A mutual fund is a popular investment choice for people. In India, there are dozens of mutual fund plans in which an investor can invest. However, determining the top ten mutual funds or the best mutual fund is difficult. So, if you’re looking for the greatest mutual fund, consider your risk tolerance and the time horizon of your goals. Your desire and capacity to accept risks is reflected in your risk profile. As a result, a risk-taking individual may invest in high-risk funds that are not acceptable for a risk-averse investor. The time horizon of your goals, i.e., the period during which you want to hold an investment for a certain purpose, is also an important consideration. Investors might invest in high-risk funds for long-term objectives rather than short-term objectives.
What Are Best Mutual Funds?
Mutual funds are classified into several kinds. We can categorise mutual funds based on their underlying assets, such as equity, debt, or gold, into equity mutual funds, debt mutual funds, and hybrid funds. These funds have varying risk profiles and investment goals.
As a result, there is no single mutual fund that is suitable for everyone. The ideal mutual fund/s for you will be those that are appropriate for your investing objectives, risk tolerance, and time horizon.
Assume you are building an investment portfolio for your child’s higher education after 15 years. In this instance, equity mutual funds may be the ideal option for you if you are investing for the long term. However, equity mutual funds are divided into sub-categories such as large cap funds, mid-cap funds, and small-cap funds. Depending on your risk tolerance, you can choose to invest in a large cap fund or a small cap fund. A small-cap fund is riskier than a large cap fund since the latter invests mostly in major firms that are market leaders with strong financial situations. Large corporations are better equipped to weather business cycle downturns than small corporations.
You may potentially have many objectives. If your second aim is to purchase a car within the next three years, investing in equities funds may not be the greatest solution. Debt mutual funds, which are less volatile than equity funds, may assist you in achieving your aim of purchasing a car.
Best Performing Equity Mutual Funds (Basis 5 Year Return)
|Scheme Name||Expense Ratio||5Y Return (Annualized)|
|Quant Tax Plan||0.57%||23.66% p.a.|
|Quant Active Fund||0.58%||22.54% p.a.|
|Quant Mid Cap Fund||0.63%||21.54% p.a.|
|PGIM India Midcap Opportunities Fund||0.38%||19.3% p.a.|
|Parag Parikh Flexi Cap Fund||0.76%||17.42% p.a.|
Best Performing Debt Mutual Funds (Basis 1 Year Return)
|Scheme Name||Expense Ratio||1Y Return|
|Aditya Birla Sun Life Medium Term Fund||0.81%||25.25% p.a.|
|UTI Banking & PSU Debt Fund||0.24%||10.28% p.a.|
|UTI Bond Fund||1.30%||9.58% p.a.|
|Nippon India Ultra Short Duration Fund||0.38%||5.17% p.a.|
|ICICI Prudential Short Term Fund||0.37%||5.03% p.a.|
Best Performing Hybrid Mutual Funds (Basis 3 Year Return)
|Scheme Name||Expense Ratio||3Y Return (Annualized)|
|Quant Absolute Fund||0.56%||31.34% p.a.|
|Quant Multi Asset Fund||0.56%||30.69% p.a.|
|ICICI Prudential Thematic Advantage Fund (FOF)||0.23%||25.59% p.a.|
|ICICI Prudential Equity & Debt Fund||1.20%||21.32% p.a.|
|Kotak Multi Asset Allocator FoF – Dynamic||0.13%||20.99% p.a.|
Mutual funds such as SBI Small Cap Fund, Axis Bluechip Fund and Mirae Asset Large Cap Fund, have also delivered historically high returns.
How to Select the Top Performing Mutual funds in India?
We’re all curious about the greatest mutual funds to invest in right now. This section will discuss some of the characteristics that might assist you in determining the top ten best mutual funds to invest in today.
Any investment should be made only after a careful analysis of your life goals. Once you’ve defined your requirements, compare them to the objectives of a mutual fund plan to see if investing in them would help you meet your financial ambitions. Mutual funds, like individuals, have distinct investing objectives, and it is up to the investors to assess whether their objectives are aligned with the mutual fund scheme in which they will participate.
As a result, in order to make an informed decision, the fund’s investment aim must be compatible with the investor’s goals and risk tolerance.
Equity funds are the greatest long-term mutual funds to invest in. Choose a growth mutual fund to easily achieve your long-term goals because the fund’s gains will compound over time.
All important facts, including asset allocation and goals, may be found in the scheme information paper.
The fund’s history gives a record of the fund’s performance through time, including market ups and downs. This demonstrates the fund’s tenacity in the face of turbulent market conditions.
Because newly launched mutual funds and funds that are up for subscription lack a track record, it is impossible to anticipate their returns and performance throughout market cycles. The greatest mutual fund to invest in is one that has a strong track record of producing consistent returns across market cycles. It also provides evidence of well-researched investing techniques.
The expense ratio is expressed as a percentage of the fund’s assets and is charged by the fund house along with other charges for managing the assets of a fund. The net return achieved by the investor will be the mutual fund returns minus the fee ratio. If an investor’s expense ratio is high, his or her returns will be reduced. As a result, while selecting a fund, an investor should opt for a plan with a lower expense ratio than its counterparts in the category.
Fund Manager’s Performance
The fund manager is in charge of overseeing the fund’s operations. It is critical to examine the fund manager’s track record.
An investor should keep track of the fund’s performance amid market ups and downs. They can also examine the performance of the fund manager’s various plans.
Examine The Financial Ratios
Financial statistics such as alpha and beta can be used to determine India’s best mutual funds.
Mutual fund results are intrinsically connected to risk. A return is a rise in the total value of the capital invested. Risk is defined as the uncertainty that surrounds an investment and refers to the chance of receiving no or negative returns due to a range of factors. As a result, each investor must analyse the risk-return potential, which financial ratios have made feasible.
The Sharpe and Alpha ratios give critical information. The Sharpe ratio calculates the extra return on each unit of risk taken by the fund. As a result, greater Sharpe ratio funds are seen as superior to lower Sharpe ratio funds. The excess mutual fund returns produced by the fund manager above the benchmark are referred to as alpha. Funds with a higher Alpha are seen to be superior.