Best Mutual Funds in India

Mutual Funds are a form of financial vehicle that invests in securities such as stocks, bonds, money market instruments, and other assets by pooling money from many investors. Professional financial managers control investment funds, allocate assets, and create capital gains or profits for the fund's investors. Their performance is usually determined by the improvement in the fund's overall market value, which is calculated by aggregating the performance of the underlying assets.

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What are the Best Mutual Funds?

A mutual fund is a professionally managed investment product that pools money from multiple investors to collectively invest in a diversified portfolio of stocks, bonds, or other securities. These funds are managed by experienced portfolio managers who make investment decisions based on the fund's objectives and strategy. 

Mutual funds offer individuals an accessible way to invest in a wide range of assets, providing diversification and professional management. 

Investors can redeem or buy fund units at the current NAV or net asset value. Since mutual funds are governed by the Securities and Exchange Board of India, they are renowned to be a haven for your money. Investing in mutual funds in India has the benefit of helping investors to scale up their investment with a relatively small initial amount.

Best Mutual Funds to Invest in India

Here is a list of top performing mutual funds to invest in India, based on their 1-year, 3-years and 5-years returns:

  1. Best Equity Mutual Funds

    Fund Name 1-Year Return 3-Year Return 5-Year Return
    Quant Small Cap Fund Direct Plan-Growth 32.60% 48.34% 30.43%
    Kotak Small Cap Fund Direct-Growth 18.03% 38.08% 24.52%
    ICICI Prudential Bluechip Fund Direct Growth 18.65% 25.66% 14.36%
    Axis Small Cap Fund Direct-Growth 20.99% 35.10% 25.67%
    ICICI Prudential Small Cap Fund Direct Plan-Growth 23.61% 39.93% 24.65%
    HDFC Mid Cap Opportunities Direct Plan Growth 29.86% 35.86% 19.77%

    Updated as on September 2023

  2. Best Performing Debt Mutual Funds

    Fund Name 1-Year Return 3-Year Return 5-Year Return
    Aditya Birla Sun Life Medium Term Direct Plan-Growth 7.49% 13.65% 9.11%
    SBI Magnum Gilt Fund Direct-Growth 8.34% 5.79% 8.93%
    ICICI Prudential Constant Maturity Gilt Fund Direct-Growth 7.93% 4.44% 8.88%
    Kotak Money Market Fund Direct Growth 7.26% 5.12% 6.08%
    ICICI Prudential All Seasons Bond Fund Direct Plan-Growth 8.20% 6.56% 8.62%

    Updated as on September 2023

  3. Best Performing Hybrid Mutual Funds

    Fund Name 1-Year Return 3-Year Return  5-Year Return 
    ICICI Prudential Equity & Debt Fund Direct-Growth 24.16% 31.67% 17.49%
    HDFC Balanced Advantage Fund Direct Plan-Growth 23.14% 30.78% 16.32%
    Edelweiss Aggressive Hybrid Fund Direct - Growth 18.91% 24.74% 15.55%
    Kotak Equity Hybrid Fund Direct-Growth 14.02% 23.55% 16.32%
    SBI Equity Hybrid Fund Regular Growth 9.40% 18.46% 12.86%

    Updated as on September 2023

  4. Best Mutual Funds for SIP to Invest in India 

    Fund Name 3 Years 5 Years 10 Years
    Nippon India Large Cap Fund 28.19% 13.65% 17.97%
    SBI Bluechip Fund 22.27% 12.54% 16.85%
    Edelweiss Large Cap Fund 20.66% 11.60% 15.34%
    Aditya Birla Sun Life Frontline Equity Fund 21.78% 11.52% 15.62%
    ICICI Prudential Bluechip Fund 23.32% 12.93% 16.17%
    Mirae Asset Large Cap Fund 19.26% 11.85% 17.88%

    Updated as on August 2023

How to Choose the Best Mutual Fund to Invest in 2023? 

Choosing the best mutual fund to invest in is a crucial decision that can significantly impact your financial future. Here are some key steps to help you make an informed decision:

  1. Define Your Financial Goals:

    Begin by identifying your specific financial goals. Are you saving for retirement, purchasing a home, or funding your child's education? Understanding your objectives will guide you towards the right type of mutual fund.

  2. Risk Tolerance Assessment:

    Assess your risk tolerance. This is a critical factor that influences the type of mutual fund you should choose. If you're risk-averse, you might opt for more conservative funds. For those comfortable with higher risk, aggressive growth funds might be suitable.

  3. Understand Different Types of Mutual Funds:

    Mutual funds come in various types, including equity funds, debt funds, hybrid funds, and more. Each type serves a different purpose and carries a distinct level of risk. Familiarize yourself with these categories to determine which aligns best with your goals and risk tolerance.

  4. Expense Ratio Evaluation:

    The expense ratio is the annual fee expressed as a percentage of your investment. Lower expense ratios are generally better, as they reduce the overall cost of owning the fund. Look for funds with competitive expense ratios.

  5. Historical Performance Analysis:

    While past performance doesn't guarantee future results, it can provide insights into how a fund has handled different market conditions. Look for consistent, long-term performance rather than short-term spikes. Recently launched mutual funds and funds that are open for subscription don’t have a track record, making it difficult to predict their returns and performance across different market cycles. The best mutual fund to invest in is one with a long track record of delivering consistent returns over different market cycles. 

  6. Professional Management and Fund House Reputation:

    Research the fund manager's track record and experience. A skilled manager can make a significant difference in a fund's performance. Additionally, consider the reputation and credibility of the fund house or company managing the mutual fund.

  7. Diversification and Portfolio Holdings:

    Ensure that the fund offers adequate diversification across different asset classes and industries. A well-diversified fund can help spread risk and potentially enhance returns.

  8. Check for Load and Exit Fees:

    Some funds charge a front-end load (when you buy) or back-end load (when you sell). Avoiding these fees can help maximize your investment returns.

  9. Stay Committed for the Long Term:

    Avoid making impulsive decisions based on short-term market fluctuations. Mutual funds are typically designed for long-term investing, so it's important to stick to your investment strategy.

  10. Regular Review and Rebalancing:

    Periodically review your mutual fund portfolio and check returns on your investments using the SIP Calculator to ensure it continues to align with your goals and risk tolerance. Rebalance if necessary to maintain the desired asset allocation.

  11. Consult with a Financial Advisor:

    If you're uncertain about which mutual fund(s) to choose, consider seeking advice from a qualified financial advisor like Policybazaar. They can provide personalized recommendations based on your unique financial situation.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

How is Tax Applied on Best Mutual Funds in India?

The tax on mutual funds in India depends on the type of mutual fund and the holding period. Here is a breakdown of how tax is applied on mutual funds:

  1. Equity Mutual Funds

    Short-term capital gains (STCG): If you sell your equity fund units within one year of purchase, the gains are considered STCG and are taxed at a flat rate of 15%.

    Long-term capital gains (LTCG): If you sell your equity fund units after one year of purchase, the gains are considered LTCG and are taxed at a flat rate of 10% on gains above Rs. 1 lakh.

  2. Debt Mutual Funds

    STCG: STCG on debt fund units is taxed as per your income tax slab.

    LTCG: LTCG on debt fund units is taxed at a flat rate of 20% after indexation.

  3. Hybrid Mutual Funds

    The tax on hybrid mutual funds depends on the asset allocation of the fund. If the fund has an equity exposure of 65% or more, then it is taxed as an equity fund. If the fund has an equity exposure of less than 65%, then it is taxed as a debt fund.

Why Should You Invest in the Best Mutual Funds in India?

There are many reasons why you should invest in the best mutual funds in India. Here are a few:

  • Long-term wealth creation: Mutual funds are a great way to create wealth over the long term. The power of compounding can help your investments grow significantly over time.

  • Achieve your financial goals: Best Mutual funds can help you to achieve your financial goals, such as retirement planning, child education planning, and buying a house.

  • Professional management: Mutual funds are managed by professional fund managers who have the expertise and experience to select the right investments for your portfolio.

  • Diversification: Mutual funds invest in a basket of securities, which helps to reduce your risk.

  • Liquidity: Mutual funds are very liquid investments. You can buy or sell your units at any time.

  • Tax benefits: There are tax benefits available for investing in mutual funds.

The best mutual funds in India have also consistently outperformed the market over the long term. This is because they are managed by experienced fund managers who have a deep understanding of the Indian economy and markets.

Conclusion

Mutual funds are a great way to invest in the Indian stock market and achieve your financial goals. The best mutual funds in India have consistently outperformed the market over the long term. If you are looking for a way to invest in the Indian stock market and achieve your financial goals, then investing in the best mutual funds through SIP is a great option.

FAQ's

  • How do I choose the best mutual funds for me?

    When choosing the best mutual funds for you, you should consider the following factors:
    • Your investment goals: What are you saving for? Retirement? Your child's education? A down payment on a house?

    • Your risk tolerance: How much risk are you comfortable with?

    • Your time horizon: How long do you plan to invest for?

    Once you have considered these factors, you can start narrowing down your choices. 

  • How do I invest in mutual funds?

    To invest in mutual funds, you need to open a demat account and a trading account with a broker. Once you have opened your accounts, you can start investing in mutual funds through your broker.
  • What are the benefits of investing in mutual funds?

    There are many benefits to investing in mutual funds, including:
    • Professional management: Mutual funds are managed by professional fund managers who have the expertise and experience to select the right investments for your portfolio.

    • Diversification: Mutual funds invest in a basket of securities, which helps to reduce your risk.

    • Liquidity: Mutual funds are very liquid investments. You can buy or sell your units at any time.

  • What are the risks of investing in mutual funds?

    Like any investment, there are risks involved in investing in mutual funds. The main risk is that the value of your investment can go down as well as up. You could lose some of your investment.

    Another risk is that mutual funds charge fees. These fees can reduce your returns over time.

  • Should I invest in mutual funds for the long term?

    Yes, it is recommended to invest in mutual funds for the long term. This is because the power of compounding can help your investments grow significantly over time.
  • How much should I invest in mutual funds?

    The amount you should invest in mutual funds depends on your investment goals, risk tolerance, and time horizon. It is a good idea to consult with a financial advisor to determine how much you should invest in mutual funds.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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