There are more than 2500 mutual funds schemes available in the market. This gives flexibility to the investors to choose the best mutual fund for them but also creates a lot of confusion. Before diving deeper into the list of best mutual funds to invest in, let’s understand some basic concepts on the same.
What are the best mutual funds?
A mutual fund is formed when an AMC pools funds from various investors to purchase various forms of securities. The AMCs have managers to manage each investment of investors. Mutual funds investors are assigned some units of mutual funds proportional to their investments in the mutual fund.
One of the plus points of investing in mutual funds is that investors can diversify their portfolios at a very low investment amount. A relatively increasing NAV is a good parameter to judge any mutual funds performance over a period and which are the best mutual funds to invest.
How to Select the best mutual funds to invest?
Every investor wants mutual funds with the best return value. The entire selection process of choosing the best investment plan depends on various parameters such as investment horizon, life/financial goal, risk profile, etc.
Investment Objective:
Every investment should be made in-sink with the investor’s life goals. Once that goal is clear, it should be matched with the investment goal of a mutual fund. Each mutual fund has an investment objective that may or may not be the same as the life goal. Select funds that support the overall financial plan/goal of your investment.
A short-term plan cannot sustain the objective of a long-term goal. Similarly, a risk-averse person should not think of investing in a very risky investment. The information about funds, including their objective, assets, and liabilities are made available to the investor.
Fund History:
A good mutual fund should have a long track record to be considered for investment. A fund with a good record displays the constant accuracy of correct investment strategies. A fund with a history of 5 years is considered good for investment while making a choice investors should keep in mind their investment horizon.
Financial Ratios:
Before investing in a mutual fund, it is important to understand its risk-return ratio. Return is the increase/profit in the initial investment whereas risk is the uncertainty concerning the actual return to not be in-sink with the expected value.
Expense Ratio:
It is an essential parameter to keep in mind while deciding the best mutual fund to invest in. This is the annual fee that is charged by the AMC in the percentage of investment to manage the investments. This value is automatically deducted from the return received. Thus, a high expense ratio results in a lower return for the investor.
Fund Manager:
Even though the entire investment is process-oriented, the fund manager takes care of important and ultimate responsibilities. Before making an investment, it is wise to check the track record of the fund manager. A fund that has given consistent returns and contained the losses to a minimum in difficult times shows strong management team support.
Diversifying the portfolio is a wise choice rather than keeping all the eggs in the same basket, in this case in the same mutual fund. To make the confusing process of selection is a little bit easier, we have listed the 8 best mutual funds to invest in different domains.
Equity Funds:
Funds are classified as equity funds if more than 65% of their investments are in equity-linked instruments such as stocks.
Axis Bluechip Fund
This fund is managed by Mr. Shreyas Devalkar from Axis AMC Ltd., with a 5yr return of approx. 6.83%
| Risk | Moderately High |
| Expense Ratio | 1.98 |
| Minimum SIP amount | 1000 |
| NAV | 26.59 (28 May 2020) |
| Fund Size | 12,716 Cr |
ICICI Prudential US Equity Fund Growth
This fund is managed by Ms. Priyanka Khandelwal, with 5yr return rate of approx. 12.29%
| Risk | High |
| Expense Ratio | 2.08 |
| Minimum SIP amount | 100 |
| NAV | 32.29 |
| Fund Size | 587 Cr |
Franklin India Feeder – Franklin US Opportunities Fund
This fund is managed by Ms. Pyari Menon, with a 5 yr return of approx. 13.8%
| Risk | High |
| Expense Ratio | 1.74 |
| Minimum SIP amount | 500 |
| NAV | 39.42 (26 May 2020) |
| Fund Size | 1515 Cr |
Debt- Based Funds:
These funds majorly invest in fixed income securities like bonds and treasury bills.
Kotak Savings Fund
This fund is managed by Mr. Deepak Agarwal, with a 3 yr return of approx. 7.35%
| Risk | Moderately low |
| Expense Ratio | 0.78 |
| Minimum SIP amount | 1000 |
| NAV | 32.56 |
| Fund Size | 9,147 Cr |
Aditya Birla Sun Life Savings Fund
This fund is managed by Mr. Kaustubh Gupta, with a 5yr return of approx. 8.16%
| Risk | Moderately low |
| Expense Ratio | 0.45 |
| Minimum SIP amount | 1000 |
| NAV | 403.64 (27 May 2020) |
| Fund Size | 12,268 |
The above-mentioned list of best mutual funds to invest in takes into consideration various parameters. There is no particular order of ranking between the funds. The best investment plan should suit your need and can be different for different investors. So, make a well-informed decision to achieve your financial goals.
