An internet search will usually lead you to a few websites with ready-made lists. Most of the time, plans can be selected based on their short-term performance. Sometimes, plans from a single category can dominate the list because that category happens to be the most popular for the season.
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Your friends or colleagues may give you names of plans that they like or are investing in. Again, there is no guarantee that the plans will actually be suitable for you.
Some people never go beyond collecting the names of the best funds because they are always held back by doubts about the veracity of the names. No wonder many investors keep visiting mutual fund forums for validation for years even after they start investing.
So, ETMutualFunds decided to publish a list of the top 10 mutual funds. We have chosen two out of five different categories of equity mutual funds (aggressive hybrid, large-cap, mid-cap, small-cap and flexible-cap), which we believe should suffice for regular mutual fund investors. There are a few caveats – read till the end to ensure you choose the best plan for yourself.Read also | The best dynamic fixed-income funds to invest in August 2024
Top 10 Plans List:
Here are some tips to keep in mind when investing in these schemes. First, educate yourself about each category and whether it suits your investment objective and risk profile.
Aggressive hybrid funds
Aggressive hybrid schemes (or erstwhile balanced schemes or equity-oriented hybrid schemes) are ideal for those who are new to investing in equity mutual funds. These schemes invest in a mix of equity (65-80%) and debt (20-35%). Due to this hybrid portfolio, they are considered to be relatively less volatile than pure equity schemes. Aggressive hybrid schemes are the best investment vehicle for very conservative equity investors who are looking to build wealth over the long term without much volatility.
Large-cap funds
Some equity investors want to play it safe even when investing in stocks. Large-cap schemes are meant for such people. These schemes invest in the top 100 stocks and are relatively safer than other pure equity mutual fund schemes. They are also relatively less volatile than mid-cap and small-cap schemes. In short, you should invest in large-cap schemes if you are looking for modest returns with relative stability.
Flexible capitalization funds
A regular equity investor (with a moderate risk appetite) looking to invest in the stock market need not look beyond flexible cap mutual funds (or diversified equity schemes). These schemes invest across market capitalizations and sectors, as per the opinion of the fund manager. A regular investor can benefit from the uptrend in any of the sectors or equity categories by investing in these schemes.
Small and mid-cap funds
What about aggressive investors looking to earn additional returns by taking on additional risk? Well, they can go for mid-cap and small-cap schemes. Mid-cap schemes invest primarily in mid-sized companies and small-cap funds invest in smaller companies in terms of market capitalization. These schemes can be volatile but also have the potential to deliver superior returns over a long period. You can invest in these categories of mutual funds if you have a long-term investment horizon and a higher risk appetite.
Lastly, a search that starts with the word “best” or “top” is unlikely to give you the best solution. You should always choose a plan that matches your investment objective, horizon, and risk profile. If you do not understand the basics of mutual funds or are totally new to the world of mutual funds and investing, you should always seek the help of a mutual fund advisor.
If you are looking for our recommendations in various mutual fund categories, check out: The best mutual funds to invest in
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