Most new mutual fund investors ask this question while starting their investment journey. But do they get the list easily? Will the magic list make them rich? Well, the answer is complicated.
For example, try an online serach. Mostly it would take you to some websites with ready-made lists. Most often, the schemes may be shortlisted on the basis of their short-term performance. Sometimes, schemes from a single category may dominate the list because that happens to be the flavor of the season. Some may follow a faulty methodology.
Some people never proceed beyond collecting names of top funds because looking for the top funds becomes their favourite pass time. A lingering doubt about the veracity of the names always hold them back. No wonder, many investors keep visiting mutual fund forums for validation even years after after they had started investing.
That is why ETMutualFunds.com decided to put out a list of top 10 mutual fund schemes. We have chosen two schemes from five different categories - aggressive hybrid, large cap, mid cap, small cap and multi cap schemes – which we believe should be enough for regular mutual fund investors. There are caveats: read till the end to ensure you are picking up the best scheme for you.
Here is the list of top 10 schemes:
- Axis Bluechip Fund
- Mirae Asset Large Cap Fund
- Parag Parikh Long Term Equity Fund
- Kotak Standard Multicap Fund
- Axis Midcap Fund
- DSP Midcap Fund
- Axis Small Cap Fund
- SBI Small Cap Fund
- SBI Equity Hybrid Fund
- Mirae Asset Hybrid Equity Fund
Here are some pointers you should keep in mind while investing these schemes. First, find out about each category and whether it is suited to your investment objective and risk profile.
Aggressive hybrid schemes (or erstwhile balanced schemes or equity-oriented hybrid schemes) are ideal for newcomers to equity mutual funds. These schemes invest in a mix of equity (65-80%) and debt (20-35). Because of this hybrid portfolio they are considered relatively less volatile than pure equity schemes that invest the entire corpus only in stocks. Aggressive hybrid schemes are the best investment vehicle for very conservative equity investors investors looking to create long-term wealth without much volatility.
Note, ICICI Prudential Equity Debt Fund has been performing poorly for a while - the scheme was in the last quartile during the last month. It was in the third quartile before that. We are watching it closely, as it is apart of our aggressive hybrid fund recommendation list. We will update about it every month.
Some equity investors want to play safe even while investing in stocks. Large cap schemes are meant for such individuals. These schemes invest in top 100 stocks and they are relatively safer than other pure equity mutual fund schemes. They are also relatively less volatile than mid cap and small cap schemes. In short, you should invest in large cap schemes if you are looking for modest returns with relative stability.
A regular equity investor (one with a moderate risk appetite) looking to invest in the stock market need not look beyond multi cap mutual funds or diversified equity schemes. These schemes invest across market capitalisations and sectors, based on the view of the fund manager. A regular investor can benefit from the uptrend in any of the sectors, categories of stocks by investing in these schemes.
What about aggressive investors looking to pocket extra returns by taking extra risk? Well, they can bet on mid cap and small cap schemes. Mid cap schemes invest mostly in medium-sized companies and small cap funds invest in smaller companies in terms of market capitalisation. These schemes can be volatile, but they also have the potential to offer superior returns over a long period. You can invest in these mutual fund categories if you have a long-term investment horizon and an appetite for higher risk.
Looking for mutual fund SIP portfolios to start investing to create wealth over a long period? Here are our recommended mutual fund SIP portfolios for three different risk profiles - conservative, moderate, aggressive - and three different basket of SIP investments. For more, read: Best mutual fund SIP portfolios to invest
Finally, any search starting with the word 'best' is unlikely to offer you the best solution. You should always choose a scheme that matches your investment objective, horizon, and risk profile.
If you do not understand these basic concepts or totally new to mutual funds and investing, you should always seek the help of a mutual fund advisor.
Note, some of these schemes in the recommended list may be underperforming for a while. They are also part of our recommendations in their respective categories. We are tracking these schemes closely and we update about their performance every month as part of our monthly updates.
If you want to look at recommendations in each category in detail, here are some useful links:
Best large cap mutual funds
Best large & mid cap funds
Best mid cap funds
Best small cap funds
Best tax saving or ELSS funds
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34 Comments on this Story
Sanjay Srivastava30 days ago
steer clear of ICICI Pru Mutual funds schemes I had invested more than 60 lacs .. the bank managers, wealth advisors and agents are only focussed on selling targets the scheme has always given loss .
Experience of over 12 years and 4 schemes . losses over 20 lacs
Serves79 days ago
ICICI Prudential is one of the deadly fund management team. I would suggest to never opt for any of the ICICI Prudential scheme.
Harshavardhan Donthi80 days ago
Useless article. 1st in the list is icici prud equity and debt fund. it is in such a bad shape that they stopped giving dividends, whereas i was getting more than 10% dividend everty month during last financial year.