Many mutual fund investors, especially new and relatively-inexperienced ones, ask various versions of this question - to friends or colleagues or in some mutual fund forums - while starting their investment journey or while deciding to invest extra money. But most of them are not satisfied with the answers they get from the internet or friends.
An
online search would mostly take you to some websites with ready-made lists.
Most often, the schemes may be shortlisted on the basis of their short-term
performance. Sometimes, the schemes from a single category may dominate the
list because that category happens to be the flavour of the season. Some may
follow a faulty methodology.
Friends
or colleagues may give you names of schemes they like or they are investing.
Again, there is no guarantee whether the schemes are indeed suitable for you.
Some
people never proceed beyond collecting names of top funds because a lingering
doubt about the veracity of the names always holds them back. No wonder, many
investors keep visiting mutual fund forums for validation for years - even
after they start investing.
That
is why we decided to put out a list of top 10 mutual fund
schemes. We have chosen two schemes from five different equity mutual fund
categories - aggressive hybrid, large cap, mid cap, small cap and flexi cap
schemes – which we believe should be enough for regular mutual fund investors.
There are caveats: read till the end to ensure you are picking up the best
scheme for you.
Here is the list of top 10 schemes:
·
Canara Robeco Bluechip Equity Fund
·
Mirae Asset Large Cap Fund
·
Parag Parikh Flexi Cap Fund
·
UTI Flexi Cap Fund
·
Axis Midcap Fund
·
Axis Small Cap Fund
·
SBI Small Cap Fund
·
SBI Equity Hybrid Fund
·
Mirae Asset Hybrid Equity Fund
Here are some pointers
you should keep in mind while investing in these schemes. First, find out about
each category and whether it is suited to your investment objective and risk
profile.
Aggressive
hybrid schemes (or erstwhile balanced schemes or equity-oriented hybrid
schemes) are ideal for newcomers to equity mutual funds. These schemes invest
in a mix of equity (65-80%) and debt (20-35). Because of this hybrid portfolio
they are considered relatively less volatile than pure equity schemes.
Aggressive hybrid schemes are the best investment vehicle for very conservative
equity investors looking to create long-term wealth without much volatility.
Some equity investors want to play safe even
while investing in stocks. Large cap schemes are meant for such individuals.
These schemes invest in top 100 stocks and they 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.
A regular equity investor
(one with a moderate risk appetite) looking to invest in the stock market need
not look beyond flexi cap mutual funds( or diversified equity schemes). These
schemes invest across market capitalisations and sectors, based on the view of
the fund manager. A regular investor can benefit from the uptrend in any of the
sectors, categories of stocks by investing in these schemes.
What about aggressive
investors looking to pocket extra returns by taking extra risk? Well, they can
bet on mid cap and small cap schemes. Mid cap schemes invest mostly in
medium-sized companies and small cap funds invest in smaller companies in terms
of market capitalisation. These schemes can be volatile, but they also have the
potential to offer superior returns over a long period. You can invest in these
mutual fund categories if you have a long-term investment horizon and an
appetite for higher Risk.
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