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961. In stark comparison, a SIP or Systematic Investment Plan is a mode of mutual fund investment that enables investors to invest through easy instalments rather than one-time lump sum payments.

Which is better SIP or mutual fund?

A mutual fund is not a category of securities. It can be defined as a scheme that involves the purchase and sale of securities. In comparison, a Systematic Investment Plan (SIP) is a mode of mutual fund investment that enables investors to pay premiums through easy instalments rather than one-time lump sum payments.

Which are the best mutual funds to invest in SIP?

Here are some of the leading mutual funds for investing through SIP:

  • SBI BlueChip Fund-Reg(G)
  • Franklin India Equity Fund(G)
  • Mirae Asset India Equity Fund-Reg(G)
  • HDFC Mid-Cap Opportunities Fund(G)
  • ICICI Pru Bluechip Fund(G)

Which is the best mutual fund SIP to invest?

Here are some of the leading mutual funds for investing through SIP:

  • SBI BlueChip Fund-Reg(G)
  • Franklin India Equity Fund(G)
  • Mirae Asset India Equity Fund-Reg(G)
  • HDFC Mid-Cap Opportunities Fund(G)
  • ICICI Pru Bluechip Fund(G)

Which mutual fund is best for long term investment?

For long term mutual fund investments, you can choose one of these options:

  • Birla SL Frontline Equity Fund
  • ICICI Prudential Value Discovery Fund
  • HDFC Mid-cap Opportunities Fund
  • DSP Micro Cap Fund
  • Axis Long Term Equity Fund

Which mutual fund is best for SIP investment?

Here are some of the leading mutual funds for investing through SIP:

  • SBI BlueChip Fund-Reg(G)
  • Franklin India Equity Fund(G)
  • Mirae Asset India Equity Fund-Reg(G)
  • HDFC Mid-Cap Opportunities Fund(G)
  • ICICI Pru Bluechip Fund(G)

Which mutual fund should I invest for a long term?

For long term mutual fund investments, you can choose one of these options:

  • Birla SL Frontline Equity Fund
  • ICICI Prudential Value Discovery Fund
  • HDFC Mid-cap Opportunities Fund
  • DSP Micro Cap Fund
  • Axis Long Term Equity Fund

Which SIP is best for long term?

Here are some of the leading long term SIP investment options for 2018:

  • Mirae Asset India Equity Fund – Direct Plan
  • Motilal Oswal Midcap 30 Fund – Direct Plan
  • Mirae Asset Emerging Bluechip Fund – Direct Plan (Growth)
  • HDFC Small Cap Fund – Direct Plan (Growth)
  • L&T Emerging Businesses Fund – Direct Plan (Growth)

Are returns of mutual funds guaranteed?

Returns on mutual fund investments are not guaranteed because they are exposed to capital market risks. However, the degree of exposure to risk varies based on the type of mutual fund.

Which is the best? Mutual funds or ULIP or endowment plan?

A mutual fund is a scheme that involves the purchase and sale of company shares, bonds and securities over varied terms, exposing the schemes to capital market risks for generating healthy returns.

ULIP is best suited for investors with long term financial goals like child’s education and marriage, etc. The benefit of a ULIP is that insurers continue to make the pre-determined premium payments till the end of the maturity term in case of an unforeseen death of the policyholder. Thus, it acts as a guardian in the absence of the policyholder.

An endowment plan is a life insurance policy that guarantees the beneficiary a lump sum after the pre-decided maturity term of ten years or fifteen years or twenty years or on the death of the policyholder. Some endowment plans also offer a payout during critical illnesses. You can select any of these based on your unique investment goals and financial needs.

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