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top 10 mutual funds

1. What are Best Mutual Funds?

There are various types of mutual funds. We can segregate mutual funds based on their underlying assets such as equity, debt or gold into different categories, such as equity mutual funds, debt mutual funds and hybrid funds. These funds have different risk profiles and investment objectives.

So, there is not one mutual fund that is best for everyone. The best mutual fund for you will be the mutual fund/s suitable for your investment objectives, risk tolerance, and investment horizon.

For example, let us assume you are building an investment corpus for your child’s higher education after 15 years. It is this case, as you are investing for the long term, equity mutual funds can be the best option for you. However, there are other sub-categories within equity mutual funds, such as large cap funds, mid-cap funds, and small-cap funds. Here, you can decide to invest in a large cap fund or small-cap fund based on your risk-taking capacity. A small-cap fund carries more risk than a large cap fund as a large cap fund invests predominately in large companies that are market leaders with strong financial positions. Large companies are better able to tide over business cycle downturns than small cap companies.

You might also have more than one goal. If your second goal is to buy a sedan in the next three years, then investing in equity funds for this goal might not be the best option. Debt mutual funds that are relatively less volatile than equity funds may help you achieve your goal of buying a sedan.

2. Top Performing Mutual Funds to Invest In India

Here’s the list of top 10 best mutual funds to invest now:

Best Performing Equity Mutual Funds

Fund Name3-year Return (%)*5-year Return (%)*
Quant Small Cap Fund Direct Plan-Growth67.91%22.49%
Tata Digital India Fund Direct-Growth37.81%22.25%
Quant Tax Plan Direct-Growth51.73%21.76%
ICICI Prudential Technology Direct Plan-Growth42.94%21.60%
SBI Technology Opportunities Fund Direct-Growth36.75%20.84%
Aditya Birla Sun Life Digital India Fund Direct-Growth40.10%20.80%
Quant Infrastructure Fund Direct-Growth57.56%20.27%
Quant Active Fund Direct-Growth46.72%19.29%
Quant Mid Cap Fund Direct-Growth46.37%19.21%
Axis Small Cap Fund Direct-Growth38.50%18.34%

*Last updated as on 29th Mar 2023

Best Performing Debt Mutual Funds

Fund Name3-year Return (%)*5-year Return (%)*
Aditya Birla Sun Life Medium Term Direct Plan-Growth14.17%8.51%
Bandhan Government Securities Investment Plan Direct-Growth5.69%8.39%
DSP Government Securities Direct Plan-Growth5.88%8.34%
ICICI Prudential Constant Maturity Gilt Fund Direct-Growth5.34%8.22%
Edelweiss Government Securities Fund Direct-Growth6.52%8.20%
Bandhan Government Securities Fund Constant Maturity Direct-Growth4.59%8.20%
Nippon India Gilt Securities Fund Direct-Growth5.38%8.07%
SBI Magnum Gilt Fund Direct-Growth6.12%8.07%
Kotak Gilt Investment Direct-Growth6.23%8.06%
ICICI Prudential Credit Risk Fund Direct Plan-Growth7.44%8.05%

*Last updated as on 29th Mar 2023

Best Performing Hybrid Mutual Funds

Fund Name3-year Return (%)*5-year Return (%)*
Quant Multi Asset Fund Direct-Growth41.20%19.86%
Quant Absolute Fund Direct-Growth39.05%18.74%
Kotak Multi Asset Allocator FoF – Dynamic Direct-Growth27.56%15.15%
ICICI Prudential Multi Asset Fund Direct-Growth32.90%14.17%
ICICI Prudential Equity & Debt Fund Direct-Growth32.16%14.16%
Baroda BNP Paribas Aggressive Hybrid Fund Direct – Growth21.56%12.93%
Edelweiss Aggressive Hybrid Fund Direct – Growth26.19%12.86%
HDFC Balanced Advantage Fund Direct Plan-Growth30.77%12.84%
Kotak Equity Hybrid Fund Direct-Growth28.63%12.52%
ICICI Prudential Asset Allocator Fund (FOF) Direct – Growth23.57%12.48%

*Last updated as on 29th Mar 2023

3. How to Select the Top Performing Mutual funds in India

We all want to know the best mutual funds to invest now. This section will highlight some of the factors that can help you identify the top 10 best mutual funds to invest in today.

  • Investment Objectives
    You should undertake any investment only after a thorough examination of your life goals. Once you’ve determined your needs, you’ll need to compare them to the objectives of a mutual fund scheme to see if investing in them would help you to achieve your financial goals. Mutual funds, like individuals, have specific investment objectives, and it is up to the investors to determine whether their goals align with the mutual fund scheme in which they will invest.

    For example, one of the objectives of equity mutual funds is wealth creation. So, equity mutual funds are best for investors looking at long-term wealth creation to achieve long-term goals like building a retirement corpus. In this case, investing predominately in equity funds would be a better option than investing in debt funds, as equities have the potential to generate higher returns than debt funds. So, if you invest chiefly in debt funds to build a retirement corpus, you won’t accumulate the same retirement corpus as you could with equity funds.

    As a result, to make a meaningful selection, the fund’s investment objective must align with an investor’s goals, and risk tolerance.

    Equity funds are the best mutual funds to invest in for the long term. Opt for a growth mutual fund option to easily reach your long-term goals, as the fund’s returns will compound over time.

    In the scheme information document, you will find all the relevant details, such as the asset allocation and objectives.

Calculate the future value of your mutual fund investment with Mutual Fund Calculator.

  • Fund’s History
    The fund’s history provides a record of the fund’s performance over time, including times of rising and corrections in markets. This shows the fund’s resilience during volatile market conditions.

    Recently launched mutual funds and funds that are open for subscription don’t have a track record so it becomes difficult to predict their returns and their performance across the different market cycles. The best MF to invest in is a fund with a long track record of delivering consistent returns over the different market cycles. It also demonstrates the proof of well-researched investment strategies.
  • Expense Ratio
    The fund house charges fund management fees along with other charges for managing the assets of a fund, which is the expense ratio and is represented as a percentage of the fund’s asset. The mutual fund returns generated minus the expense ratio will be the net return earned by the investor. An investor’s returns will be lower if the expense ratio is high. As a result, an investor should look for a scheme with a lower expense ratio than its peers in the category while choosing a fund.
  • Fund Manager’s Performance
    The fund manager is in charge of managing the fund. It’s crucial to look at the fund manager’s track record.

    An investor should monitor the fund’s performance during times of rise and corrections in the market. They can also look at the performance of the different schemes managed by the fund manager.
  • Check the consistency of the fund
    Top performing mutual funds in India have a proven track record of outperforming the market over the long term, typically three to five years. These funds would have outperformed their benchmark and peer funds in terms of performance. You must examine the fund’s performance across the previous several business cycles. Examine the fund’s performance during market downturns, in particular. Market fluctuations have a lower than average impact on the performance of a top-performing fund. However, that past performance does not guarantee future results.

    Additionally, you can also check the historical NAV of Mutual Funds and the latest NAV of Mutual Funds to understand the past track record of the mutual fund.
  • Check the financial ratios
    You can evaluate financial ratios such as alpha and beta to identify India’s top-performing mutual funds.

    Mutual fund returns and risk are inextricably linked. The increase in the overall value of the capital invested is referred to as a return. Risk is defined as the uncertainty surrounding an investment, and it refers to the possibility of obtaining no or negative returns for a variety of causes. As a result, any investor must evaluate the risk-return potential, and financial ratios have made this risk-return analysis possible.

4. Best Mutual Funds for SIP

The Systematic Investment Plan (SIP) is a popular and easy way to invest in mutual funds. SIP is like a pre-set investment at a fixed frequency, usually a month. After you set the SIP mandate, the mutual fund investment will take place automatically.

Here’s the list of the five best mutual funds for SIP:

Fund Name3-year Return (%)*5-year Return (%)*
Quant Active Fund Direct-Growth46.72%19.29%
Parag Parikh Flexi Cap Fund Direct-Growth34.91%17.72%
PGIM India Flexi Cap Fund Direct-Growth36.34%15.56%
Mirae Asset Emerging Bluechip Fund Direct-Growth31.38%14.83%
Canara Robeco Bluechip Equity Fund Direct-Growth25.98%13.89%
Quant Large and Mid Cap Fund Direct-Growth33.70%13.64%
Kotak Equity Opportunities Fund Direct-Growth30.61%13.60%

*Last updated as on 29th Mar 2023

5. How Tax is Applied on Best Mutual Funds in India

There are two ways to earn income when you invest in mutual funds: capital gains and dividends. Currently, dividends are added to your overall total income, and the amount of tax on the dividend will depend on your current income tax slab.

Capital gains are the profit that you get after redeeming your mutual fund units. The tax on capital gains on India’s top performing mutual funds will depend on the type of mutual fund and the investment period.

For taxation, the mutual fund that invests at least 65% of its assets in equity and equity-related instruments are classified as equity funds. And other funds that don’t have a minimum allocation of 65% to equities, such as debt funds or gold funds, are considered non-equity funds.

If you redeem your equity mutual fund investments within one year from the investment date, the gains are classified as Short Term Capital Gains (STCG) on equity investments and will be taxed at 15%.

However, if you redeem after holding it for one year, capital gains are considered as Long Term Capital Gains (LTCG) and amount above Rs. 1 lakh is taxed at 10%.
If we consider non-equity funds, i.e., debt funds, STCG are gains you get when you sell your debt fund units before three years. In this case, the mutual funds’ gains are added to the total income and taxed as per your current income tax slab.

If you stay invested in non-equity funds for over three years, the gains will be considered as LTCG, and the gains will be taxed at 20% after indexation. For information visit Mutual Fund Taxation.

If you have invested in a hybrid mutual fund, the tax on capital gains will depend on the underlying asset. If 65% of the fund’s portfolio is invested in equities, then gains from the hybrid fund will be taxed like an equity fund. On the other hand, it would be taxed like a debt fund if it has less than 65% allocation to equities.

6. Who Should Invest in Best Mutual Funds?

Mutual funds that give high returns on a consistent basis across market cycles are considered the best performing mutual funds in India as as they have shown the potential to earn better returns.

  • Achievement of financial goals: Investors who want to fulfil their investment goals should invest in top mutual funds as per their needs. Investing in top mutual funds that have delivered better returns than the peers on a consistent basis will help investors achieve their goals faster.
  • People who are looking to invest regularly: Through SIP, you can invest in the top mutual funds on a regular basis i.e., on a monthly, weekly or quarterly basis. You can invest in the best SIP mutual fund to make your investment goals a reality. You may start investing in mutual funds through SIP with an amount as low as Rs.100 per month in any of the best SIP plans in India.
  • Better returns than traditional saving options: Traditional saving options give a guaranteed interest rate. However, as it is almost risk-free, the returns from these saving options are also muted. On the other hand, mutual funds cannot guarantee returns. However, it can generate higher returns than traditional saving options, like bank fixed deposits.

    Moreover, different types of mutual funds have different risk-return profiles. So, if you want to invest in high return mutual funds that give the best return, you might have to be ready to take more risk.
  • Expert money management: Fund managers are professionals who manage mutual funds. Their job is to select the best stocks or debt instruments that can help the fund generate high returns and fulfil its objectives. So, individuals looking for expert fund management can invest in these top mutual funds.
  • Diversification: Depending on the type of fund, best performing mutual funds invest in basket of securities that help achieve diversification, irrespective of the investment amount. Diversification mitigates the negative impact of a single (or a few) investment security’s poor performances on the total portfolio.
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