Mutual funds are a good investment option for those seeking to grow their wealth. Read this article to find out the top mutual fund schemes in the market that offer high returns on one’s hard-earned money.
The primary intent behind putting money into mutual funds is wealth creation. We all want to see our money grow – and higher the returns, the better. But how do we know which scheme would fetch the best returns? Considering that there are ample of mutual fund investments options, identifying the right fund to invest in can seem tricky. Well, before we look into the best-performing mutual funds in the market, let us first understand on what basis one must select the mutual fund category.
To start with, potential investors need to be aware of their financial goals, investment horizon and risk profile as this will determine the course of investment. If an investor wants his or her goals to be met within a period of five years, then the investor should consider parking money in debt mutual funds. On the other hand, if the individual is investing to meet long-term goals, he or she should consider going for hybrid or equity schemes.
The next essential factor to be considered is the investment horizon. It is very important that the individual chooses a debt mutual fund scheme that matches his or her investment horizon. Even while selecting equity mutual fund schemes, this aspect should not be overlooked. For investments in equity schemes, the minimum investment horizon is five to seven years. If investments are made in mid cap or small cap schemes, the individual’s investment horizon needs to be longer i.e. seven to ten years or so.
It is a commonly known fact that all mutual fund schemes do not have the same element of risk. The level of risk can be low, medium or high. Overnight funds and liquid mutual fund schemes tend to carry the lowest risk among debt mutual funds, while credit risk schemes can be viewed as highly risky. Similarly, a small cap scheme is riskier when compared with a large-cap or multi-cap scheme. It is extremely crucial for investors to be aware of their risk appetite while selecting a mutual fund scheme.
Now that we have looked into the factors to be considered prior to investing, here is a look at some of the top-performing mutual funds schemes on the basis of their 1-year and 3-year returns: