Choosing the best mutual fund from the thousands available in India is not an easy task. To find the right one, consider your risk profile and time horizon. Your risk profile reflects your willingness and ability to take risks, so high-risk funds may be suitable for risk-tolerant individuals. Additionally, the time horizon of your goals plays a crucial role. Long-term goals may align better with high-risk funds, while short-term goals require different investment strategies. But then, which are best mutual funds to invest in 2023.
What are types of Mutual Funds?
Mutual funds can be categorized into equity, debt, hybrid and commodity funds based on their underlying assets. Each type has different risk profiles and objectives. There is no universally best mutual fund; the ideal one depends on your investment goals, risk tolerance, and time horizon.
For long-term goals like building an education fund for your child in 15 years, equity mutual funds are a good choice. Within equity funds, consider factors like risk tolerance when deciding between large cap and small-cap funds.
If you have multiple goals, such as buying a sedan in three years, equity funds may not be the best option. Debt mutual funds, with lower volatility, can be more suitable for achieving short-term goals like purchasing a sedan.
If you want to diversify your mutual fund portfolio beyond equity and debt, you can checkout Commodity oriented mutual funds. These may not give great returns but will help you when Equity takes a downward trejectory.
Top Performing Mutual Funds to Invest In India
Here’s the list of top 10 best mutual funds to invest now.
Top Performing Equity Mutual Funds
| Fund Name | 3 Year returns |
|---|---|
| Quant Small Cap Fund | 59% |
| Quant Infrastructure Fund | 51% |
| ICICI Pru Commodities | 47% |
| Nippon India Small Cap | 47% |
| Nippon India ETF Nifty PSU Bank BeES | 44% |
| Canara Robeco Small Cap Fund – Direct Plan | 44% |
| Tata Small Cap Fund – Direct Plan | 44% |
| Kotak Nifty PSU Bank ETF | 44% |
| HSBC Small Cap Fund- Direct Plan | 44% |
Top Performing Debt Mutual Funds
| Fund Name | 3 Year returns |
|---|---|
| Bank of India Credit Risk Fund – Direct Plan | 42% |
| Aditya Birla Sun Life Medium Term Plan – Direct Plan | 14% |
| Baroda BNP Paribas Credit Risk Fund Direct | 12% |
| Bank of India Short Term Income Fund – Direct Plan | 11.8% |
| UTI Credit Risk Fund – Direct Plan | 11.2% |
| IDBI Credit Risk Fund – Direct Plan | 10% |
| Nippon India Credit Risk Fund – Direct Plan | 9.5% |
| UTI Dynamic Bond Fund – Direct Plan | 8.7% |
| UTI Bond Fund – Direct Plan | 8.4% |
Top Performing Hybrid Mutual Funds
| Fund Name | 3 Year returns |
|---|---|
| Quant Multi Asset Fund – Direct Plan | 36.4% |
| Quant Absolute Fund – Direct Plan | 33.2% |
| Bank of India Mid & Small Cap Equity & Debt Fund – Direct Plan | 29.9% |
| ICICI Prudential Equity & Debt Fund – Direct Plan | 28.6% |
| HDFC Balanced Advantage Fund – Direct Plan | 27.7% |
| ICICI Prudential Multi Asset Fund – Direct Plan | 27.4% |
| HDFC Children’s Gift Fund – Direct Plan | 24.3% |
| Edelweiss Aggressive Hybrid Fund – Direct Plan | 24.3% |
| Kotak Equity Hybrid Fund – Direct Plan | 24.2% |
Top Performing Commodity Mutual Funds
| Fund Name | 3 Year returns |
|---|---|
| IDBI Gold ETF | 6.03% |
| Axis Gold Fund – Direct Plan | 5.94% |
| IDBI Gold Fund – Direct Plan | 5.80% |
| ICICI Prudential Equity & Debt Fund – Direct Plan | 28.6% |
| HDFC Balanced Advantage Fund – Direct Plan | 27.7% |
| ICICI Prudential Multi Asset Fund – Direct Plan | 27.4% |
| Axis Gold ETF | 5.77% |
| Invesco India Gold Fund – Direct Plan | 5.77% |
| Invesco India Gold ETF | 5.75% |
| SBI Gold Fund – Direct Plan | 5.72% |
| Aditya Birla Sun Life Gold ETF | 5.68% |
| HDFC Gold Exchange Traded Fund | 5.67% |
Returns are for direct plans that save on your commission. You can check out Best App For Direct Mutual Fund Investment to invest in direct plans.
What are top 3 Mutual Funds?
Based on historic performance, Quant Small Cap Fund, Quant Infrastructure Fund and ICICI Pru Commodities are top three mutual funds in India beating Nippon India Small Cap just by a minute margin.
Which is Rank 1 Mutual Fund?
Based on historic performance, Quant Small Cap Fund is number 1 rank mutual fund as of now.
How to Select the Top Performing Mutual funds in India
Choosing the best mutual funds involves considering key factors:
- Investment Objectives: Ensure the fund aligns with your goals and risk tolerance.
- Fund’s History: Look for consistent performance across market cycles.
- Expense Ratio: Opt for funds with lower expenses compared to peers.
- Fund Manager’s Performance: Evaluate their track record and ability to navigate markets.
- Fund’s Consistency: Prioritize funds that consistently outperform over the long term.
- Financial Ratios: Assess risk-return potential using metrics like alpha and beta.
Considering these factors helps identify the best mutual funds for your investment needs.
How Tax is Applied on Mutual Funds in India
Mutual fund investments provide income through capital gains and dividends. Dividends are taxed based on your income tax slab. Capital gains tax varies for different types of funds and holding periods.
For equity funds, short-term capital gains (held for less than a year) are taxed at 15%, while long-term gains (held for a year or more) above Rs. 1 lakh are taxed at 10%.
Budget 2023: No indexation benefit will be available while calculating long-term capital gains on Specified Mutual Fund (i.e a mutual fund which invests less than 35% of its proceeds in the equity shares of domestic companies). Debt mutual funds will now be taxes as per the applicable slab rates.
Hybrid funds’ tax on capital gains depends on the equity allocation. If over 65%, it follows equity fund taxation.
Consulting tax regulations and seeking professional advice is recommended for accurate understanding of mutual fund taxation.
Who Should Invest in Mutual Funds?
Investing in the best performing mutual funds in India can provide investors with high and consistent returns across market cycles.
These funds have shown the potential to outperform peers and help individuals achieve their financial goals more quickly.
Regular investments through SIPs offer a convenient way to invest in these funds. While traditional saving options provide guaranteed but limited returns, mutual funds offer the potential for higher returns, albeit with higher risk.
Expert fund managers manage these funds, ensuring professional money management and selecting the best investments. Additionally, top mutual funds provide diversification, reducing the impact of poor performing securities and leading to more consistent returns.
Overall, investing in the best performing mutual funds enables investors to aim for better average returns, meet their financial goals, and benefit from diversification.
Conclusion
Choosing the right mutual funds for investment depends on your financial goals, risk tolerance, and investment duration. The best mutual funds vary for each individual, as they are based on personal preferences and objectives. It is important to carefully assess these factors to identify the mutual funds that align with your needs and maximize your investment potential.
Also check out Best Mutual Funds in India in other categories.
