Investment in long-term assets is necessary for wealth creation. You want to invest in financial instruments that will yield a profit for you as an investor. One of the most common investment options for people is a mutual fund. Mutual funds are financial instruments that let you combine your funds with other investors to buy various stocks, bonds, and other securities. Mutual funds have low costs, are professionally managed, and can be purchased through a broker or advisor.
Without having to handle individual investments, mutual funds provide the chance to diversify across many asset types. Also, mutual funds might give investors access to opportunities they otherwise wouldn’t have.
What is the best mutual fund?
There are many kinds of mutual funds categorised into a wide range of groups, including equity mutual funds, debt mutual funds, and hybrid funds. These categories depend on a fund’s underlying assets, such as equities, debt, or gold. These funds’ risk appetites and investment objectives differ. The best mutual funds for you will depend on your investment goals, risk profile, and time horizon.
For example, equity mutual funds may be the ideal choice for you if you plan to invest for the long term. Or, investing in debt mutual funds, which tend to be less volatile than equity funds, may help you achieve good returns in a shorter time.
Top 5 mutual funds to invest in this year
You can plan to invest in several mutual funds, regardless of how experienced you are with investing. The top 5 mutual funds in India to think about investing in are listed below:
|S. No||Mutual Fund||AUM||Expense Ratio||3-Year Return||5-Year Return|
|1.||Tata Digital India Fund Direct-Growth (Equity)||Rs. 5,981 crores||0.34%||28.65%||28.12%|
|2.||ICICI Prudential Technology Direct Plan-Growth (Equity)||Rs. 3,135 crores||0.85%||30.77%||27.57%|
|3.||ICICI Prudential Credit Risk Fund Direct Plan-Growth (Debt)||Rs. 8,014 crores||0.88%||8.16%||8.05%|
|4.||Axis Bluechip Fund Direct Plan-Growth (Equity)||Rs. 36,979.68 crores||0.52%||25.07%||45.13%|
|5.||Quant Absolute Fund Growth (Hybrid)||Rs. 583 crores||0.56%||30.04%||20.35%|
Tips to select the best performing mutual fund
You can select a good-performing good mutual fund by examining several factors that influence its ability to generate the desired returns. The following characteristics shared by all funds make them essential online investment schemes:
Total expenditure ratio
A low expense ratio is necessary because no one wants to make an overpriced or expensive investment. The best Indian mutual funds have lower expense ratios, and while having higher prices, these investments are still beneficial in a portfolio.
A top-performing fund often has a proven track record of providing greater returns over the prior three and five-year periods. In terms of performance, these funds would have exceeded their benchmark and competitor funds. Analyse the fund’s performance during the last few economic cycles. Look at the performance of the fund, especially during market downturns. Market changes do not hamper the performance of a good fund. However, you should be aware that past performance does not necessarily predict future outcomes.
You should only invest after carefully analysing your goals. Once the objectives are in place, you must evaluate if investing in a mutual fund plan would result in the desired outcome by comparing the demands to the plan’s goal. It is up to you to decide if your objectives match the objectives of the mutual fund plan in which you intend to invest.
Fund managers are in charge of the money belonging to the investors, and their skills allow them to make money. A mutual fund plan can gain good returns if the fund manager can identify the best investment opportunities even in bad times.
Who should invest in the best mutual funds?
Everyone should consider mutual funds as an investing option. Investing in mutual funds is one of the best ways to achieve your financial goals. Every mutual fund has objectives it hopes to achieve. Because of this, whenever you plan to invest in mutual funds, you must ensure that your goals and the fund’s goals are aligned.
Investing using a SIP reduces the need to arrange a large payment. Therefore, you only need a small amount to start your financial journey. Some mutual funds let you invest as low as Rs 100 per month in a SIP. This option is not generally available in other investment alternatives.
Each investment strategy comes with a certain level of risk. Deposits are also not entirely safe as investments. The risk level of mutual funds largely depends on the kind because it directly depends on the underlying securities. You should thus only invest in a mutual fund plan if you are willing to bear the risk involved.
Mutual funds provide a good, affordable approach to diversifying your portfolio, and you may use them to grow your money while controlling risk.
However, it is also necessary to be aware of several factors before investing in a mutual fund. We recommend consulting a financial consultant if you cannot figure out which mutual fund works best for you. It is better to be cautious before investing than to lose your investment over time.
A financial expert like Piramal Finance can help you with information regarding can also help apply for a personal loan and manage your finances efficiently.