Investing in mutual funds offers individuals a lucrative route to make their wealth grow, which is the key reason for their popularity in recent times. This new found popularity has been further compounded by the fact that traditional investment routes such as FDs, PPF, NSC, etc. have witnessed sustained ROI decrease in recent years due to multiple interest rate cuts. However, investing in the right fund is vitally important in order to ensure that the principal amount invested grows in the desired fashion over time.
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 consistent returns or high capital appreciation. The risk to the principal amount will vary accordingly, as potentially higher returns indicate a higher level of risk.
- Past Performance – How the proposed investment has performed in the past 3-5 years. 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 – Equity, Debt or Hybrid and whether to go with a reputed fund house or an upcoming one. Equity funds are the riskiest option with the highest potential of returns, debt funds are considered the least risky hence their returns also tend to be lower. Hybrid funds, on the other hand, lie somewhere in between in terms of both risk and return. Going with a reputed fund house as compared to a lesser known one might be beneficial as established AMC often have dedicated teams in place that are capable of managing the fund’s requirements no matter what the eventuality.
- Expense Ratios/Exit Load – Higher expense ratios and exit loads decrease payout benefits even if marginally, so are they worth it? Most investors prefer to seek out funds that have lower expense ratios and if possible no exit load. 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.
Top 10 Mutual Funds to Invest in India
Based on the criteria mentioned above, the following in no particular order are the top 10 mutual funds that you should consider investing in.
Table1. Table Showing Key Details of top 10 mutual funds on the list*
|Fund Name||Fund Type||1 Year Returns||3 Year Returns||5 Year Returns||Risk Grade||Return Grade|
|ICICI Prudential Focused Bluechip Equity Fund||Equity: Large Cap||19.99%||13.25%||18.83%||Below Average||Above Average|
|Franklin India Prima Plus Fund||Equity: Multi cap||16.77%||17.26%||21.10%||Low||Average|
|ICICI Prudential Value Discovery Fund||Equity: Multi cap||12.09%||14.22%||22.59%||Below Average||Above Average|
|DSP BlackRock Opportunities Fund||Equity: Multi cap||23.92%||18.39%||22.17%||Average||Above Average|
|Axis Long Term Equity Fund||ELSS||16.8tab0%||16.57%||24.52%||Low||Above Average|
|DSP BlackRock Tax Saver Fund||ELSS||22.02%||17.16%||22.49%||Below Average||Above Average|
|ICICI Prudential Corporate Bond Fund||Debt: Credit Opportunities||9.88%||9.85%||9.29%||Low||Average|
|Franklin India Ultra Short Bond Fund – Super Institutional Plan||Debt: Ultra Short Term||9.31%||9.61%||9.75%||Below Average||High|
|Reliance Dynamic Bond Fund||Debt: Dynamic Bond||10.93%||10.74%||9.74%||High||Average|
|Birla Sun Life Short Term Fund||Debt: Short Term||9.10%||9.56%||9.49%||Average||Average|