Best Performing Mutual Funds in India

Indians like mutual funds as an investment because they can give them high returns, let them diversify their investments, and are professionally managed. With so many choices on the market, finding the mutual funds to help you reach your spending goals and take the slightest risk can be problematic. His blog post details the best mutual funds in India in 2024 and provides helpful information to help you choose wisely.

What are the best-performing mutual funds?

The Indian mutual fund industry has experienced remarkable growth in recent years, with a diverse range of funds catering to various investment objectives and risk profiles. It is essential to look at a mutual fund's past performance, fund management, investment strategy, and total risk-return profile to find the ones that do the best.

Best-performing equity mutual funds in India

Equity mutual funds invest mainly in stocks and are known for their potential to create higher returns over the long term. Some of the best-performing stock mutual funds in India in 2024 include:

1. Mirae Asset Emerging Bluechip Fund: This fund invests in a well-diversified mix of mid-cap and small-cap stocks, hoping to capitalize on the growth potential of emerging companies. It has regularly outperformed its benchmark index over the past several years.

2. SBI Bluechip Fund: As the name suggests, this fund focuses on investing in large-cap, blue chip companies with good fundamentals and growth prospects. A team of experienced fund managers manages it and has a proven track record of providing consistent returns.

3. Axis Bluechip Fund: Another large-cap-oriented fund, the Axis Bluechip Fund follows a disciplined investment approach and aims to produce long-term capital appreciation by investing in high-quality, large-cap companies across various sectors.

Best-performing debt mutual funds

Debt mutual funds deal in fixed-income instruments such as bonds, debentures, and government securities. These funds are known for their relative reliability and regular income generation. Some of the best-performing debt mutual funds in India include:

1. ICICI Prudential All Seasons Bond Fund: This fund invests in a diversified mix of fixed-income instruments across different maturities and credit ratings. It aims to create stable returns while effectively managing interest rates and credit risks.

2. HDFC Corporate Bond Fund: As the name implies, this fund mainly invests in corporate bonds issued by reputable companies with solid credit ratings. It has a track record of delivering consistent returns while keeping a moderate risk profile.

3. Kotak Company Bond Fund: Similar to the HDFC Corporate Bond Fund, this fund invests in high-quality company bonds. A team of experienced fixed-income professionals manages it and has regularly outperformed its benchmark over the long term.

Best-performing hybrid mutual funds

Hybrid mutual funds combine the features of equity and debt funds, giving a balanced investment approach. These funds provide capital appreciation while maintaining a level of stability. Some of the best-performing combination mutual funds in India include:

1. ICICI Prudential Equity & Debt Fund: This fund dynamically allocates its assets between equity and debt instruments, hoping to balance growth and stability. It has a proven track record of providing consistent returns across market cycles.

2. Mirae Asset Hybrid Equity Fund: This fund takes a multi-cap investment approach, investing in a mix of large-cap, mid-cap, and small-cap stocks, as well as fixed-income instruments. It aims to provide long-term capital growth while managing risk through asset allocation.

3. SBI Stock Hybrid Fund: With a focus on generating capital appreciation and income, this fund invests in a diversified portfolio of stock and debt instruments. A team of experienced professionals manages it and has regularly outperformed its benchmark over the long term.

How do you select the top-performing mutual funds?

While past performance is an important consideration, it is not the sole reason for selecting the best mutual funds. Here are some critical things to consider:

Check the fund's track record and history 

Evaluate the fund's performance over various market cycles and periods to judge its consistency and resilience. A fund with a consistent track record across different market conditions is considered a safer bet. Mirae Asset Emerging Bluechip Fund, HDFC Corporate Bond Fund, and ICICI Prudential Equity & Debt Fund have proven strong long-term performance across market cycles.

When assessing a fund's track record, it's essential to consider its overall returns and risk-adjusted performance. Metrics such as the Sharpe ratio, which measures the fund's return compared to its volatility, can provide valuable insights into its risk-reward profile.

Additionally, it's essential to understand the fund's investment philosophy and strategy. Funds that follow a disciplined and well-defined investment approach are more likely to create consistent returns over the long run. For example, the SBI Bluechip Fund's focus on large-cap companies with good fundamentals has been a critical driver of its success.

Check the financial and expense ratios  

Expense ratios represent the annual costs of managing and operating a mutual fund. Lower expense ratios can significantly impact the fund's overall returns over the long run. It's essential to consider funds with reasonable expense ratios. For instance, SBI Bluechip Fund and Kotak Corporate Bond Fund are known for their low expense rates.
While expense ratios are essential, evaluating them in the context of the fund's performance and total value proposition is necessary. HigherHigher expense ratios may sometimes be justified if the fund regularly offers superior returns and is managed by a highly skilled investment team.
Investment objective  

Ensure the fund's investment aim aligns with your financial goals and risk tolerance. For instance, if you seek long-term capital appreciation, equity funds like Axis Bluechip Fund may be suitable. In contrast, debt funds like ICICI Prudential All Seasons Bond Fund may be more appropriate for preserving capital and creating regular income.

It's also important to consider your investment time horizon when choosing mutual funds. Equity funds are generally more suitable for long-term investments, as they are more volatile in the short term but offer higher growth potential over longer times. Conversely, debt or hybrid funds may be more appropriate for investors with shorter time frames or a lower risk appetite.

Performance of the fund manager 

The expertise and experience of the fund manager play a crucial part in the fund's performance. Research the fund manager's track record, investment philosophy, and decision-making process to assess their ability to handle different market conditions. Experienced and well-regarded fund managers handle funds like Mirae Asset Hybrid Equity Fund and SBI Equity Hybrid Fund.

Experienced fund managers often profoundly understand their markets and can effectively handle various economic and market conditions. They may also have access to extensive research resources and industry insights, which can inform their investment choices.

Additionally, it's essential to consider the fund manager's investment style and whether it aligns with your investment tastes. Some fund managers may take a more aggressive investment approach, while others may be more conservative.

Advantages of buying in the best mutual funds 

Expert money managers 
Mutual funds are managed by professional fund managers with extensive knowledge and skill in analyzing and selecting investments. Their expertise can help navigate market complexities and make informed financial choices. Top fund houses like ICICI Prudential, HDFC, and Mirae Asset are known for their skilled fund management teams.
Professional fund managers have access to a wealth of study resources, industry insights, and analytical tools that individual investors may need access to. They can leverage this expertise to spot attractive investment possibilities and effectively manage portfolio risks.

Option to invest and add amounts regularly  
Mutual funds offer the flexibility to invest and give regularly through systematic investment plans (SIPs). This disciplined strategy can help you average your investment costs and benefit from rupee cost averaging. Most mutual funds in India offer SIP options, allowing investors to spend small amounts regularly.
SIPs are particularly advantageous for investors with limited lump-sum amounts to spend. By investing a fixed amount at regular intervals, investors can benefit from the power of compounding and achieve their long-term financial goals more effectively.

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Diversification  
Mutual funds naturally provide diversification by investing in a basket of securities across different sectors, industries, and asset classes. This diversification can help mitigate risk and enhance returns. Funds like SBI Bluechip Fund and ICICI Prudential All Seasons Bond Fund offer diversity across large-cap stocks and high-quality bonds, respectively.
Diversification is a crucial risk management strategy, as it helps to reduce the effect of underperformance in any security or industry on the overall portfolio. By spreading investments across various asset classes and sectors, investors can benefit from the possible upside of different market segments while mitigating the downside risk associated with any particular investment.

Well-regulated  
The mutual fund industry in India is closely controlled by the Securities and Exchange Board of India (SEBI), ensuring transparency, accountability, and investor protection. All the mentioned funds comply with SEBI regulations, giving investors a secure investing environment.

SEBI's regulations cover various facets of mutual fund operations, including disclosure standards, investment restrictions, and investor redressal mechanisms. These regulations aim to support fair practices, prevent conflicts of interest, and safeguard the interests of investors. By investing in SEBI-regulated mutual funds, investors can trust the fund's adherence to regulatory standards and oversight.

Risks posed by joint funds  
While mutual funds offer numerous advantages, it is essential to understand the associated risks to make informed investment decisions.

Market risk 
Mutual funds, especially equity funds, are subject to market fluctuations and volatility. Market conditions, economic factors, and global events can impact the performance of the underlying securities, leading to possible losses. Funds like Mirae Asset Emerging Bluechip Fund and Axis Bluechip Fund are subject to market risks due to their equity investments.

Market risk is an inherent part of investing in equity markets, and it is essential to have a long-term investment horizon and a well-diversified portfolio to mitigate this risk. Investors should also be prepared for short-term volatility and possible drawdowns in their equity fund investments.

Interest rate risk  
Debt mutual funds are subject to changes in interest rates. Rising interest rates can adversely affect the value of fixed-income securities, possibly leading to a decline in the fund's net asset value (NAV). Funds like HDFC Corporate Bond Fund and Kotak Corporate Bond Fund carry interest rate risks.

Interest rate risk is a crucial factor for investors in debt mutual funds. When interest rates rise, the value of existing bonds tends to decrease as newly issued bonds with higher coupon rates become more appealing. Conversely, when interest rates fall, the value of existing bonds with higher coupon rates tends to rise.

Liquidity risk 
Some mutual funds may hold illiquid or thinly traded securities, making it challenging to sell or redeem units fast without affecting the fund's NAV. However, most funds deal in highly liquid securities, minimizing liquidity risks.
Liquidity risk can arise when a fund holds a significant portion of its portfolio in illiquid or thinly traded securities. In such cases, the fund may face difficulties selling these securities at fair prices, especially during market stress or redemption pressure. This can lead to possible losses or delays in meeting redemption requests.

Conclusion

Investing in the best-performing mutual funds can be a robust plan to achieve your financial goals and build long-term wealth. You can find the funds that align with your investment preferences by considering factors such as track record, investment objective, fund management, and risk-return profile. Funds like Mirae Asset Emerging Bluechip Fund, ICICI Prudential All Seasons Bond Fund, and ICICI Prudential Equity & Debt Fund have proven strong performance and are worth considering. Remember, diversification, regular monitoring, and a long-term investment plan are crucial for successful mutual fund investing.