Best Mutual Funds for Beginners

12 January 2023
7 min read

A Mutual Fund is a type of investment vehicle that is essentially a group of stocks and/or bonds overseen by experts from an asset management firm. Depending on their tolerance for risk and the length of their investment, investors will place their money in a variety of Mutual Funds unit types.

Due to their advantages, Mutual Fund investments are growing in popularity among individual investors. They have drawn a lot of attention for several reasons, including creating a wide and varied investment portfolio, providing an economical solution to save for retirement, or assisting one in achieving short or long-term financial objectives.

In this blog, we examine some of the top Mutual Funds for beginners and new investors and their historical performance. 

List of Mutual Funds for Beginners in India

If you are a new investor, you might want to try investing in one of India's leading Mutual Fund investment plans. Please keep in mind that before making a significant investment decision, conducting your own market and fund research is essential.

In light of that, let's have a look at some of these funds-

S.No.

Mutual Fund Names

1.

Canara Robeco Equity Tax Saver Fund

2.

ICICI Prudential Equity & Debt Fund

3.

DSP Tax Saver Fund

4.

Mirae Asset Tax Saver Fund

5.

Kotak Tax Saver Fund

6.

Edelweiss Aggressive Hybrid Fund

7.

SBI Equity Hybrid Fund

8.

Baroda BNP Paribas Aggressive Hybrid Fund

Factors to Consider Before Investing in Mutual Funds for Beginners

You may also want to know how to invest in Mutual Funds for beginners in India, before that, let's have a look at some of the important factors to consider before you make an investment decision.

  • Different Mutual Fund Categories Have Different Risk and Return Trade-Offs

One of the most important things to remember is that different mutual fund segments typically have different risk and return trade-offs. Because the risk that comes with each unique category of Mutual Funds is different, it is very challenging to determine the various levels of risk in any specific components of Mutual Funds through specific factors or scales.

  • Choose the Alternative That Is Most Suitably and Properly Suitable For YOU!

Your search for the best Mutual Fund to invest in should start with an assessment of your risk tolerance and investment and financing objectives. For investments and capital gains that last longer than a year, be sure to invest in long-term Mutual Funds, where your money will accumulate over a period of at least a year, but if you prefer current income, be sure to invest in short-term and hurried schemes.

  • Check the Mutual Funds' Performance Consistency as the Uniformity of Return is the Definition of Quality Funds

Before seriously considering investing in any Mutual Fund, it is also important to consider the quality, consistency, and time period of performance.

Consider how the scheme has performed over the past 1 to 5 years rather than focusing on how much money it has recently made. This shows whether it can provide you with steady returns or just erratic ones.

  • Keep In Mind That Excessive Diversification Can Be Dangerous

It is common knowledge that "diversification reduces risk," but over-diversification does not necessarily result in greater risk mitigation. Gains won't be increased by funds beyond a minimal level of diversification.

Beginner investors should begin with the fundamentals before moving up. You risk adding similar funds to your portfolio in haste, resulting in lower returns.

  • It Is Highly Unlikely for You to Receive the Same Returns Every Year

Annualized returns are typically what people mean when they discuss Mutual Fund returns. This might give the impression that your returns will remain constant over time. However, consider a specific mutual fund scheme with annualized returns of 8%; this does not necessarily mean that you will earn 8% annually. This is a result of inconsistent returns from mutual funds.

For instance, a Mutual Fund scheme may offer you +10% returns in one year but -2% returns in another. There might also be instances where there aren't any returns. Therefore, you should also anticipate this variability in your annual returns.

Best Mutual Fund for Beginners 2023 - 

Performance Overview

The performance statistics, investment goals, and other critical information about the aforementioned Mutual Funds are listed below-

1) Canara Robeco Equity Tax Saver Fund

Canara Robeco Equity Tax Saver Direct-Growth is an Equity Mutual Fund Scheme launched by Canara Robeco Mutual Fund. This scheme was made available to investors on 19 Dec 1987. The scheme seeks to achieve long-term capital appreciation by predominantly investing in equities.

It also offers tax benefits under Section 80C. The investments may be made in primary and secondary markets, and the scheme may also invest in overseas equity markets like ADRs/GDRs. This is one of the best schemes for investing in Mutual Funds for beginners.

2) ICICI Prudential Equity & Debt Fund

ICICI Prudential Equity & Debt Fund Growth is a Hybrid Mutual Fund Scheme launched by ICICI Prudential Mutual Fund. This scheme was made available to investors on 12 Oct 1993.

The scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio in equities and related securities as well as fixed income and money market securities.

3) DSP Tax Saver Fund

DSP Tax Saver Direct Plan-Growth is an Equity Mutual Fund Scheme launched by DSP Mutual Fund. This scheme was made available to investors on 16 Dec 1996.

The scheme seeks to generate medium to long-term capital appreciation from a diversified portfolio that is substantially constituted of equity and equity-related securities of corporates and to enable investors to avail of deduction from total income, as permitted under the income tax act. This is considered as other top Mutual Funds investment plans for beginners.

4) Mirae Asset Tax Saver Fund

Mirae Asset Tax Saver Fund Direct-Growth is an Equity Mutual Fund Scheme launched by Mirae Asset Mutual Fund. This scheme was made available to investors on 26 Apr 2019.

The scheme seeks long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related instruments. Mirae Asset Tax Saver Fund - Direct plan - Growth is ideal for investors looking to park their money into an investment for more than three years.

Being an ELSS fund serves the dual purpose of tax saving and long-term wealth creation for investors.

5) Kotak Tax Saver Fund

Kotak Tax Saver Fund Direct-Growth is an Equity Mutual Fund Scheme launched by Kotak Mahindra Mutual Fund. This scheme was made available to investors on 05 Aug 1994.

The scheme aims to generate long-term capital appreciation from a diversified portfolio of equity and equity-related securities and enable investors to avail of the income tax rebate, per prevailing tax laws.

6) Edelweiss Aggressive Hybrid Fund

Edelweiss Aggressive Hybrid Fund Direct-Growth is a Hybrid Mutual Fund Scheme launched by Edelweiss Mutual Fund. This scheme was made available to investors on 30 Apr 2008.

The scheme seeks to generate long-term capital and current income growth through a portfolio investing predominantly in equity and equity-related instruments and the balance in debt and money market securities.

7) SBI Equity Hybrid Fund

SBI Equity Hybrid Fund Direct Plan-Growth is a Hybrid Mutual Fund Scheme launched by SBI Mutual Fund. This scheme was made available to investors on 29 Jun 1987.

The scheme seeks to provide investors with long-term capital appreciation along with the liquidity of an open-ended scheme by investing in a mix of debt and equity. The scheme will invest in a diversified portfolio of equities of high-growth companies and balance the risk by investing the rest in fixed-income securities.

8) Baroda BNP Paribas Aggressive Hybrid Fund

Baroda BNP Paribas Aggressive Hybrid Fund Direct-Growth is a Hybrid Mutual Fund Scheme launched by BNP Paribas Mutual Fund. This scheme was made available to investors on 15 Apr 2004.

The Scheme seeks to generate income and capital appreciation by investing in a diversified portfolio of equity-related and fixed-income instruments.

Conclusion

A Mutual Fund is a professionally managed investment vehicle funded by investor contributions to make investments on their behalf. These funds are invested in securities by Mutual Funds, including stocks, bonds, money market instruments, etc.

For investors who want to invest in such securities but lack the knowledge or time to do so, Mutual Funds are the ideal option. We sincerely hope this blog helped you learn more about Mutual Funds for beginners and better understand them.

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Bavadharini KS

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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