Are you in India, and you are looking for the Best Mutual Funds to Invest in 2021 India? If the answer is yes, this article may resonate with you. Most new mutual fund investors ask this question while starting their investment journey. But do they get the list easily? Will the magic list make them rich? Well, the answer is complicated. Read this article to understand why.
What are Mutual Funds
A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains or income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.
Mutual funds give small or individual investors access to professionally managed portfolios of equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of securities, and performance is usually tracked as the change in the total market cap of the fund—derived by the aggregating performance of the underlying investments.
How Mutual Funds Work
What are the various types of mutual funds?
There are several different types of mutual funds, each geared toward unique investor objectives.
1. Stock Funds
Usually, you purchase stock funds in hopes of achieving capital appreciation— in other words, you want the value of your fund to go up. In exchange for this potential price increase, you accept a degree of investment risk—the possibility that you could lose some of your principal.
2. Income Funds
When you purchase income funds, you receive current income in the form of an interest payment. The value of the fund can fluctuate based on changes in market interest rates, the credit rating of the institutions issuing the bonds, or prepayments made by the institutions issuing the bonds.
3. Assets Allocation Funds
These funds follow a diversified allocation model or strategy and include exposure to many asset classes, including equities and bonds. Typically, these funds are managed to meet an established risk tolerance such as conservative, moderate, or aggressive.
4. Money Market Funds
When you invest in a money market fund, you earn income by receiving interest on the money the fund lends to the government and corporations. The rate of interest fluctuates daily because these loans are very short term and rates reset frequently. Money market funds are considered the least risky mutual fund investment.
5. Sector Funds
Sector funds provide exposure to specific industries or leading companies in categories such as health care or energy. Since these funds are not diversified, they can pose substantial investment risk. To find out more about investing in different types of mutual funds, please call your RBC Wealth Management® financial advisor.
6. Balanced Funds
Investing in a balanced fund allows you to hold stocks and bonds to provide both current income and potential long-term
Why Invest in Mutual Funds
Mutual funds invest in a large number of securities and hence diversify the investment. Diversification enables users to cut down on losses. Most Mutual Funds do not have a lock-in period and hence are liquid investments. Factoring in the ease of investing (no hassle and less cost), Mutual fund schemes seem to be a very attractive investment.
List of Best Mutual Funds to Invest in 2021 India
Here is the list of top Best Mutual Funds to Invest in 2021 India.
- Axis BlueChip fund: Large-cap equity fund with NAV 38.63 launched in January 2010. The fund has 97.72% (86.1% large-cap and 1.5% mid-cap) invested in stocks. The Return stands at 20.62% a year.
- Parag Parikh Long Term Equity Fund –Multi-Cap Equity Fund with NAV Rs.36.16 and 65.74% (29.05% large-cap, 11.69% mid-cap, 21.92% small-cap) investment in stocks. Annualized return 31.77%. Moderately high risk.
- Kotak Standard Multi cap Fund –An Equity Multi-Cap at 43.18 NAV running since Sep 2009. 99.02% invested (65.99% large-cap, 24.36% mid-cap and 1.52% small cap) in stocks. The return is recorded at 14.27%.
- Axis MidCap Fund –
Mid Cap Equity @Rs.50.64 with 97.5% (12.18% large cap, 66.29% mid-cap and 8.11% small cap) invested in stocks. Return at 25.11%.
- DSP Midcap Fund –One of the better performing DSP Mutual funds. NAV Rs.72.94. Mid Cap equity with 93.29% (13.61% large-cap, 61.95% mid-cap & 10.88% small-cap) invested in stocks. Return clocked at 21.02%.
- Axis SmallCap Fund –NAV at Rs.39.84. 93.67% invested (14.42% mid-cap, 71.56% small-cap) in stocks. Return at 19.96%.
- SBI Small Cap Fund –Small Cap Equity Fund with NAV Rs.72.74. 95.25% (78.06% small-cap, 8.48% mid-cap) invested in stocks. Return at 29.26%. Moderately high risk.
- SBI Equity Hybrid Fund –Aggressive Hybrid Fund trading at NAV of 167.57 launched in January 1996 with 11.9% return since inception. 73.66% invested (49.37% large-cap, 10.89% mid-cap, and 3.56% small cap) in stocks and 18.77% invested (9.97% in Government securities, 8.13% in low-risk securities) in Debt. Return at 14.12%.
- Mirae Asset Hybrid Equity Fund –Aggressive Hybrid fund with NAV @Rs.18.31. 75.84% invested (53.63% large-cap, 11.01% mid-cap & 2.32% small-cap) in stocks and 12.74% invested (9.73% in Government securities and 3.02% in very low risk securities) in Debt. Return clocked in at 16.84%.
- Nippon India Mutual Fund –Nippon India Pharma Fund: NAV at Rs.251.10. 97.91% invested (57.69% in large-cap, 18.16% mid-cap & 11.84% small-cap) in stocks. Return at 60.01%. High risk.
- Aditya Birla Sun Life Frontline Equity Fund –Aditya Birla Mutual Funds have been performing well lately. This specific mutual fund has a NAV of Rs.272.9. 97.75% invested (78.46% large-cap, 8.25% in mid-cap and 1.58% in small-cap) in shares. Return at 17.33%.
Historical fund performance does not guarantee the same results in the future. Principal value, share prices, and investment returns fluctuate with market conditions. Your investment may be worth more or less than your original cost when you redeem your shares.
This list of the best mutual funds to invest in 2021 in India is not financial advice. It serves only to educate readers on possible profitable investments. Be sure to do your research before investing in these mutual funds. If you want to make money, you invest. But what if you want to save money?
Out of all the mutual funds we have mentioned above, which one should? Drop your answers in the comment section below.