Beginner’s Guide to choose the best mutual fund schemes in India
When it comes to investing in mutual fund schemes to meet long-term financial goals, beginners often face a dilemma. With choices ranging from conservative options like debt schemes to riskier but higher returns-oriented equity schemes, picking the best mutual fund schemes in India can be a tricky task for the neophyte investor.
In this article, we will look at the various types of mutual fund schemes available in India and discuss the best mutual fund schemes for beginners.
Equity Schemes:
Equity mutual fund schemes invest in stocks of listed companies and hence tend to be more volatile in nature. These funds reward investors over the longer term by providing them with higher returns than any other asset class.
For equity schemes, two of the best mutual fund schemes for beginners in India are large-cap funds and multi-cap funds.
Large-cap Funds:
Large-cap funds are actively managed funds that invest their corpus in large-cap stocks, i.e., those companies with the highest market capitalization. This fund is ideal for those who want moderate returns with relatively low risk.
| 3 Best Large Cap Mutual Fund Schemes | |||||
|---|---|---|---|---|---|
|
Scheme Name |
AUM |
TER |
1 Year Return % |
3 Years Return % |
5 Years Return % |
|
HDFC Top 100 Fund (G)
|
19,910.47
|
1.82%
|
9.82%
|
12.10%
|
9.33%
|
|
Aditya Birla SL Frontline Equity Fund (G)
|
19,782.18
|
1.77%
|
4.99%
|
14.13%
|
9.13%
|
|
Kotak Bluechip Fund (G)
|
4,217.00
|
2.00%
|
3.04%
|
16.11%
|
10.85%
|
Multi-cap Funds:
Multi-cap funds invest in companies across various market capitalisations and sectors. These funds are more suited for investors who are willing to take on a bit of risk for higher returns.
| 3 Best Multi Cap Mutual Fund Schemes | |||||
|---|---|---|---|---|---|
|
Scheme Name |
AUM |
TER |
1 Year Return % |
3 Years Return % |
5 Years Return % |
|
ICICI Pru Multicap Fund - (G)
|
6,156.91
|
1.98%
|
3.38%
|
14.63%
|
10.60%
|
|
Nippon India Multi Cap Fund (G) |
11,268.25 |
2.09% |
17.05% |
17.12% |
11.69% |
|
Baroda BNP Paribas Multi Cap Fund-Reg (G) |
1,516.42 |
2.25%
|
5.29% |
19.09% |
10.76% |
Debt Funds:
Debt mutual fund schemes primarily invest in government or corporate bonds. These instruments pay regular interest to investors and hence carry a lower risk than equity schemes.
Beginners can look to invest in short-term debt funds or liquid funds. These funds offer investors higher returns than a bank account but with minimal risk exposure. The underlying portfolio of these funds invests mainly in instruments with a maturity period of three years and below.
Alternatively, dynamic bond funds are best suited for investors who are willing to take on a bit more risk for higher returns. These funds actively manage the underlying portfolio of debt instruments based on the ongoing market trends.
| 3 Best Short Duration Debt Mutual Fund Schemes | |||||
|---|---|---|---|---|---|
|
Scheme Name |
AUM |
TER |
1 Year Return % |
3 Years Return % |
5 Years Return % |
|
HDFC Short Term Debt Fund (G)
|
13,817.95
|
0.74%
|
2.71%
|
6.62%
|
6.88%
|
|
ICICI Pru Short Term Fund (G)
|
15,543.71
|
1.12%
|
3.37%
|
6.64%
|
6.52%
|
|
Kotak Bond - Short Term Fund (G)
|
13,156.19
|
1.16%
|
2.28%
|
5.81%
|
6.17%
|
| 3 Best Liquid Mutual Fund Schemes | |||||
|---|---|---|---|---|---|
|
Scheme Name |
AUM |
TER |
1 Year Return % |
3 Years Return % |
5 Years Return % |
|
ICICI Pru Liquid Fund - Regular (G)
|
49,911.75
|
0.29%
|
3.59%
|
4.04%
|
5.28%
|
|
SBI Magnum Constant Maturity Fund (G)
|
45,044.59
|
0.33%
|
3.64%
|
4.08%
|
5.32%
|
|
IDFC GSF Constant Maturity Plan (G)
|
65,819.20
|
0.28%
|
3.62%
|
4.02%
|
5.23%
|
| 3 Best Dynamic Bond Mutual Fund Schemes | |||||
|---|---|---|---|---|---|
|
Scheme Name |
AUM |
TER |
1 Year Return % |
3 Years Return % |
5 Years Return % |
|
ICICI Pru All Seasons Bond Fund - Regular (G)
|
5,646.11
|
1.37%
|
3.11%
|
6.94%
|
6.55%
|
|
Kotak Dynamic Bond Fund - Regular (G)
|
2,050.32
|
1.21%
|
2.15%
|
5.83%
|
6.71%
|
|
AXIS Dynamic Bond Fund (G)
|
1,691.03
|
0.66%
|
1.42%
|
6.16%
|
6.26%
|
Hybrid Funds:
Hybrid mutual fund schemes are a combination of equity and debt funds and are suitable for beginner investors who prefer a balanced approach to investing in mutual funds. These funds follow a predetermined asset allocation strategy, which makes them ideal for those looking to diversify their portfolio without having to actively manage it.
Aggressive hybrid funds allocate a higher portion of their corpus to equity instruments, while conservative hybrid funds allocate a greater portion to debt instruments.
| 3 Best Aggressive Hybrid Mutual Fund Schemes | |||||
|---|---|---|---|---|---|
|
Scheme Name |
AUM |
TER |
1 Year Return % |
3 Years Return % |
5 Years Return % |
|
ICICI Pru Equity & Debt Fund - (G)
|
18,586.87
|
1.80%
|
15.93%
|
18.49%
|
12.68%
|
|
Tata Hybrid Equity Fund - Regular (G)
|
3,027.41
|
2.00%
|
6.11%
|
12.29%
|
7.90%
|
|
Aditya Birla SL Equity Hybrid 95 Fund (G)
|
7,525.08
|
1.88%
|
0.96%
|
11.46%
|
6.85%
|
| 3 Best Conservative Hybrid Mutual Fund Schemes | |||||
|---|---|---|---|---|---|
|
Scheme Name |
AUM |
TER |
1 Year Return % |
3 Years Return % |
5 Years Return % |
|
HDFC Hybrid Debt Fund (G)
|
2,652.94
|
1.85%
|
4.47%
|
9.00%
|
6.50%
|
|
ICICI Pru Regular Savings Fund (G)
|
3,240.32
|
1.74%
|
6.45%
|
8.96%
|
7.77%
|
|
Aditya Birla SL Regular Savings Fund (G)
|
1,658.42
|
1.88%
|
6.18%
|
9.21%
|
5.88%
|
Balanced Advantage Funds:
Balanced advantage funds represent a relatively newer asset class in the mutual fund landscape. These mutual fund schemes implement a strategy of rolling arbitrage. This strategy involves buying and selling different derivatives such as futures and options contracts based on market inefficiencies.
This fund is well suited for investors with a relatively high-risk appetite.
| 3 Best Balanced Advantage Hybrid Mutual Fund Schemes | |||||
|---|---|---|---|---|---|
|
Scheme Name |
AUM |
TER |
1 Year Return % |
3 Years Return % |
5 Years Return % |
|
HDFC Balanced Advantage Fund (G)
|
43,078.53
|
1.72%
|
12.56%
|
14.35%
|
9.95%
|
|
Nippon India Balanced Advantage Fund (G)
|
6,076.41
|
1.93%
|
2.74%
|
10.26%
|
7.67%
|
|
Aditya Birla SL Balanced Advantage Fund (G)
|
6,671.99
|
1.85%
|
1.54%
|
10.94%
|
7.75%
|
Summary:
It is important for beginners to pick the right mutual fund schemes to meet their long-term financial goals. Equity schemes can provide higher returns but involve a greater level of risk. Debt funds, on the other hand, provide investors with stability but lower returns. Hybrid and balanced advantage schemes are a mix of both debt and equity.
