In the Indian financial market, mutual funds have become an incredibly popular option for a wide variety of investors. A mutual fund is an investment instrument that covers both stocks and bonds, managed by asset management professionals. Depending on the risk, duration, and cost investors can put their money in a well-diversified instrument. If you are a newcomer in the mutual fund market, you must get basic information about different types of MFs. Today we’ve come up with a suggestion of the best mutual funds to invest in for the long term.
The Need for Good Mutual Funds to Invest
The 2018 year is coming to an end and we would be in the new year in another month. With the growing inflation rate, investment becomes necessary and we are quite well-acquainted with the volatility of the stock market. In such a case, the mutual fund is one of the safest and most profitable investment options. Here is the list of the best mutual funds to invest in the long term.
Best Mutual Funds for Investing in Long Term
Mutual Fund is a versatile field with multiple investment options according to their market cap. There are large-cap, mid-cap, small-cap, SIP plans, etc. In order to keep the topic clear, we try to provide the recommended list of the best mutual funds to invest in for the long term in almost every segment.
Equity Mutual Funds
An equity mutual fund is a particular type of fund that invests principally in stocks. It can be both actively or passively managed funds. In other words, it is also known as the stock fund. Under equity mutual funds, there are market cap divisions like large-cap, mid-cap, and small-cap.
Large Cap
ICICI Prudential Bluechip Equity Fund
The fund primarily focuses on blue-chip quality companies. Apart from its consistent performance, over the past 10 years, the specific scheme is known to protect the downside in bear cycles. In the past 3-5 years span, the scheme has given 10 to 15 percent returns.
Aditya Birla Sun Life Frontline Equity Fund
In the large-cap category, the scheme ranked 3 by Crisil (Sept 2018). Depending on its performance and the fund manager’s ability the scheme is a relatively safe bet. Over the past few years, it has given 8.1% and 15.3% returns.
Reliance Large Cap Fund
At present, it ranks among the top listed funds in India. Formerly it was named the Reliance Top 200 fund. The primary objective of the fund is to generate consistent profit by investing in equity-related instruments in large-cap companies. Its 3-5 years returns are 13.03% and 17.48% respectively.
SBI Bluechip Fund
In the present market condition, the company’s high exposure to large-cap companies would be an appropriate choice. In the past 5-10 years period, the scheme has given 13 to 18 percent return. It’s been reported that in the past six months, its fund manager has maintained a diversified portfolio, covering companies like auto, FMCG, financial sector, etc.
Mid Cap
L&T Mid Cap Fund
In the mid-cap category, the fund is ranked 2nd by Crisil (September 2018). the scheme has outperformed both the category average (15.89%) and benchmark index (14.01%) with a 10-year return of 17.96 percent.
Kotak Emerging Equity Scheme
Though the scheme carries a moderately high risk, it is considered one of the best mid-cap equity fund schemes. It has outperformed the benchmark index (9.58%) but at the same time lags behind the category average (14.70%) with a 10-year return of 13.41%.
Axis Mid Cap Fund
The aim of the scheme is to achieve long-term capital appreciation by investing in the equity-related instrument of mid-cap companies. 3-5 years returns are 14.31% and 22.48% respectively. This fund also carries moderately high risk.
Small Cap
HDFC Small Cap
The fund is four-star rated and covers only small-cap stocks for investment. The fund has given an 18.38% return after being launched. Besides this, the scheme has returned 18.32% and 21.99% in 3 and 5 years respectively.
Reliance Small Cap Fund
In the small-cap category, it is one of the best funds. Here the return and risk both are in a high position. Its 3 years return level is 15.08% and 5 years return is 29.26%.
Franklin India Smaller Companies Fund
It is also a good equity small-cap fund with a profitable return.
Debt Mutual Funds
Debt mutual fund schemes fall under the lower-risk category in comparison to equity mutual funds. It can give you a more consistent return. The investment schemes are based on corporate bonds, Govt (both state and central) bonds, bonds issued by banks, treasury bills, certificates of deposits, etc.
Franklin India Ultra-Short Bond Fund
The particular fund covers debt and money market instruments. The duration of the portfolio is between 3 to 6 months. The objective of the scheme is to enhance consistent income through a portfolio of money market and debt instruments.
ICICI Prudential Liquid Fund
In this fund, approximately 80% of it would be invested in the money market security. Its 3-5 years returns are 7.28% and 7.9% respectively.
L&T Money Market Fund
This is also a good fund to park your money in the debt instruments.
Hybrid Mutual Funds
It is a diversified fund, typically investing in two or more asset classes such as stocks, bonds, etc.
ICICI Prudential Equity and Debt Fund
The scheme belongs to the hybrid category. It is one of the safest and most profitable schemes with 14.08% since its launch.
Best Mutual Funds for Long Term SIP
A Systematic Investment Plan or SIP is the best way to invest money in a mutual fund. For SIP, investors need not pay any high amount, SIP can be started with a very small amount of capital. Here is the list of the best SIP mutual funds for 2019.
- HDFC Top 100 Fund
- Kotak Standard Multicap Fund
- ICICI Pru Bluechip Fund
However, even in such a volatile and risky market, mutual fund performs as a non-risky option.
Conclusion
So, these were my top picks when it comes to the best mutual funds to invest in the long term. I cannot emphasize enough that thorough research must be undertaken before making any investment decisions as stock markets are volatile and can go either way in a short span of time. But if you do your homework, you will have better chances of earning significant returns for decades. Take some time out to compare all available options before actually investing your hard-earned money and reap the ultimate rewards!
