Mutual funds or a collective investment scheme as we call it, function by pooling your investments with the accounts of other investors and get your money invested in other assets. This collected money is then used to invest in stocks, bonds, debts and so on. Investors claim their ownership on a mutual fund based on their shares and the generated income by those shares.
Since the market place is dynamic, it is difficult to pinpoint which are the best mutual funds to invest in India. This is why it is wise to keep track through the rating systems like ICRA, Morningstar, PersonalFN and Crisil. To get an idea of which mutual fund house is performing well, you could opt for advisory services from LKP Securities Limited. Their experienced researchers are always monitoring the market to give their clients fruitful advice to invest at the right time.
Categories of mutual fund
There are three main categories of mutual funds. To determine what are the best mutual funds to invest in India go through the following options.
Equity Funds or stock funds are mostly for long term investors. It works in a simple way. First, you invest in a fund, the collected money further gets invested in stocks. Based on how the stocks perform in the market resonates with you.
Debt Funds or bond funds are mostly for short or medium-term investors. The debt funds invest in fixed income instruments that offer capital appreciation.
Hybrid Funds or exchange-traded funds are for medium to long-term investors. These funds invest in more than one type of security.
Top mutual funds to invest in India
Now let us see what are the best mutual funds to invest in India.
Mirae Asset Hybrid
It is an open-ended hybrid scheme that invests mainly in equity and equity-related instruments. This fund invests in large companies and is perfect for conservative equity investors who look for long term investment. The main strategy of this fund is the allocation between Equity and Debt and is considered one of the top 10 mutual funds in India.
- The nature of investment for this type of mutual fund is a portfolio mix of equity and fixed income instruments.
- The portfolio risk for this fund is within a specified level.
Nippon India Gilt Securities Fund
This mutual fund primarily invests in debt securities that are issued by the State and Central Governments to generate risk-free returns. Since it is highly unlikely for the government to default on the principal of issued bonds or payment of interest, it is one of the safest debt instruments. This is why it is one of the best debt mutual funds in India.
- Credit risks are negligible.
- Long term investors can invest in this fund if they have a long term motive of wealth creation.
ICICI Prudential Bluechip Fund – Growth
It is one of the best new mutual funds in India. This mutual fund is suitable for investors who want to invest their money for at least 3 to 4 years with high returns. Mainly focused on bluechip companies, this fund contains large, mid and small-cap stocks. Most of the stock is invested in Indian stocks. The risk factors are high with this fund which means the investors must be prepared for potential losses.
- This mutual fund is one of the consistent performers in the large-cap category.
- It protects the downside in bear cycles.
SBI Magnum Medium Duration
Among the best debt mutual funds in India, this one invests in debt securities to generate decent returns within a medium-term investment. To ensure regular accrual payment, the fund invests in short term debt securities coupled with a moderate level of liquidity. The credit risk here is well diversified.
- The maturity period of the fund is 3 to 4 years for substantial capital appreciation.
- This fund has very low-risk securities.
Parag Parikh Long Term Equity Fund
It is a diversified equity scheme and one of the top 10 mutual funds in India. This fund is suitable for long term investors. If you want your money to be managed sensibly, this is the one. Even if the risk factors are high, this scheme can be invested in Indian equities, foreign equities and debt securities.
- One of the most simple mutual fund products.
- Suitable for investors who have detailed knowledge about the perils involved within an instant gratification.
Aditya Birla Sun Life Mutual fund
It is one of the best new mutual funds in India. It is for investors who are looking for long term capital appreciation. Environmental, Social and Governance (ESG) themed companies are invested with this scheme.
- Largest fund house in India, having a pan-India presence over 247 locations.
- Impeccable asset management, efficient risk-adjusted performance, unique products backed up by 25 years of detailed and strong research.
Your investment objective, risk profile and investment horizon need to be emphasized before choosing the best mutual fund to invest in. The utmost responsibility relies on the fund manager in terms of the seamless performance of a particular fund. So, pay attention to the track record of the fund manager. Further, financial and expense ratios also play an important role in terms of choosing the best mutual fund.