Guide to identify and invest in high return mutual funds in India for 2023
Mutual funds have become an increasingly popular investment instrument for individuals looking for high returns. The appeal lies in their impressive performance, ease of purchase and the potential for long-term returns. India’s mutual fund industry has seen a major boom in recent years, with the top return mutual funds consistently delivering exceptional returns.
What are the high return mutual funds?
There are several types and categories of mutual funds available for investment in India. Depending on your risk appetite and return expectation, the right mutual fund scheme for you should provide you the highest return at minimum risk. Therefore, the first step to find high return mutual funds is to know the type of fund you would be investing in.
Mutual funds are generally of 3 types: Equity Funds, Debt Funds, and Hybrid Funds.
- Equity funds are designed to generate returns through investments in equities,
- While debt funds are designed to generate returns by investing in fixed income instruments.
- Hybrid funds combine both equity and debt, with the latter providing a steadier return.
- Further, there are several other categories of mutual funds that offer a range of management styles, but ultimately they all aim to generate higher-than-average returns.
How to manage the risks while investing in high return mutual funds?
Investing in high return mutual funds comes with some degree of risk, as is the case with any investment, some of the major risks associated with investing in mutual funds are:
Market Risk:
Market risk is the uncertainty of returns arising from cyclical fluctuations in the economy. This type of risk has to do with the underlying value of the stocks and bonds held by the mutual fund. When the economy is volatile, investments may suffer losses since the value of securities can decline rapidly. Investors should take into account the current market conditions when deciding to invest in any top return mutual funds.
Liquidity Risk:
Liquidity risk is the possibility of investors not being able to liquidate their mutual fund investments quickly and at fair prices. This can be a major issue as it impacts the timing of returns. Investors should make sure to choose top return mutual funds with a high degree of liquidity.
Operational Risk:
Operational risk is the risk of errors or fraud in the management of a mutual fund, which can lead to loss or detrimental performance. The primary cause of operational risk is the competency of the fund manager. Before investing in any fund, investors should investigate the track records of the fund managers and research the funds’ operations to ensure their promise of profitability is realistic.
Dividend Risk:
Dividend risk is the possibility of earning less than the expected returns from high return mutual funds due to various factors such as mismanagement of the fund, changing market conditions, or other factors. Investors should take this risk into account when selecting which mutual funds to invest in, as investing in a fund that does not pay out regular dividends can cause investors to miss out on valuable returns over the long term.
Tax Risk:
Tax risk is the possibility of exposure to higher taxes due to changes in the tax laws. Investors should look at the current tax code to determine which funds offer the most tax savings when investing.
Tips to invest in High return mutual funds:
Below are few tips to invest in high return mutual funds:
Diversification:
When investing in high return mutual funds, understanding the risk profile of the fund is an important factor. Funds with higher returns usually carry more risk. It is therefore important to understand the characteristics of each fund before investing, including the scope of its investments, the management style and the risk/return profile. Additionally, it is important to diversify investments across different funds, to reduce the risk of any one fund losing value.
Invest in SIP:
A Systematic Investment Plan (SIP) is an investing strategy, which allows investors to systematically invest a fixed amount at regular intervals into high returns mutual funds. There are several benefits to investing through a SIP, including convenience, discipline and the potential to compound wealth using the concept of rupee-cost averaging.
Compare different funds:
Investors should always check different mutual fund schemes first and their associated fees, fund manager’s performance and the fund’s long-term performance record before investing.
Rebalance regularly:
Finally, investors should keep in mind that high return mutual funds are a long-term investment, and that returns can vary over time. It is important to review investments periodically and ensure that they remain aligned with the investor’s goals. Investing regularly in well-managed funds is the key to maximizing returns while minimizing the risk of losses.
Top return mutual funds for 2023:
Below is the list of top return mutual funds for SIP based on performance of these mutual funds in 2023:
| TOP LARGE CAP FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Axis Bluechip Fund – Growth |
4.01 |
11.55 |
12.24 |
13.22 |
|
Canara Robeco Bluechip Equity Fund – Growth |
0.77 |
15.30 |
14.61 |
13.67 |
|
UTI MasterShare Fund – Growth |
0.77 |
16.76 |
13.95 |
12.88 |
|
Aditya Birla Sun Life Frontline Equity Fund – Growth |
1.30 |
17.35 |
13.25 |
12.63 |
| TOP LARGE AND MID CAP FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Canara Robeco Emerging Equities Fund – Growth |
2.63 |
20.81 |
16.61 |
18.69
|
|
ICICI Prudential Large & Mid Cap Fund – Growth |
8.16 |
25.73 |
18.13 |
14.49 |
| TOP FLEXICAP / FOCUSED FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
UTI Flexi Cap Fund – Growth |
5.57 |
16.67 |
15.52
|
14.62 |
|
Kotak Flexi Cap Fund – Growth |
1.78 |
15.35 |
12.67 |
14.04 |
|
ICICI Prudential Focused Equity Fund – Growth |
3.19 |
21.23 |
16.06 |
13.26 |
| TOP MIDCAP FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Axis Midcap Fund – Growth |
3.94 |
21.43 |
19.10
|
18.18 |
|
Kotak Emerging Equity – Growth |
11.06 |
28.26 |
21.17 |
19.60 |
|
Edelweiss Mid Cap Fund – Growth |
10.51 |
28.78 |
20.97 |
19.09 |
| TOP SMALL CAP FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Axis Small Cap Fund – Growth |
9.97 |
30.85 |
24.97 |
- |
|
Nippon India Small Cap Fund – Growth |
15.22 |
39.85 |
26.65 |
24.00 |
|
ICICI Prudential Small Cap Fund – Growth |
11.80 |
35.75 |
24.55 |
17.52 |
| TOP VALUE/CONTRA/DIVIDEND YIELD FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Invesco India Contra Fund – Growth |
5.12 |
19.41 |
15.31 |
16.12 |
|
ICICI Prudential Value Discovery Fund – Growth |
6.42 |
25.73 |
18.60 |
15.93 |
|
UTI Dividend Yield Fund |
6.12 |
16.14 |
13.21 |
12.10 |
| TOP SECTOR FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Invesco India Infrastructure Fund – Growth |
6.39 |
26.33 |
19.48 |
16.30 |
|
SBI Infrastructure Fund – Growth |
11.68 |
25.90 |
18.26 |
14.54 |
|
ICICI Prudential Technology Fund – Growth |
25.05 |
25.15 |
23.85 |
20.09 |
| TOP ELSS FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Kotak Tax Saver Fund – Growth |
5.73 |
20.23 |
16.27 |
14.92 |
|
Axis Long Term Equity Fund – Growth |
7.32 |
10.93 |
11.30 |
14.21 |
|
Canara Robeco Equity Tax Saver – Growth |
2.27 |
20.34 |
17.74 |
15.53 |
Conclusion:
High return mutual funds offer attractive returns, but it is important to understand the risk profile of the various fund options and to diversify investments across different funds. Automated investing is a great way to save time and effort. It is essential to keep track of investments and make sure that they remain aligned with the investor’s goals. Following these principles can help investors make the most of their investments in high return mutual funds.
