The Indian mutual funds segment is witnessing good inflows and its total assets under management have grown at a compound annual growth rate or CAGR of 20.6% in the last five years. The growth has been driven by the uptrend in the equity markets, improving global economic scenarios and the growing investor interest in the segment. Are you also looking to invest in mutual funds and wondering about where to invest or what are the top performing mutual funds in India? If yes, you need to choose a scheme that matches your goals and not simply go by any list of top performers.
Different types of mutual fund schemes are available in the market and invest in a variety of instruments in varying proportions. Choosing the right scheme to match your investment objectives is important.
Performance and Types of Mutual Funds
The performance of the mutual funds depends on several factors including their portfolio and asset allocation and the overall economic scenario. This means that one type of mutual funds may do well in a specific period while others may perform at some other time. To ensure a steady stream of returns over the long run- one should have a diversified portfolio including mutual funds of various types or mutual fund schemes investing in different instruments.
Balanced or Equity Oriented-Hybrid Schemes
These invest in both equity and debts are highly safe and appropriate for new mutual fund investors. These schemes are relatively less volatile than equity schemes that invest only in equities. Aggressive hybrid schemes are highly suitable for investors looking to create long-term wealth rather than aiming for short term returns.
Equity Funds
Investors wanting to take advantage of the equity markets can go for investment in mutual fund schemes that invest in large cap or mid cap or small cap stocks. Diversified mutual fund schemes are also a good option for such investors. Investment in large cap funds is likely to generate moderate returns with relative stability. Investors with a higher risk appetite can go for mid-cap and small-cap funds which have the potential to generate good returns but also come with a higher risk.
Systematic Investing
Investors looking for a disciplined way of investing to create long-term wealth should go for investment through the SIP route.
Steady Income
If you are looking for a steady income from your mutual fund investments, you can go for the dividend option available upon investing in a mutual fund scheme. Similarly, investors looking to build a big corpus should choose the growth option of investing in mutual fund schemes.
Tax-Saving
If you are looking to invest in mutual funds for tax saving, you can go for Equity Linked Saving Schemes or ELSS scheme. Predominantly investing in equity, these funds come with a lock-in period of three years and offer tax exemption under Section 80C of the Income Tax Act.
Invest in a Particular Sector
If you wish to take advantage of the changing situation in a particular segment, say energy or power, you can choose to invest in sectoral funds. These mutual funds invest in the stocks of companies operating in a particular field.
Invest in Commodities or Gold
Again, investors looking to benefit from the change in the prices of gold and other commodities should invest in the stocks of exchange traded funds or industry funds.
To conclude, the list of the top performing mutual funds may vary from time to time depending on several factors. It is best to plan your investments keeping in mind your goals, risk appetite and your interest.
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