Mutual funds have become the
go-to investment scheme for most of the investors today. The reason behind it
is that mutual funds are professionally managed which makes it a smart and less
risky, market linked investment. The
person who is responsible for a particular mutual fund is called the Fund
Manager. He/she is responsible for making alterations to avert the market risk
and get maximum returns. Every fund has an objective and accordingly the investment
is made that will fulfil the objective of the fund. The mutual fund units can
be redeemed or purchased anytime as per the NAV (Net Asset Value) which is
updated on daily basis. This article will help you understand the best type of
mutual fund to invest in 2018.
To understand the best type of
mutual fund to invest in, it is first necessary to understand different types
of mutual funds. Every fund has their own objective and accordingly it offers
the returns. Depending on the objective
of the fund, the investment is made into an appropriate type of financial
instruments. For example – If the objective of the fund is long-term growth,
then the investment from the mutual fund will be done in equity stock of
companies. If the objective of the fund is to generate regular income, then the
majority of the investment from the mutual fund will be done in debt
instruments. Once you understand the types of the mutual fund out there, then
you should make the investment in those types of mutual funds which will help
you reach your personal financial goals. With the advent of the internet and
technology, you can take help of online mutual fund calculator to compare and
calculate returns
Types of mutual fund
Debt mutual funds
Debt funds are the type of mutual
funds that predominately invest in fixed income securities. The investment will be made in long-term
bonds, short-term bonds, securitised funds, money market instruments, and
floating rate debt.
Equity mutual funds
Equity mutual funds are the types of mutual funds that invests primarily
in the stocks of the company. Equity mutual funds are managed actively and
passively depending on their classification.
(ELSS) Equity-linked savings
schemes Mutual funds
One of the main objectives of the
equity mutual funds is to help save tax of the investor. Through ELSS, an
investor is able to save tax under the provisions of Section 80C of the Income
Tax Act, 1961.
Diversified mutual funds
Diversified mutual funds
basically invest money in various sectors or industries. This way the
dependence on one single sector performance can be avoided and eventually risk
factor in the investment can be lowered.
Gilt mutual funds
The investment in this mutual
fund is basically made in state and central government. These funds are safe to
invest.
Index mutual funds
Index mutual funds basically
invest in the companies that are listed on the stock exchanges like BSE and
NSE. The NAV of index mutual fund is dependent on the Sensex ratings of the
stock exchanges.
Liquid Mutual Funds
As the name suggests, these
mutual funds have a short-term objective of returns. The investment is done
mostly in money market instruments like deposit certificates, commercial
papers, treasury bills etc.
Debt-oriented hybrid funds
The term hybrid represents a
mixture of investment. As it is a debt oriented hybrid fund, the majority of
investment is done in debt instruments and the remaining is invested in equity.
The objective of the fund is to maintain a fine balance of risk and income.
Arbitrage mutual funds
The investment of arbitrage
mutual funds is done in both cash and derivatives market.
Dynamic bond mutual funds
The investment in dynamic bond
and mutual funds are done in money market and debt instruments. The period of
the investment varies as per the investment it makes.
The number of mutual funds has
increased drastically over the past few years. This has resulted in a wide
variety of options for the investors to choose. Today investors can further
streamline their financial objectives and invest in the mutual funds best
suited to reach their long term or short term financial goals.
Below are some of the TOP rated
Mutual Funds as per different categories:
Top 10 Large Cap Oriented Equity
Funds (Regular)
|
Fund Name
|
1-Year Returns
|
3-Year Returns
|
|
ICICI Prudential Top 100 Fund
|
7.46%
|
10.78%
|
|
UTI Top 100 Fund
|
9.03%
|
9.42%
|
|
SBI Blue Chip Fund
|
12.09%
|
12.17%
|
|
HSBC Equity Fund
|
13.39%
|
11.55%
|
|
Reliance Top 200 Fund
|
9.75%
|
14.26%
|
|
Reliance Vision Fund
|
6.40%
|
7.67%
|
|
HDFC Growth Fund
|
13.41%
|
12.74%
|
|
ICICI Prudential Focused Bluechip
Equity Fund
|
14.86%
|
12.12%
|
|
Invesco India Dynamic Equity Fund
|
13.85%
|
11.63%
|
|
Sundaram Select Focus
|
16.28%
|
11.17%
|
Top Equity Linked Saving Schemes
|
Fund Name
|
1-Year Returns
|
3-Year Returns
|
|
DSP BlackRock Tax Saver Fund
|
9.68%
|
14.44%
|
|
HDFC Long Term Advantage Fund
|
13.84%
|
14.13%
|
|
Invesco India Tax Plan
|
18.32%
|
13.65%
|
|
Sundaram Diversified Equity
|
8.72%
|
13.59%
|
|
Principal Tax Saving Fund
|
14.68%
|
16.13%
|
|
L&T Tax Advantage Fund
|
14.95%
|
15.96%
|
|
Tata India Tax Savings Fund
|
13.31%
|
15.67%
|
Short
Term Debt funds
|
Fund Name
|
1-Year Returns
|
|
HDFC Short Term Opportunities Fund
|
5.99%
|
|
UTI – Banking & PSU Debt Fund
|
5.89%
|
|
Kotak Corporate Bond Fund
|
6.60%
|
|
ICICI Prudential Ultra Short Term
Plan
|
5.63%
|
|
L&T Short Term Opportunities
Fund
|
5.36%
|
|
Reliance Banking and PSU Debt Fund
|
5.27%
|
Top Balanced (Hybrid) Funds
|
Fund Name
|
1-Year Returns
|
3-Year Returns
|
|
HDFC Balanced Fund
|
10.72%
|
12.18%
|
|
Reliance Regular Savings Fund –
Balanced
|
12.72%
|
12.40%
|
|
ICICI Prudential Balanced Fund
|
9.91%
|
12.15%
|
|
DSP BlackRock Balanced Fund
|
7.28%
|
11.85%
|
|
L&T India Prudence Fund
|
10.14%
|
12.12%
|
|
Canara Robeco Balance
|
9.62%
|
10.98%
|
|
UTI Balanced Fund
|
8.15%
|
10.78%
|
|
HDFC Prudence Fund
|
4.87%
|
10.69%
|
|
SBI Magnum Balanced Fund
|
13.06%
|
10.18%
|
Top Income Funds
|
Fund Name
|
1-Year Returns
|
3-Year Returns
|
|
ICICI Prudential Long Term Plan
|
5.49%
|
9.03%
|
|
Kotak Flexi Debt
|
4.83%
|
8.50%
|
|
UTI – Dynamic Bond Fund
|
3.65%
|
8.28%
|
|
ICICI Prudential Dynamic Bond Fund
|
3.82%
|
8.01%
|
|
DHFL Pramerica Medium Term Income
Fund
|
4.65%
|
8.00%
|
|
SBI Magnum Income Fund
|
3.72%
|
7.86%
|
Top 10 Liquid Funds
|
Fund Name
|
1-Year Returns
|
|
Indiabulls Liquid Fund
|
6.82%
|
|
DSP BlackRock Liquidity Fund
|
6.77%
|
|
Reliance Liquidity Fund
|
6.72%
|
|
Axis Liquid Fund
|
6.86%
|
|
BARODA PIONEER Liquid Fund
|
6.83%
|
|
UTI Liquid Cash Plan
|
6.82%
|
|
Invesco India Liquid Fund
|
6.81%
|
|
ICICI Prudential Liquid Plan
|
6.78%
|
|
Sundaram Money Fund
|
6.75%
|
|
HDFC Liquid Fund
|
6.62%
|
Conclusion
To invest in a mutual fund, you
first will need a clear financial objective. Once the objective is clear, compare mutual funds using Online Mutual Fund
Calculator. You can calculate the actual future returns on your investment
using the mutual fund calculator to take a decision of investment in a
particular mutual fund. Mutual funds are subject to market risk; so ensure you
do your research properly before investing. An investor can gain high returns
through mutual fund investment but only with the right investment strategy.
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