Investors are often on the lookout for best mutual funds to invest in the new year. However, a new year does not necessarily shift performance of mutual funds since a fund performance must be studied over at least a 10- year period. Investors must aim at investing in consistently performing mutual funds. A consistent mutual fund provides stable returns during bull and bear market conditions. These are often less volatile to market movements when compared to their peers.
Here, we will share details of some handpicked regular mutual fund schemes that have shown consistent performance over the past 10 years. Before investing in these, investors must try to understand the suitability of these schemes to individual risk-taking ability. For example, a small cap mutual fund may not be suitable for all investors. Thus, investors should consider the downside risk of each and associated volatility factors before considering making an investment.
To allow better investment decision-making, we have presented the fund category before providing fund details.
Index Funds
Index Mutual Funds invest in stocks that replicate an index such as NSE Nifty, BSE Sensex, etc. These are passively managed mutual funds since the fund manager invests in the same set of securities and in the same proportion as the underlying index. The objective of these funds is to offer returns that are in line with the index chosen.
About the fund
This is an open-ended passively managed scheme that replicates the portfolio composition of S&P BSE SENSEX Index. The investment objective of the fund is to provide returns in line with the performance of the S&P BSE SENSEX Index. The returns are subject to tracking errors.
| Inception Date | July 17, 2002 |
| Benchmark Name | NIFTY 50 – TRI, S&P BSE 200 TRI |
| Fund Manager | Arun Agarwal, Krishan Daga |
| Expense Ratio | 0.40% |
Historical Returns of the Fund (annualised)
| 6-months | 1-Year | 3-Year | 5-Year | 10-Year |
| 12.57% | 52.39% | 14.54% | 15.61% | 12.02% |
- UTI Nifty Index Fund
About the fund
UTI Nifty Index Fund tracks and emulates the performance of NSE Nifty 50 index. The fund mainly invests in the same stocks and in the same proportion as the Nifty index. The primary advantage offered by the fund is exposure to a well-diversified portfolio that consists of top-performing stocks spread across various sectors.
| Inception Date | March 06, 2000 |
| Benchmark Name | NIFTY 50 – TRI |
| Fund Manager | Sharwan Kumar Goyal |
| Expense Ratio | 0.30% |
Historical Returns of the Fund (annualised)
| 6-months | 1-Year | 3-Year | 5-Year | 10-Year |
| 15.44% | 54.75% | 14.37% | 15.31% | 11.87% |
Large-Cap Funds
Large Cap mutual funds are equity funds that primarily invest in companies with a large market capitalization. These companies have a good track record of wealth creation for investors over a long period and are generally market leaders in their sectors. These funds have a lower risk as compared to small-cap or mid-cap funds.
About the fund
This open-ended equity scheme predominantly invests in large-cap stocks. It aims to offer consistency of returns through large cap stock investments and wider exposure of sectors as well as themes. The scheme targets companies that have highly sustainable competitive advantage.
| Inception Date | April 04, 2008 |
| Benchmark Name | NIFTY 50 – TRI |
| Fund Manager | Gaurav Misra, Harshad Borawake |
| Expense Ratio | 1.60% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 50.18% | 16.85% | 14.43% | 15.90% | 16.00% |
About the fund
The fund objective is to achieve long-term capital appreciation through investment in a diversified portfolio comprising equity and equity related securities of large cap companies. It is an ideal investment option for investors who have long-term goals such as children’s education, retirement, and other wealth creation related goals.
| Inception Date | January 05, 2010 |
| Benchmark Name | NIFTY 50 – TRI |
| Fund Manager | Shreyash Devalkar |
| Expense Ratio | 1.77% |
Historical Returns of the Fund (annualised)
| 1-Year | 3-Year | 5-Year | 10-Year |
| 46.6% | 15.67% | 17.05% | 13.16% |
Mid-Cap Funds
Mid Cap Funds invest in equity and equity-related instruments of mid-cap companies. Mid-cap companies are those ranked between 101 and 250 in the list of companies as per market capitalization. The market capitalization of the 101st company is generally around Rs. 30,000 crores, and that of the 250th company is around Rs. 9,500 crores. These funds are ideal for investors who want better returns with slightly higher risk levels as compared to large cap funds.
About the fund
The scheme aims to provide long-term capital appreciation to investors through a portfolio of equity and equity related securities. It primarily invests in mid-cap companies. This scheme is ideal for investors who are looking to park their funds for at least 3-4 years and expect high returns. Investors who are prepared for moderate losses can consider this fund since this fund falls under the high risk category.
| Inception Date | March 30, 2007 |
| Benchmark Name | NIFTY Midcap 100 TRI |
| Fund Manager | Pankaj Tibrewal |
| Expense Ratio | 1.82% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 77.05% | 28.62% | 17.91% | 17.75% | 19.57% |
About the fund
This mid cap mutual fund primarily invests in mid-cap companies with the objective to deliver superior returns through faster earnings growth of the companies. It is an actively managed portfolio that is diversified across various sectors to ensure a well-balanced risk level of the fund.
| Inception Date | February 15, 2011 |
| Benchmark Name | S&P BSE MidCap TRI |
| Fund Manager | Shreyash Devalkar |
| Expense Ratio | 1.87% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 57.59% | 28.88% | 20.01% | 19.48% | 19.55% |
Small-Cap Funds
Small-cap equity funds invest in equity shares of companies with market capitalisation under Rs 5,000 crore. The main objective behind investing in these companies is to make the most of their growth potential. However, since these stocks are more volatile, the funds are vulnerable to losses during market downturns. Therefore, small-cap funds are ideal for investors who are willing to take on higher risk.
- SBI Small Cap Fund
About the fund
SBI Small Cap Fund aims to offer opportunities to investors for long-term capital growth through investments in a well-diversified portfolio of equity stocks of small cap companies. The fund adopts a mix of growth and value investment style while following a bottom-up approach for stock selection.
| Inception Date | September 09, 2009 |
| Benchmark Name | S&P BSE Small Cap TRI |
| Fund Manager | R. Srinivasan |
| Expense Ratio | 1.97% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 85.38% | 34.06% | 20.05% | 22.67% | 23.15% |
- Kotak Small Cap
About the fund
The scheme mainly invests in companies with small cap market capitalization and are selected from across sectors. The scheme is designed to provide investors with the benefit of potential growth through investments in small-cap stocks.
| Inception Date | February 24, 2005 |
| Benchmark Name | NIFTY Smallcap 100 TRI |
| Fund Manager | Pankaj Tibrewal |
| Expense Ratio | 1.98% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 114.66% | 40.49% | 22.27% | 20.19% | 18.82% |
Banking & PSU Funds
Banking & PSU Funds are open-ended schemes that predominantly invest in debt instruments of banks, Public Sector Undertakings (PSUs) and Public Financial Institutions. These mutual funds invest at least 80% of their corpus in instruments like debentures, bonds, and certificates of deposit of banks and PSUs.
- Aditya Birla Sun Life Banking & PSU Debt Fund
About the fund
The scheme aims to offer reasonable returns to investors by primarily investing in debt and money market securities issued by Banks, Public Sector undertakings (PSUs) and Public Financial Institutions (PFIs) in India. It is best suited for investors who have a short investment horizon of two to three years or those who are looking for fixed-income allocation in a long-term portfolio. Investors can earn higher returns through such investments as compared to bank fixed deposits.
| Inception Date | April 24, 2008 |
| Benchmark Name | NIFTY Banking and PSU Debt TRI |
| Fund Manager | Harshil SuvarnkarKaustubh Gupta |
| Expense Ratio | 0.67% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 5.93% | 8.55% | 8.89% | 8.31% | 9.19% |
Corporate Bond
A corporate bond fund invests a minimum of 80% of its corpus in corporate bonds. Corporate bonds are issued by business organisations to fund their expense needs, such as working capital, insurance premium payments, etc. Corporate bond funds invest in top-rated companies that have high CRISIL credit ratings, including top public sector companies, Navratnas, and companies that have a credit rating of AA+ or above.
- Aditya Birla Sun Life Corporate Bond
About the fund
This open-ended debt scheme mainly invests in AA+ and above rated corporate bonds. The main objective of the fund is to offer optimal returns combined with high liquidity. It is actively managed by a fund manager who maintains a portfolio of High Quality Debt and Money Market Instruments.
| Inception Date | March 03, 1997 |
| Benchmark Name | NIFTY Corporate Bond TRI |
| Fund Manager | Kaustubh Gupta |
| Expense Ratio | 0.46% |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 6.71% | 9.13% | 9.29% | 8.49% | 9.08% |
Disclaimers to investing in above funds
Some of the points that investors must note before investing in any mutual fund:
- Investors must consider a holistic set of factors while investing in mutual funds, and not just returns generated
- Past fund performance may not necessarily be reflective of future performance
- These are regular mutual funds as direct mutual funds were introduced only in 2013.
Factors to consider before investing in the above funds
Some of the factors to consider before investing in mutual funds are:
- Your investment objective: You should have a clear goal for investing in mutual funds, such as saving for retirement, education, or a vacation. This will help you choose the right fund category and scheme that matches your time horizon and risk appetite.
- Your risk tolerance: You should assess how much risk you are willing to take and how much volatility you can handle in your portfolio. Different types of mutual funds have different levels of risk and return potential. For example, equity funds are more risky but can offer higher returns than debt funds.
- The fund performance: You should look at the past performance of the fund over different time periods and compare it with its benchmark and peers. You should also check the consistency of the fund’s returns and its risk-adjusted measures such as Sharpe ratio and Treynor ratio.
- The fund management: You should check the experience and track record of the fund manager and the fund house. You should also look at the investment philosophy, strategy, and process of the fund and see if it aligns with your expectations.
- The fund costs: You should be aware of the various costs involved in investing in mutual funds, such as expense ratio, exit load, transaction charges, etc. These costs can reduce your net returns and affect your long-term wealth creation. You should look for funds that have low costs and high value.
Conclusion
Investing in mutual funds can be beneficial, as investors can invest in a single fund and obtain instant access to multiple individual stocks or bonds. These can be used to diversify your portfolio instead of buying individual securities.
FAQs
- What are the benefits of investing in mutual funds?
Some of the benefits that can be availed from a mutual fund investment are portfolio diversification, fund manager’s expertise in investment selection, easy to invest through SIP, trackable investment, exposure to various market sectors, etc.
- Can you lose money in a mutual fund?
Each mutual fund has a different risk level and investors must carefully consider the risk rating of a mutual fund before investing in it. It is important to invest in a mutual fund that has a risk level aligned with the investor’s risk appetite.
- Is mutual fund better than FD?
A Fixed Deposit has predetermined returns and does not change through the investment tenure. Mutual Funds may offer comparatively better returns, especially to long-term investments, since these are market-linked.
- Can I get monthly income from mutual funds?
If you are looking for monthly income from mutual funds, you may consider investing in monthly income plans. These are relatively safe investment options that can ensure sufficient liquidity in the hands of investors.
- How to invest in mutual funds?
To invest in mutual funds, you can download the Fisdom app on your smartphone. This app allows a seamless investment process for investors who want to read about fund performance, compare funds and invest in funds as per personal investment time horizon.
