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Professionally managed: By opting for a mutual fund, you choose a professional money manager, who invests a pool of money after thorough research and based on well thought strategy.
Diversified & many investment options: Mutual Fund saves you a lot of time and helps you quickly get exposed to large number of stocks and bonds. Limited capital restricts you to a handful of investment ideas. With large pool of money, a mutual fund helps you take exposure to all types of assets including corporate bonds, pure gold and 100s of stocks.
Liquidity: Mutual funds are liquid investments unless they have a specific lock-in period. This means you can redeem your units at any time and access your money when needed.
Ease of investment: It is quite easy to invest in mutual funds. And, you can start with amounts as low as Rs. 500.
Read our blog , 'If not past returns, then how do you select the right Equity Mutual Fund to invest in?' for details
While the best mutual funds to invest keep changing from time to time. Here are a few funds that are currently doing well:
|Fund Name||Category||AUM (Cr.)||Returns Since inception||3 yr Avg Rolling||Quality||Performance|
|Mirae Asset Emerging Bluechip Fund||Equity - Large & Mid Cap Fund||11,929||19.8||23.21||Somewhat Good||Very Good|
|Canara Rob Emerg Equities Fund-Reg(G)||Equity - Large & Mid Cap Fund||6,126||16.6||20.15||Somewhat Good||Very Good|
|Axis Midcap Fund||Equity - Mid Cap Fund||6,949||16.9||19.32||Very Good||Not Good|
|Aditya Birla Sun Life MNC Fund||Equity - Thematic Fund - MNC||3,708||16||19.3||Somewhat Good||Not Good|
|Nippon India Pharma Fund||Equity - Sectoral Fund - Pharma & Health Care||3,900||20.8||18.69||Very Good||Not Good|
|HDFC Mid-Cap Opportunities Fund||Equity - Mid Cap Fund||21,817||14.2||18.51||Somewhat Good||Very Good|
|Principal Emerging Bluechip Fund||Equity - Large & Mid Cap Fund||2,120||23||18.3||Somewhat Good||Not Good|
|Invesco India Multicap Fund||Equity - Multi Cap Fund||933||13.9||18.21||Somewhat Good||Not Good|
|ICICI Prudential Technology Fund||Equity - Sectoral Fund - Technology||832||10.9||17.99||Risky||Very Good|
|ICICI Prudential FMCG Fund||Equity - Sectoral Fund - Consumption||516||16||17.98||Very Good||Not Good|
Do your own research before you invest in these funds, so you know which funds would make a better choice. Read, ‘If not past returns, then how do you select the right Equity Mutual Fund to invest in?' to know how to choose the best mutual fund for you.
Key advantages of such a fund are (1) lower costs as there is no fund manager and (2) lower efforts to identify best fund or fund manager (3) Exposure to large section of market, guaranteeing average stock market returns.
Index fund is an equity fund, so it also comes with volatility but it is a simplest form of equity investing.
If your goals are more than 5-7 years away, you must consider investing in Equity Mutual Funds to earn equity-linked returns (significantly higher than FD). This will also help you reach your financial goals faster or on lower amount of savings. Those who are already investing in stocks directly can consider investing in equity MFs to complement your investment strategy/style/biases and also be confident about committing a larger portion of your Investable Surplus to equities.
You must select at least 4-5 funds whose strategy complements each other. Every Fund Manager chooses a strategy, such that it will work best only in some market situations. So, when investing in equity mutual funds, if you own different combination of mutual funds, they will work better together, in good times and bad.
Ideally, you should invest at least 25% of your portfolio in debt. This can be through FDs, PPFs or debt funds. Since this part of your portfolio is your safety net, we usually advise clients to stick to safer category of debt funds, i.e. Liquid funds. For portfolios smaller than Rs. 50 Lakhs can choose simple Fixed Deposits in Top 5 banks of India for this portion of portfolio.