When we start investing to invest in mutual funds then this query is always is in the mind of beginners that which are the high performing funds to invest for high growth.
And which would give them high return in no time but it is not true because of the first key rule of investing is that.
Do you know, As per data in the fiscal year(2019-20) this mutual funds industry has added up 9.39 lakh accounts each month.
“More want to build, the longer time you have to invest”
Also, you have identify your financial goal before investing and your risk appetite.
This means higher the risk higher the returns and lowers the risk means lower is the returns.
So in this blog, we will discuss points to consider before investing and the best mutual funds in India in 2020.
What is inside for me.
- Things you should consider before investing in mutual funds.
- Difference between direct plan and regular plan of the mutual fund.
- List of Best mutual funds in India to invest.
- What matters while start investing in mutual funds.
- FAQ’s.
Things you should consider before investing in mutual funds.
Know your goal, investment horizon, and risk profile.
Whenever we performed any task which is related to daily needs than we remember our goal yet when it comes to investment than a friend’s call may be enough to convince for the selection of any mutual fund.
If the above case is with you than you are on the wrong path of making investments.
Moreover, you need to ask yourself what is the end goal of doing the investment before choosing the best mutual funds in India for investments.
You should decide the risk and time horizon of it so that you can invest accordingly.
The goal should be categorized as to whether it is for long term capital gains or short term gains.
Before investing in mutual funds you should have habit of saving money.
For example, the long term includes retirement planning, children’s education, or short terms like buying a house or a car.
You should take risks according to the goal like more for any holiday or vacation planning. and, less risk for retirement planning, children’s education, future emergencies as it is very important for your life.
For example -You can invest or save in mid or small-cap funds for vacation planning as it is riskier.
And for safe investments like retirement or children education invest in debt or large-cap funds.
“More risk means more returns and less risk means fewer returns”.
The risk associated with that fund.
You need to calculate your risk according to your goal like it is a high-risk fund or low-risk fund and how much risk you need to take according to your age.
now, here is an example of how you can take a risk:-Now do you calculation as follows
(100-Your age)%=allocate money in market-related products, which discussed in brief below.
For example -your age is 20 years. so By this rule, 80% of saved money should invest in market-based products and remaining in safe assets.
So reallocate your money as per your needs and invest accordingly.
“Bole toh jawani mai risk le sakte hai”
Always check at least 10 years of the past track record of that fund.
Whenever you choose a mutual fund for yourself. Check its at least a 10-year record or from inception date(starting date of that mutual fund).
Because in equity type of investments history repeats itself and it is connected with the sentiments with the market.
You need to know the types of fund before investing for good returns.
Check the profile of the fund manager.
This tip may be new to some of the investors and got puzzled about why they should do that for their investments. Let’s take an example:-
Earlier in the 90s west indies team was supposed to be the best team for world cup also they have won it too but for now, would you consider it as a good team or ready for world cup because it all depends upon the captain and players of that team
As it is the returns of a mutual fund that will depend on the profile of that fund manager and his ability of risk tolerance.
As the market is low or high the manager secures your fund and invests it judicially to get a better return for all the retail investors.
Check the fund’s Expense ratio and exit load.
These are the charges which are cut down when the investor redeems or withdraw the money from that fund or fees of the fund managing company.
So you need to check all the charges related to that fund when start investing.
Read the offer document of that mutual fund Scheme carefully.
Several investors invest in mutual funds without reading the offer document of that fund also we all must have listened to the tag line of a mutual fund as
“Mutual fund investments are subject to market risks Please read the offer document carefully before investing”.
Why we need to read this Document.
The offer document of mutual fund clarifies the investment decisions and objectives of that fund. Also how they will take a risk when the market is low or high.and you need to match up the risk profile according to your investment objective with that mutual fund.
Difference between direct plan and regular plan of the mutual fund.
Direct plan buys mutual fund directly from mutual fund company from its website etc.without the involvement of the broker.
But regular plan invests with the use of a broker and charges the extra managerial fees.
So direct plan offers more returns and growth as a comparison to the regular plan.
But there is more convenience in the regular plan as it offers no prior investment experience.
List of Best mutual funds to invest.
Here is the list of the best funds of India according to each category but do not invest blindly.
You need to do complete analysis based on the mentioned points to get the high return and growth.
You should know the criteria for selecting the fund before you start to invest in mutual funds.
All the mutual funds which are listed below have source at website moneycontrol.
Equity fund.
Invest majorly in the stock market and are riskier than debt fund due to its dependence on market volatility.
Large-cap equity mutual funds.
Large-cap equity fund invests in stocks of companies with a market capitalization of more than 20,000 crores.
Due to Sebi’s recategorization, mutual fund companies can invest in large-cap companies ranging from 1-101 and it provides less risk than mid and small-cap plans.
These are some best mutual funds in India listed below to invest in this category.
Axis Bluechip Direct plan
Mirae Asset Large Cap Direct plan.
Mid-cap equity mutual funds.
Mid-cap equity fund invests in stocks of companies with a market capitalization of between 5000 to 20,000 crores.
And due to Sebi’s categorization, mutual fund companies can invest in mid-cap companies ranging from 101-200.
Therefore it provides more risk and also due to this categorization it is now difficult to choose between these companies and creates a tough task for a fund manager to invest may result in lower returns.
Some of the best mutual funds in India according to this category are listed below.
Axis mid-cap fund
Small-cap equity mutual funds.
Small-cap equity fund invests in stocks of companies with a market capitalization of fewer than 5000 crores.
And as due to Sebi’s categorization, mutual fund companies have to invest in small-cap companies ranging from 201-last.
Therefore, it provides more risk but also an opportunity for growth as there are several choices are available for the fund manages to invest in and can provide better returns for you. Therefore Some of the best mutual funds according to this category are listed below.
And also small-cap funds have high risk in a shorter period so you should invest for a longer time.
Because small-cap provides more returns than any large and mid-cap fund as it growing and small company.
So some of the best mutual funds in India from this category are listed below.
Axis Small Cap fund.
SBI Small Cap fund.
Multi cap mutual funds.
These multi-cap funds can invest in any large, mid, and small-cap fund with any proportion.
So it will provide good and consistent returns as fund managers have a high variety of companies to invest.
Some of high performing mutual fund according to this category are listed below.
Parag Parikh multi-cap fund
Debt funds.
These types of funds ‘borrows’ money from the investors and keep their major proportions of their investment in debt instruments like fixed interest giving securities.
For example like corporate bonds, government securities, treasury bills, commercial paper, certificates of deposit, etc.
As debt funds invest in government securities so these are less volatile as compared to equity .
But overall returns still depend on fund managing company and in which AMC is investing their money.
Some of high performing mutual fund according to this category are listed below.
Debt-liquid mutual funds.
These are the funds invest in government securities for a maximum of 91 days.
And after maturing, it changes its investment and dive to some other debt instruments. also, it gives a higher return than saving accounts.
Nippon India Liquid Direct fund.
Franklin India Liquid fund.
Ultra-short duration mutual funds.
These funds are also the type of debt fund which lends to companies for 3-6 months and also provides low returns and risk.
PGIM Ultra-short duration fund.
ELSS or tax saving mutual funds.
This is one of the favorite categories of investors who are looking to save tax every year as per their income slab.
So by showing these investments to the government they provide exemptions under 80C up to Rs 1.5 lakh per year.
Aditya Birla tax relief 96
Axis long term equity fund.
What matters while start investing in mutual funds.
- You should know you end long term goals according to your risk profile and age.
- Must have a clear idea and knowledge of terms related to funds and analyze it according to your risk profile.
- You should be patient and have faith in the economy for a long time.
- We should able to distinguish between a cheap and costlier market and manage the right to invest in it.
- We should diversify your portfolio by allocating your money into different assets and gain returns over a longer period.
FAQ’s.
A-There are series of steps through which best mutual funds can be chosen.
1.Check the past 10 years record of the fund.
2.Analyze the fund manager of that fund.
3.Risk and return profile of that fund.
4.Charges and expenses in that fund.
5.Read the objective statement of that fund.
A-Here is the list of some best mutual fund but analyze it properly.
Aditya Birla tax relief 96.
PGIM Ultra-short duration fund.
Nippon India Liquid Direct fund.
Parag Parikh multi-cap fund.
Axis Bluechip Direct plan
A-Aditya Birla tax relief 96.
Axis long term equity fund.
These are some tax-saving funds which has given good returns in the past.
A-Liquid funds are the funds that invest in government securities of up to 91 days of maturity. It is safe and has a lower risk.
It also gives more returns than saving account of 7% and provides liquidity like it.
A-1.Motilal Oswal Multicap 35 Fund Regular-Growth.
2.DSP Equity Opportunities Fund-Growth.
3.SBI Bluechip Fund-Growth.
This is Randeep pursuing mechanical engineering and passionate about learning new things in life every day who is looking forward to enhancing skills that would help me in building my own empire.
