Investing in mutual funds in India is one of the most common methods for individuals to save for their retirement. Mutual funds are a type of investment in which a large pool of money from many different investors is invested in a variety of different stocks, bonds, or other types of investments. When individuals invest in mutual funds, they benefit from the expertise of professional financial advisors and managers who oversee investments within the fund.
Risk Analysis:
Different types of mutual funds exist in India, ranging from relatively safe and predictable investments to riskier, higher-reward investments. Investors should assess their risk tolerance and long-term financial goals as the step 1 of their mutual fund plans. For example, if someone is looking for income and safety of principal, then a conservative mutual fund may be the best option. These conservative funds hold a variety of safe, short-term investments in the form of corporate bonds, foreign bonds and treasury bills. On the other hand, a more aggressive investor might opt to invest in an equity mutual fund, which generally holds stocks that are considered riskier but have the potential for greater returns over time.
You can refer the risk to return hierarchy in mutual funds on the chart given below:
Low risk does not really mean that they are the top mutual funds to invest in India as you lose the potential higher returns. Hence, determining your risk appetite, tenure of goal and investment objective becomes one of the most important steps in the mutual fund plans.
Example based on risk appetite:
If two individuals are looking for mutual fund investments whose age are 25 years and 60 years respectively, only on the basis of their age, we can recommend: high risk equity mutual funds would be the top mutual funds to invest in India for 25-year-old and a low-risk debt mutual fund for 60-year-old. Our basis of recommendation is on the assumption that young individuals can take a higher risk for higher returns as they have several working years left in their life, while a person in his late 50’s might not be comfortable taking risk as they are close to retirement and would prefer regular periodic returns.
Example based on time horizon:
You can have multiple goals in life, based on the time horizon of each goal the mutual fund investments can be made. For example, you want to create a savings for your child’s higher education which will be required 10 years from today and you want to buy a new car in the next 3 years. For goals maturing sooner the top mutual funds to invest in India are low-volatile debt funds whereas for long-term goals one can invest in moderate high risk equity mutual funds. This is on the assumption that equities over a longer time frame are more profitable than other instruments as volatility is adjusted with time.
Example based on Investment objective:
You may plan on two or more financial goals which can be maturing in the same tenure. For example, you want to save on taxes and buy a new car in 3 years. In this case, the top mutual funds to invest in India shall be a combination of two different mutual funds where one portion of your total investable amount can be invested in tax saving equity mutual funds (ELSS) and the other portion in debt funds to buy a new car.
Comparing different mutual funds:
When comparing various mutual fund plans in India, investors should consider the fees associated with each one, as well as the selection of funds available. Choosing the right mix of funds helps to ensure that an individual’s portfolio is properly diversified and has the potential to generate the highest possible returns. Additionally, investors should make sure that the fund manager has a good track record and strong customer service ratings.
Below is the list of some top mutual funds to invest in India for different categories:
Scheme Name | AUM | TER | 1 Year Return% | 3 Years Return% | 5 Years Return% | Inc. Return% |
Invesco India Contra Fund (G) | 8,210.76 | 1.78% | 4.54% | 17.70% | 12.61% | 13.95% |
UTI-Dividend Yield Fund (G) | 2,655.91 | 2.19% | 0.22% | 16.45% | 11.01% | 14.16% |
ICICI Pru Long Term Equity Fund – (G) | 9,072.14 | 1.93% | 5.86% | 15.39% | 11.50% | 21.01% |
HDFC Flexi Cap Fund – (G) | 26,511.45 | 1.75% | 14.58% | 16.09% | 11.31% | 21.56% |
Mirae Asset Emerging Bluechip Fund (G) | 20,663.71 | 1.69% | 2.36% | 21.02% | 14.29% | 20.10% |
HDFC Top 100 Fund (G) | 19,910.47 | 1.82% | 9.82% | 12.10% | 9.33% | 20.93% |
Nippon India Growth Fund – (G) | 11,267.89 | 1.89% | 6.56% | 23.25% | 13.30% | 25.06% |
ICICI Pru Multicap Fund – (G) | 6,156.91 | 1.98% | 3.38% | 14.63% | 10.60% | 19.65% |
HDFC Capital Builder Value Fund – (G) | 4,781.71 | 2.06% | 4.31% | 14.16% | 9.03% | 20.20% |
Conclusion:
In India, investing in mutual funds can be a great way to diversify one’s portfolio and achieve financial success. Careful selection of the right mutual fund plans, combined with good financial planning, can help strengthen an individual’s financial status and ensure they have the financial achievement they desire.