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Top 10 mutual funds to invest

Here are two schemes from five important categories - aggressive hybrid, large cap, mid cap, small cap, and multi cap schemes - you may consider investing to meet your long-term financial goals. We believe these schemes should be enough for regular mutual fund investors.

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Last Updated: Jan 28, 2020, 10.16 AM IST
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Which are the top 10 mutual funds to invest?

This is the question that most new comers to mutual funds ask while starting their investment journey. Often, they turn to their friends and colleagues for clues. Some try to find the answer online with the help of a search engine. In short, most new mutual fund investors want a ready-made list of mutual fund schemes to invest. Who doesn't like easy way out?

However, this strategy has many pitfalls. For example, an online search would often take investors to websites that list mutual fund schemes based on their internal assessment that the reader may never pause to read. 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 flavour of the season.

Friends or colleagues might provide a few names, but those schemes might not be suitable for the investor's goals and risk profile.

Simply put, an open-ended query like this need not fetch you the best result. Even if you manages to secure a list that looks appealing, you might not follow it up with real investments because of your lack of conviction. A lingerign doubt about the veracity of the list might hold many investors back. No wonder, many investors keep visiting mutula fund forums for validation.

That is why 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 schemes:

  • ICICI Prudential Equity & Debt Fund
  • Mirae Asset Hybrid Equity Fund
  • Axis Bluechip Fund
  • ICICI Prudential Bluechip Fund
  • L&T Midcap Fund
  • HDFC Mid-Cap Opportunities Fund
  • L&T Emerging Businesses Fund
  • HDFC Small Cap Fund
  • Motilal Oswal Multicap 35 Fund
  • Kotak Standard Multicap 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 per cent) 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.

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 in 2019
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.

Here are some other 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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