Over the years mutual funds have become a trendy investment option among individuals in India. There are varieties of mutual fund schemes to choose from in India. This is why most new investors when starting up their investment journey in mutual funds want to know the best mutual funds. It becomes difficult in most cases when deciding which mutual should be selected or invested in.
The truth is that there is no specific mutual fund that is suitable for everyone but certain things can be put into consideration. Things like risk tolerance and the period one plans to hold the investment based on a specific goal. Most investors always show interest in mutual funds that offer high-return investments.
How do you know the best mutual funds that fit your needs?
Based on underlying assets mutual funds are of different types, we have debt mutual funds, equity mutual funds and hybrid funds. Attached to each of these funds are their profile risk and investment goals. For example, if you are investing for any of your children, you will need to consider an equity mutual fund. This fund is further subdivided into different categories which are large-cap funds, mid-cap funds and small-cap funds. Investing in one of these categories should be dependent on your ability to handle risk.
Small-cap funds involve higher risk than large-cap funds; the reason behind this is that large-cap funds are for large companies. Large companies are more capable of overcoming business downturns than small companies. Also, if you have a short-term goal investment like buying a car in the next two to four years, equity funds are not the best. The best mutual fund to choose is a debt mutual fund as it is less volatile than equity funds.
Factors to consider before opting for a high-return mutual fund
Below are some of the factors to consider before investing in high return mutual fund
Goals and objective
Investment plans don’t start and end in a day, you need to carefully make a plan even if it takes longer. Your goals and objectives must be spelt out, after this is done, you have to compare them with the type of investment schemes. Your needs should be known first before investing in any mutual funds. Once your needs match with any mutual funds objectives, it helps you achieve your financial goals easily.
A retirement plan is a long-term investment; your plan should be an equity mutual fund. For a short-term investment, a debt mutual fund is the best. To be successful in your investment, the fund’s investment plan must correspond with an investor’s objective and also its risk tolerance.
Fund’s track record
It will be highly risky to invest in a company with no history or track record of their fund, especially a new mutual fund. If they don’t have a history of their performance in the past, predicting their returns will be quite difficult. Investing in a mutual fund with a long-term record of its performance and how they deliver its returns consistently will be the best choice. With their performance sheet, you will be able to know their rising period and falling period and how they corrected it. This spells out their volatility in the market.
Performance consistency
Check their performance consistently to see how stable they are in the market. They should be able to at least have an outstanding performance for at least 2-5 years. Check out their performance during market downturns, fluctuations business cycles etc. however know that past performance does not automatically mean a better future result, but this will just be a guide.
Expense ratio
If the expense ratio of the investment is high, the investor’s return will be low. Check out for their house charges and fund management fees and other charges, these sum up as the expense ratio. Generated mutual funds minus the expense ratio will be the investor’s share. With this in mind, look for a mutual fund that has a low expense ratio to get high earnings.
List of high return investments in India
Debt mutual funds
- Aditya Birla Sun Life Medium Term Direct plan growth
- ICICI Prudential Credit Risk Fund Direct Plan-Growth
- IDFC Government Securities Fund Constant Maturity Direct Growth
- Edelweiss Government Securities Fund Direct-Growth
Equity mutual funds
- Tata Digital India Fund Direct-Growth
- ICICI Prudential Technology Direct Plan-Growth
- Aditya Birla Sun Life Digital India Fund Direct-Growth
- SBI Technology Opportunities Fund Direct-Growth
Hybrid mutual funds
- Quant Absolute Fund Direct-Growth
- Quant Multi Asset Fund Direct-Growth
- ICICI Prudential Equity and Debt Fund Direct-Growth
- Kotak Multi Asset Allocator FoF-Dynamic Direct Growth
Final words
Mutual funds are the best investment when you invest wisely, know the funds and your objectives and ensure it tallies before investing. Once this is done rightly, your financial goals are set to be realized.
