Thanks to stellar returns, mutual funds have become one of the most popular modes of investment in India for both short and long term. However, the most pertinent question among investors regarding mutual fund investment is “Which are the best mutual funds to invest? ”
Based on the criteria mentioned above, the following in no particular order are the top 10 mutual funds that you should consider investing in.
Here is a List of 10 Best Mutual Funds in India
Check out the list of top 10 Mutual Funds in India FY 2019-20:
|Fund Name||Fund Type||1 Year Returns||5 Year Returns||Risk Grade||Return Grade||Tenure|
|Mirae Asset Emerging Blue Chip Fund||Equity: Large & Mid Cap||17.05%||16.84%||Below Average||High||Long Term|
|SBI Small Cap Fund||Equity: Small Cap||10.13%||16.21%||Average||High||Long Term|
|Kotak Standard Multicap Fund||Equity: Multi cap||14.29%||12.07%||Below Average||High||Long Term|
|Axis Long Term Equity Fund||ELSS (Tax Saving)||15.32%||12.35%||Low||High||Long Term|
|Mirae Asset Tax Saver Fund||ELSS (Tax Saving)||16.59%||18.26% (3 Years)||Low||High||Long Term|
|L&T Midcap Fund||Equity: Mid Cap||2.12%||11.32%||Below Average||Above Average||Long Term|
|Nippon India Gilt Securities Fund||Debt: Gilt||13.12%||10.32%||Average||High||Medium-Long Term|
|Franklin India Ultra-Short Bond Fund – Super Institutional Plan||Debt: Ultra Short Term||9.72%||9.25%||Below Average||High||Ultra Short Term|
|Aditya Birla SL Short Term Opportunities Fund||Debt: Short Term||9.74%||8.72%||Average||Average||Short Term|
|Axis Liquid Fund||Debt: Liquid||6.83%||7.46%||Low||Average||Very Short Term|
*The above figures are based on data obtained till December 10, 2019 and are subject to periodic change
Mirae Asset Emerging Bluechip Fund
Category: Equity- Large & Mid Cap
AUM: ₹ 8,868 Crore
Bluechip stocks usually refer to large-cap funds that are among the most valuable and least volatile on the stock exchange. Mirae Asset Emerging Bluechip Fund has been a top performer in the Large & Mid Cap category.
- The fund has delivered at 17.05% in 1-year and 16.84% in 5-years, consistently outperforming its benchmark and category average
- Further, the direct plan of the fund operates at a very low expense ratio
- The fund has invested about 51.87% of its assets in the large-cap stocks and another 42.96% in mid-cap category which gives it a balanced outlook in terms of volatility and growth
- With a total of 63 stocks in the portfolio, the fund looks well-diversified
SBI Small Cap Fund
Category: Equity- Small Cap
AUM: ₹ 2,915 crore
The regular plan of SBI Small Cap Fund was launched on September 9, 2009 and the fund has returned over 24.02% returns since then. Also, the fund has outperformed its benchmark returns as well as category returns by a huge margin.
- The fund has invested about 68.91% of its assets in small cap companies and another 22.50% in the mid cap space
- Though the fund has delivered kind of unbelievable returns since its launch, being a small cap fund the risk quotient of the fund is equally high. However, the risk can be dealt by staying invested for a long-term
- SBI Small Cap Fund currently has holdings in about 49 companies. If you look at the sector wise break up of its investments, unlike other funds, the investment is not skewed in favour of any particular sector
- Engineering has 17.47% assets allotted, 14.32% assets have been allotted to FMCG and Financials find a prominent space with about 10.93% allocation
- The fund could be a good choice for individuals looking to generate really high returns on their investments but at the same time having high risk appetite and long term investment horizon
Kotak Standard Multicap Fund
AUM: ₹ 29,096 Crore
Kotak Standard Multicap Fund has delivered returns at 12.07% in 5-year period and has beaten both its benchmark (9.12%) and category (9.29%) returns by a significant margin.
- The fund has invested about 74.66% of its assets in large cap companies and another 23.52% in the mid-cap space
- If you look at the sector wise allocation, the fund has allocated about 36.87% of its assets in the financial sector, 14.97% in energy sector and another 11.52% in the construction sector
- With 52 funds in the portfolio, the fund seems well-diversified. Further, higher exposure to large cap stocks makes the fund stable in terms of market volatility
Axis Long Term Equity Fund
Category: Equity: ELSS
AUM: ₹ 21,492 crore
The fund has been a favourite of the investors in ELSS category which stands very much justified with the fact that the fund has delivered over 19.50% of returns since its launch, not to forget tax benefits u/s 80C.
- Not only that, the fund has consistently outperformed its benchmark and also the category returns
- The portfolio of the fund is pretty much concentrated with 32 stocks in it
- Further, 75.26% of the assets have been invested in large cap portfolio which gives the fund a conservative but stable outlook. However, the fund has also invested 23.19% of the assets in the mid cap space which addresses the growth issues
- With 41.01% assets allocated to financial sector, the portfolio looks a little skewed. Apart from that, the fund has some significant investments in consumption driven sectors such as automobiles, services and chemicals
Mirae Asset Tax Saver Equity Fund
Category: Equity: ELSS
AUM: ₹ 2,671 crore
Mirae Asset Tax Saver Equity Fund has become immensely popular in a short period of time due to top returns in the tax saving category.
- The fund was launched in December 2015, and since then the fund has generated returns of about 18.78%, which are exceptional in the ELSS category
- The fund has delivered returns at 18.26% in the last 3 years compared to 13.13% generated by its benchmark (S&P BSE 200)
- Further, the fund has one of the lowest expense ratio (0.30% in direct plan) in the category
- The fund has invested about 71.07% of its assets in the large cap category and about 24.32% in the mid cap space
- With 56 stocks in its portfolio, the fund looks well-diversified
- If you look at the sector wise allocation, the fund has allocated about 36.63% of its assets to the financial sector, which is much more balanced as compared to other ELSS funds. Apart from financial, the fund has invested in energy, technology, FMCG, and automobile sector.
L&T Midcap Fund
Category: Equity- Mid Cap
AUM: ₹ 5,928 crore
L&T Mid Cap Fund is one of the best rated funds in the mid cap space. The direct plan of the fund was launched on January 1, 2013 and it has returned close to 18.30% per annum since then.
- Even during tough times of 2018-19 for mid and small cap spaces, the fund managed to obtain good one year returns of 2.12
- If you look at the 3-year (9.58%) and 5-year (11.32%) returns, they have outperformed its benchmark as well as category average by a margin of more than 5%
- The fund holds about 76.63% of its assets in mid cap space and another 15.38% in small cap companies which make the fund highly volatile in the short term but at the same time can provide higher returns in the long term
- With 81 stocks in the portfolio, the fund seems little over-diversified. However, the sector wise breakup of investments looks very much balanced
- The fund has allocated about 20.09% of the assets to the financial sector and another 13.13% to the construction sector companies
Nippon India Gilt Securities Fund
AUM: ₹1,090 crore
Nippon India Gilt Securities Fund was launched in July 4, 2003 which makes the fund more than a decade old. The fund has delivered returns at 10.62% since its launch, which are really impressive in the gilt fund category.
- Further, the 1 year returns at 13.12% and 3 year returns at 8.27% make the fund exceptional in the category
- The fund has invested about 97.54% of its assets in the sovereign category bonds which makes it absolutely safe
- The average maturity of the holdings of the fund is about 7.59 years while modified duration stands at 5.43 years. The fund is suitable for investors who are looking to make moderate returns at minimal risk
Franklin India Ultra Short Bond Fund – Super Institutional Plan
Category: Debt- Ultra Short Duration
AUM: ₹ 19,950 crore
As per the scheme’s stated objectives, the Franklin India Ultra Short Bond Fund – Super Institutional Plan invests in a mix of debt and money market instruments that ensure a high level of liquidity for the investor.
- Classified as an ultra short term debt fund, investments made by the scheme are mainly those that mature within a period of 180 days, however, the fund does have the option of investing in longer or shorter maturity investments as per the requirements of the market
- A majority of the investments included in Franklin India Ultra Short Bond Fund – Super Institutional Plan are high-quality securities rated in the range of A+ to AAA. The fund has currently invested about 49.56% of its assets in AA rated papers and another 25.72% in A and below rated papers
- The fund has consistently generated over 9.72% returns in 1 year, 8.87% in 3 years and 9.25% in 5 years framework, which are pretty good in the debt funds category
- The minimum lump sum investment amount required for entry into this scheme is Rs. 10,000 and the exit load of this scheme are nil
Aditya Birla SL Short Term Opportunities Fund
Category: Debt-Short Duration
AUM: ₹ 3,220 crore
Aditya Birla Sun Life Short Term Opportunities Fund is managed by Aditya Birla Sun Life Mutual Fund AMC, one of India’s largest fund houses. Being a short term debt fund, the scheme invests exclusively in the money market as well as short term debt securities.
- In terms of investment quality, the fund is heavily invested in Sovereign and AAA credit rating debt instruments – which are among the safest investments available in the debt market
- Despite being a safe bet, the fund has delivered returns close to 9.50% since its inception which are not only higher than its benchmark returns but also better than other investment options in the category
- The minimum investment required for first timers investing in this fund is Rs. 1000 and even better investors don’t have to worry about an exit load no matter how long or how short a time they are invested in the scheme
Axis Liquid Fund
AUM: ₹ 30,068 Crore
The regular plan of the Axis Liquid Fund was launched on September 09, 2009 and since then the fund has not only augmented assets worth 24K crore but also consistently outperformed its benchmark in terms of returns.
- The fund has been rated 4 or 5 stars by the rating agencies. It has invested about 83.41% of its assets in A1+ rated papers
- The fund has delivered fairly stable returns in 1 (6.83%), 3 (7.03%) and 5 (7.46%) years framework
- The average maturity of the fund is about 43 days and modified duration also stands at 43 days
- Axis Liquid Fund can be a great investment option for a low risk investor who is looking for making higher returns than savings account and fixed deposit in very short term.
How to Choose the Best Mutual Funds to Invest?
Some of the key features an investor needs to consider before choosing the best mutual funds to invest in are –
- Investment Objective – Knowing whether you want returns in the form of dividends or high capital appreciation. The risk to the principal amount will vary as per returns expectations, as potentially higher returns indicate a higher level of risk.
- Past Performance – The past performance of funds under consideration can be another key factor while choosing a fund. Though this is no guarantee of future performance, it does help gauge the possible direction of the fund and how capable its management it.
- Fund Type and Fund House – Based on risk appetite and investment time horizon, investor has to choose between equity, debt and hybrid funds. Equity funds are the riskiest option but with the highest potential for returns, debt funds are considered the least risky hence their returns also tend to be average. Hybrid funds are kind of a mix between debt and equity. Going with a reputed fund house as compared to a lesser known one might be beneficial as established AMC (Asset Management Company) have not only have market reputation but also can be more competitive in terms of returns.
- Expense Ratios/Exit Load – Higher expense ratios and exit loads decrease net payout at the time of redemption. It is better to prefer funds that have lower expense ratios and if possible no exit load in the long run. Alternately, you might choose to stay invested for the period during which the exit load applies, if the scheme is providing the desired/expected returns.
Q. Are returns of mutual funds guaranteed?
A. No. Mutual funds are market linked instruments, hence returns are not guaranteed. That said, over time, capital markets have created significantly more wealth than any other investment route currently available in the country.
Q. Which are the best mutual funds to invest in India?
A. Mutual funds are good investments as long as the investor chooses a fund that suits their unique investment needs. On average, equity mutual funds offer the highest returns however, these investments require significantly higher risk tolerance as compared to debt or hybrid schemes that offer potentially lower returns but at the same time require considerably lower risk tolerance on the investor’s part.
Hence the best mutual funds to invest in India would depend on multiple factors including investor’s risk tolerance, potential returns as well as investment time horizon.
Q. What are the different types of mutual funds and how do they differ?
A. There are three major categories of mutual funds – equity, debt and hybrid. Equity schemes invest mainly in equities and equity-derivatives, while debt funds invest in debt schemes such as bonds and money-market instruments. Hybrid schemes on the other hand invest in both equity and debt/money market investments.
Q. Which is better, mutual funds or ULIPs?
A. Mutual funds are pure investment instruments whereas ULIPs provide dual benefits of insurance and investments. According to most experts, the combination of insurance with investment makes ULIPs an inherently poor choice as they provide low life insurance benefit along with potentially low investment benefits.
Thus, from an investment perspective, mutual funds with their potentially higher returns, superior transparency and excellent flexibility score above ULIPs.
Q. How can I invest in mutual funds?
A- All a potential investor needs to start investing in mutual funds are a free investment account, an Indian bank account and KYC documents such as Aadhaar, PAN etc. At present investors also have to option of completing the online eKYC that can be completed from the comfort of their home with minimal paperwork.
Q. What is ELSS?
A- Equity Linked Saving Scheme (ELSS) is a category of equity mutual fund which provide tax benefits upto Rs. 1.5 lakh under section 80C of the Income Tax Act, 1961. ELSS is the only investment option in the tax saving category which can potentially provide highest returns and comes with lowest lock-in of 3 years.