What are the Best Mutual Funds?
An asset management company (AMC) forms a mutual fund by pooling the investments of several individuals and institutions.
Fund managers manage the pooled investments of the AMCs. These are financial professionals with extensive experience managing investment portfolios. A mutual fund is a pathway for combining the investments of a number of investors to invest their money in bonds, stocks, and other investments of a similar nature.
Investors in mutual funds receive fund units in proportion to their investment amount. Net asset values (NAVs) are the only price at which fund units may be purchased or redeemed by investors.
A mutual fund's NAV fluctuates daily depending on the performance of its underlying assets. As mutual funds are regulated by the Securities and Exchange Board of India (SEBI), they are considered safe investment options. Investing in mutual funds offers investors the opportunity to diversify their portfolio at a relatively low investment level.
Top 10 Best Performing Mutual Funds
According to their equity exposure, mutual funds can be divided into equity funds, debt funds, and hybrid/balanced funds. Mutual funds classified as equity funds have equity exposures of more than 65%. Otherwise, it belongs to the debt fund category. Equities and debt securities are both included in a hybrid mutual fund.
Following is a list of the best equity funds to answer How to start investing in mutual funds:
- Quant Small Cap Fund - Direct Plan-Growth
- ICICI Prudential Commodities Fund Direct Plan-Growth
- Aditya Birla Sun Life CEF - Global Agri Plan - Growth-Direct Plan
- Baroda BNP Paribas Dynamic Bond Fund - Direct Plan - DAILY IDCW Option- Reinvestment
- Navi Liquid Fund - Direct Plan - DAILY IDCW- Reinvestment
Who Should Invest in Best Mutual Funds?
Investing in mutual funds for Beginners should consider mutual funds as an investment option at some point in their lives. A mutual fund is one of the best ways to achieve your financial goals.
There are certain objectives to be achieved by every mutual fund. When planning to invest in mutual funds, you should ensure that your objectives are aligned with those of the fund you are considering.
By investing via a SIP, the need to arrange a lump sum was eliminated. In this way, you can begin your investment journey with a small amount of capital. The SIP option is available for mutual fund plans that allow you to invest a sum as low as Rs 100 per month. In contrast to most other investment options, this option is not available.
There is a risk associated with every investment option. It is important to note that no investment, including deposits, is completely safe. Mutual funds differ in terms of risk levels since they are directly influenced by the underlying assets. Consequently, you should only invest in a mutual fund scheme if you are willing to assume its associated risks.
How to Select the Top Performing Mutual Funds?
When selecting the top-performing funds, the following parameters should be considered:
- Make sure the fund has a good track record
- Review the financial ratios
- Analyze the expense ratio
- Investment Objective
- Fund History
- Performance of Fund Manager
Advantages of Investing in Best Mutual Funds
- Management of your money with expertise
- Regular investment in small amounts
- Increasing diversification
- Redeemable at any time
- Regulations that are in place
- A tax-efficient investment
Risk Possessed by Best Mutual Funds
As previously mentioned, mutual funds vary in risk based on their type. It is considered that equity funds are the most risky since they invest in equity shares of companies with a wide range of market capitalizations. Market movements can easily affect these funds.
The following are the types of risks that come attached with equity funds:
- Market Risk
- Concentration Risk
- Interest Rate Risk
- Liquidity Risk
- Credit Risk
Types of Mutual funds to invest
The best kind of fund to invest in depends on your financial objectives
The top mutual funds for SIPs
Investors can invest small amounts of money periodically through systematic investment plans (SIPs). Through SIP, investors have the option of determining the frequency and size of their investment.
The top equity mutual funds
A mutual fund that invests primarily in equity instruments, such as stocks, is an equity mutual fund. Among all mutual funds, these funds are likely to offer the highest returns.
Top Small-Cap Mutual Funds
Small-cap mutual funds invest primarily in equity shares of companies with small market capitalizations, which are classified as small-cap companies.
Top Large-Cap Mutual Funds
The term large-cap mutual fund refers to a class of equity mutual funds that invest primarily in equity shares of companies with a large market capitalization. In general, these companies are not adversely affected by changes in the market.
Top Multi-Cap Mutual Funds
Mutual funds that invest in equity shares of companies across a wide range of market capitalizations are called multi-cap funds. Diversifying your portfolio with multi-cap funds is the best way to achieve this.
Top Tax Saving Mutual Funds
Under Section 80C of the Income Tax Act, 1961, equity-linked savings schemes (ELSS) or tax-saving funds are equity-oriented funds. A tax deduction of up to Rs 1,50,000 a year is available to investors who invest in these funds.
Top Mid-Cap Mutual Funds
Mid-cap funds invest in equity shares of companies with a market capitalization between Rs 500 crores and Rs 10,000 crores.
Top Liquid Funds
Liquid funds are a type of debt fund that invests in high-rated debt instruments such as Treasury bills. Compared to regular savings accounts, these offer a better way to park idle funds.
Conclusion
Knowing the best mutual funds allows you to select one that is aligned with your investment objectives. Don't forget, however, to carefully review all the details of the fund scheme before investing. Furthermore, you can use a mutual fund calculator to estimate how much wealth you will accumulate over the course of the investment period. Contact YourMoneyWise for further information on investment.
Comments