Top 10 mutual Funds You Can Bet on For Long-term Growth

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Income tax rebateUnderstand Mutual Fund First 

A Mutual Fund is basically a trust which invests your funds with shared objectives. The savings of multiple investors are collectively invested as one entity by a Professional Fund Manager (PFM), on behalf of the fund. Investments are directed towards multiple securities such as stocks, bonds, short-term money market instruments and commodities such as precious metals. The investment spread over different and diverse asset classes aim to maximize the gain and also offset the potential losses if any.

How Mutual Funds Work? 

Mutual funds are an assembly of large number of individuals who pool their money to invest collectively. They form a trust with a shared common objective of the investors, which is managed by a Professional Fund Manager (PFM). Your funds are invested in a variety of instruments, such as equities, bonds, money market and other securities that match the collective goal. Mutual Fund is thus one of the most viable investment options for the common man. It gives you the opportunity to invest in a variety of professionally managed securities for a relatively meager fee. You earn a proportionate amount of gains generated out of these investments minus the cost of expenses incurred, as you are the owner of units, which represent a portion of fund holdings.

Set-up of Mutual Fund

There are three basic components in a Mutual Fund set up. They are:

  • Sponsor or sponsors : The sponsor promoter of a company establishes a trust which is registered with the Securities and Exchange Board of India (SEBI).
  • Trustees : Trustees are the holders of the property for the benefit of the unit holders. They monitor performance of the fund, compliance of SEBI regulations and also oversee the operations of the Asset Management Company (AMC).
  • Asset Management Company (AMC) : It is body approved by the Securities and Exchange Board of India (SEBI) who are managers of the fund.

Types of Mutual Fund

Mutual funds investment is determined by your risk appetite, financial goals and time horizon.

  • Funds based on maturity period:
    • Open ended funds : They are flexible with time and liquidity. You can redeem your units on Net Asset Value (NAV) on a need basis.
    • Close ended funds : This is fixed term of maturity vehicle for 3 to 6 years.

 

  • Interval funds : This is a hybrid of open and close ended funds. Though they are essentially close ended funds, it is actually a hybrid of the two.

Funds Based on Investment Objective

  1. Equity Growth Fund : You are putting your money in stocks aimed primarily at long term capital appreciation by investing here. This fund invests around 65% of its corpus in equities or equity related instruments. It is suitable for you if you have a high risk appetite and a long term goal as the focus of the investment is on a wide range of industries and sectors.
  2. Debt Income Fund : Fixed income securities such as corporate debentures, bonds, government gilt securities, and money market instruments makes 65% of the portfolio.
  3. Balanced Fund : About 60% of the fund is invested in equity and 40% in debt instruments such as bond and debentures. It is combination that   provides steady stable returns as well as capital appreciation.
  4. Money Market Liquid Fund : The investments are made in safe short term instruments such as Treasury Bills, Certificates of Deposits a commercial paper of less than 91 days. This fund is ideal for corporate and industrial investor.
  5. Gilt Fund : In this fund the investments are exclusively directed towards government securities. The returns depend on fluctuations in rates of interest.
  • Other Funds:
    • Tax Saving Fund : Equity Linked Savings Schemes (ELSS) is a fund with a lock in of 3 years. The investment is focused on equities and suits those with high risk appetite and desire capital appreciation in long term. Income tax rebate as per provisions of the IT Act, 1961 is available.
    • Index Fund : The fund is attached to any particular index such as the BSE, NIFTY or the S&P. Results of the index determine its performance.
    • Sector-specific Fund : Specific sector of industry is chosen for investment such as banking, FMCG or Pharmaceuticals. Overall performance of sectors determines its returns. The risk is higher in this fund.

Functioning of Mutual Funds

Top 10 Mutual Funds trade in securities based on thorough market study and understanding. Being a professionally managed trust, investment objectives are set when a scheme is launched. The focus of investments is as per the set objectives:

  • Long term capital growth;
  • Regular monthly income; or
  • Steady returns.

Top 10 Mutual Fund Pros

  • Size Benefit : Small investment and a low fee.
  • Easy Trade : Trade in stock exchanges with relative ease in top 10 Mutual Funds through a Mutual Fund.
  • Professional Management : Gives you the benefit of seasoned financial methods in top 10 Mutual Funds.
  • Fresh Investor : New young individual novice investors who are averse to actively manage their money are benefited in top 10 Mutual Funds.
  • Free Choice : You are able to research and select a fund manager of your choice.
  • Diverse Portfolio : Mixing of investments and assets in top 10 Mutual Funds within a portfolio reduces risks.                                    

Top 10 Mutual Funds cons

The inherent disadvantages of top 10 Mutual Funds need to be factored in by you.

  • Fluctuating Returns : Your returns in top 10 Mutual Funds are always prone to fluctuate depending on the performance of your securities at the exchanges as it is market driven.
  • Cash : It is always required to keep some provision of cash compulsorily due to the continuous flow of funds in and out of the Mutual Fund.
  • Expenses : The cost of operations of top 10 Mutual Funds reduces the amount of your pay-out.
  • Opaque : Performance is totally dependent on the acumen of the fund manager with an apparent lack of transparency in the way the funds are managed in top 10 Mutual Funds.
  • Appraisal Blues : The research and comparison of funds is very complex and difficult for a layman in top 10 Mutual Funds.

Top 10 Mutual Funds for Long Term Growth

How do you arrive at an informed analysis of what the top 10 Mutual Funds are in the market? It is a question that will continuously keep on engaging you before you home in on the right choice for investment. Of course factors like your risk appetite, your financial goals and your budget are important to explore the possibilities of investment in top 10 Mutual Funds.  So a prudent move would be to pick up two schemes from five categories - large and mid-cap, value, ELSS, and hybrid scheme should be good enough pool for you as a regular investor. The top 10 Mutual Funds in the list:

ICICI Prudential Equity & Debt Fund (Among top 10 Mutual Funds)

  • Fund objective : It aims to generate long term capital appreciation by investing in equities and related securities as well as fixed income money market instruments.
  • Scheme type : Open ended
  • Scheme Objective : To generate long term capital appreciation. The allocation in equity is in the range of 60-80% and the debt allocation is in the range of 40-49%.
  • Class : Hybrid
  • Category : Aggressive hybrid.
  • Launch date : September 1999.
  • Current Fund Size :28300 crores.
  • NAV : 22.85 as on 6th Nov, 2018.

Motilal Oswal Multicap 35 Fund(Among top 10 Mutual Funds)

  • Fund Objective : It aims to generate long term capital appreciation by investing in equities and related securities across different sectors and capitalizations.
  • Scheme type : Open ended
  • Scheme Objective : It aims to generate long term capital appreciation by investing in equities and related securities across different sectors and capitalizations.
  • Class : Equity
  • Category:
  • Launch date : April 2014.
  • Fund Size :13600 crores.
  • NAV : 23.81 as on 6th Nov, 2018.

 L&T Tax Advantage Fund(Among top 10 Mutual Funds)

  • Fund Objective : It aims to generate long term capital appreciation by investing in diversified portfolio, mainly in equities and related securities.
  • Scheme Type : Open ended
  • Scheme Objective : It aims to generate long term capital appreciation by investing primarily in equities and related securities.
  • Class : Equity
  • Category:
  • Launch Date : January 2006.
  • Fund Size :3300 crores.
  • NAV :52.86 as on 6th Nov, 2018.

 ICICI Prudential Bluechip Fund(Among top 10 Mutual Funds)

  • Fund Objective : It aims to generate long term capital growth by investing in a portfolio predominantly in equities and related securities of large cap companies.
  • Scheme Type : Open ended
  • Scheme Objective : It aims to generate long term capital appreciation by investing in equities and related securities of large cap companies.
  • Class : Equity
  • Category : Large cap.
  • Launch Date : April 2008.
  • Fund Size : 18800 crores.
  • NAV :39.72 as on 6th Nov, 2018.

 Aditya Birla Sun Life Tax Relief 96(Among top 10 Mutual Funds)

  • Fund Objective : It aims to generate long term capital appreciation by investing 80% of the funds in a portfolio comprising mainly in equities and related securities and the rest in debt and money market instruments.
  • Scheme Type : Open ended
  • Scheme Objective : It aims to generate long term capital appreciation by investing 80% of the funds in equities and related securities.
  • Class : Equity
  • Category:
  • Launch Date : March 2008.
  • Fund Size : 6500 crores.
  • NAV : 29.52 as on 6th Nov, 2018.

 SBI Magnum Multi Cap Fund(Among top 10 Mutual Funds)

  • Fund Objective : It aims to generate long term capital appreciation by investing in a portfolio mainly in equities and related securities of companies spanning entire spectrum of market capitalization
  • Scheme Type : Open ended
  • Scheme Objective : It aims to generate long term capital appreciation by investing in equities and related securities of companies spanning entire market capitalization spectrum.
  • Class : Equity
  • Category : Multi cap.
  • Launch Date : August 2005.
  • Fund Size : 5800 crores.
  • NAV :44.05 as on 6th Nov, 2018.

 L&T India Value Fund(Among top 10 Mutual Funds)

  • Fund Objective: It aims to generate long term capital appreciation by investing in a diversified portfolio mainly in equities and related undervalued securities. Investments are also made in foreign securities in the international market.
  • Scheme type: Open ended
  • Scheme Objective: It aims to generate long term capital appreciation by investing in equities and related undervalued securities. Investments are also made in foreign securities in the international market.
  • Class: Equity
  • Category: Value oriented.
  • Launch date: November 2009.
  • Fund Size: 8000 crores.
  • NAV: 34.07 as on 6th Nov, 2018.

 SBI Bluechip Fund(Among top 10 Mutual Funds)

  • Fund Objective : It aims to generate long term capital appreciation by investing in a portfolio mainly in equities and related securities of large cap companies.
  • Scheme Type : Open ended
  • Scheme Objective : It aims to generate long term capital appreciation by investing in equities and related securities of large cap companies.
  • Class : Equity
  • Category : Large cap.
  • Launch Date : December 2005.
  • Fund Size : 19900 crores.
  • NAV :36.23 as on 6th Nov, 2018.

 DSP Equity Opportunities Fund(Among top 10 Mutual Funds)

  • Fund Objective : It aims to generate long term capital appreciation by investing in a portfolio mainly in equities and related securities of both large and mid-cap companies.
  • Scheme type : Open ended
  • Scheme Objective : It aims to generate long term capital appreciation by investing in equities and related securities of both large and mid-cap companies.
  • Class : Equity
  • Category : Large and Mid-cap.
  • Launch Date : March 2000.
  • Fund Size : 5700 crores.
  • NAV :202.04 as on 6th Nov, 2018.

 Mirae Asset Emerging Bluechip Fund(Among top 10 Mutual Funds)

  • Fund Objective : It aims to generate long term capital appreciation by investing in a diversified portfolio mainly in equities and related securities of large and mid-cap companies.
  • Scheme Type : Open ended
  • Scheme Objective : It aims to generate long term capital appreciation by investing in equities and related securities of large and mid-cap companies.
  • Class : Equity
  • Category : Large and Mid-cap.
  • Launch Date : May 2010.
  • Fund Size : 5790 crores.
  • NAV :47.92 as on 6th Nov, 2018.

Bottom Line:

The market regulator SEBI keeps a strict tag of the functioning of top 10 Mutual Funds in India. Thereby, it protects your interests as an investor. As a result, top 10 Mutual Funds have turned one of the safest modes of investment that also ensures a handsome and steady return. Though the scope was confined to the top 10 Mutual Funds, a brief mention of taxes imposed will not be out of place. Only ELSS and some investments in Government bonds enjoy tax deduction under IT Act, 1961.  Rest fall under the purview of taxation. You are well informed about the quality and quantity of your investment, since standard information is shared with you.