All investment schemes in India have their benefits and drawbacks. In the past few years, there has been a considerable shift towards investment in mutual funds due to the advantage of risk management. Investors who want to diversify their portfolios always find it safer to invest in mutual funds, since they are managed by qualified professionals.
A mutual fund is a scheme wherein the investors’ money is reinvested in different stocks and securities. This is often regarded as ‘Pooling of Resources.’ After investing in a mutual fund, the fund houses allot specific funds units to the investor. All the accumulated income of the fund is then distributed among the investors.
However, it is extremely important to choose the correct mutual fund for yourself, keeping your goals and risk appetite in mind. In this guide, we have come up with various best mutual funds in India to help you pick an ideal mutual fund for yourself.
Best performing mutual funds In India
The list of best performing mutual funds in India is given below, along with their 3-year annualised returns:
|Fund name||Type of fund||3-year annualised growth|
|Canara Robeco Small Cap||Small Cap Fund||32.8%|
|Quant Mid Cap||Mid Cap Fund||20.9%|
|Quant Infrastructure||Thematic Fund||32.8%|
|Axis Small Cap||Small Cap Fund||26.9%|
|ICICI Pru Equity & Debt||Aggressive Hybrid Fund||18.1%|
|Baroda BNP Paribas Credit Risk||Credit Risk Fund||8.6%|
|Quant Absolute||Aggressive Hybrid Fund||26.1%|
|Invesco India Infrastructure||Thematic Fund||20.7%|
|Franklin UST||Other Bond||8.1%|
How to choose the best mutual fund for yourself?
There are multiple categories of mutual funds, such as debt mutual funds, equity mutual funds, hybrid mutual funds, and so on. All these funds have different goals on investment and risk appetite. One mutual fund can never be the best mutual fund for everyone.
Therefore, the factors to keep in mind before choosing the best mutual fund for yourself are as follows:
- Investment objective: The first and the most crucial factor before investing in any mutual fund is examining your investment objectives. The objectives of your investment must always be in line with the goals of that mutual fund scheme. The investors who want to invest their money in the long term for wealth creation must invest in equity mutual funds. On the other hand, if you wish to purchase a home in the next three years, investing in equity mutual funds would be the wrong option.
- Past performance of the fund: You must always look for the history of the fund before investing. This will help you understand how that fund manages to survive in the changing market conditions. You must always try to invest in the mutual funds that have given consistent returns in different market cycles.
- Expense ratio: In return for managing the fund’s assets, the fund house charges some fees from the investor as a consideration. This fee is known as the expense ratio. If this expense ratio is high, the net returns earned by the investor will decrease. So, you must look for fund options that have a low expense ratio.
- Performance of the fund manager: Apart from studying the past performance of the fund, it is also essential to look at the track record of the fund manager. This is because the manager is the only person who manages the fund and takes all the decisions regarding the reinvestment of your resources. Therefore, the investors must check the performance of various fund schemes managed by the fund manager.
Reasons for investing in the best mutual funds?
You must also understand the importance of investing in mutual funds. The benefits of mutual funds investment are given below:
- They are managed by professionals known as fund managers who have vast experience in this field. They select suitable investments for you, keeping in mind all the external market factors.
- You can easily diversify your portfolio by investing in mutual funds. Your money is invested in different categories of stocks that reduce the risks of high losses.
- Mutual funds are said to generate higher returns than other traditional investments since they invest in the best-diversified securities.
- Mutual funds have fewer expenses than the expenses you will incur while investing directly in stocks.
- You can easily track the value of your investment through the detailed account statement and portfolio disclosures.
- A mutual fund house offers various schemes from which you can choose the best mutual fund that meets your expectations. You can choose the mutual fund scheme that fits your investment horizon and the level of risk that you can bear.
It is always an amazing plan to secure your future and have a peaceful life after retirement. Investing has always been an appropriate way to achieve such goals. Mutual funds remain on the safer side than most other investing options. In addition to this, they also give higher returns with less cost incurred. They help the investors for the creation of wealth in a disciplined manner.
So what are you waiting for? Start your investing journey right now with Kuvera – The best platform to invest in mutual funds. You can also visit the Kuvera app to know more about the investing options.
Frequently Asked Questions
- What is a mutual fund?
A mutual fund is one of the popular schemes of investing through the pooling of resources. You can easily diversify your portfolio and create wealth without investing in the stocks directly.
- What are the benefits of investing in mutual funds?
- Diversification of portfolio
- Managed by highly experienced professionals
- Cheaper than other investing schemes
- Higher returns than many other traditional investing schemes
- What factors should be kept in mind before investing in mutual funds?
- Goals of your investing
- Expense ratio
- Past performance of the fund
- Track record of the fund manager
- What are the ways through which I can invest in mutual funds?
There are two ways to invest in a mutual fund – Lump sum or SIP (systematic investment plan).