Mutual funds saw a very good run last year. Equities, along with mutual funds have been one of the favourite investment class in the past couple of years. Now, in line with the recent market volatility, mutual funds have become more attractive as an investment class.

Mutual funds come with the option of Systematic Investment Plan (SIP). Systematic Investment Plan (SIP) is a way of investing money in mutual funds at regular interval. Most famous frequency is monthly.  With the benefit of rupee cost averaging, investing in mutual funds via the SIP mode becomes most favourable.

Read More: 13 Things to Know About SIP.

During volatile market situations such as right now, a SIP becomes a blessing in disguise for a common investor. As more units of the subscribed fund can be purchased at the corrected/ lower price. Thereby investors get their units at a lower average cost and therefore higher returns when the market situation improves.

Best Mutual Funds for 2018

Mutual funds can be of varied types. In this article we have hand-picked various mutual funds based on the type of the scheme and vision of the scheme.

Tax Saving ELSS Funds

ELSS funds are one of the best investment options for tax savings.

Equity Linked Savings Scheme or ELSS is a type of mutual fund wherein a major portion out of the total fund is invested in equity and related products. As evident from the name of the scheme, it comes with benefits attached to it, in the form of tax savings. They have a lock-in period of 3 years.

Aditya Birla Sun Life Tax Relief 96

Aditya Birla Sun Life Tax Relief 96

Review:  

This Aditya Birla ELSS fund is ideal for investors seeking long-term capital appreciation. Aditya Birla Sun Life Tax Relief 96 is launched in the year 1996 and currently managed by Ajay Garg.

With exceptional one year returns of about 26-27%, the fund has provided considerably high returns over the period. Moreover, this fund has outperformed the industry benchmark. In the last 1 year, this fund has grown by 40%. Groww has rated 5 stars for this fund.

Its composition is primarily equity (80% approximately) and the balance is invested in debt and other instruments. Like other ELSS funds, this fund is eligible for tax benefits up to ₹150,000 under 80C and has a lock-in period of 3 years.

More: Aditya Birla ELSS Funds

Its diverse portfolio is a unique selling proposition for this fund. Similar to the most of the funds, it also has its fund invested in the financial sector at a weight of 18.2%. But other sectors such as consumer goods has seen a rise from 17.1% to 20.2% over the period in the investment allocation for this fund.

Other sectors in which this fund is invested in are the pharma, services, industrial manufacturing, fertilizers, and pesticides, etc

Since 2006, it is been managed by Ajay Garg and the fund has performed really well. However, it performed bearly in the US recession period of 2008 and also in the year 2011. But if the returns are compared over the period, the returns had outweighed those bear trends.

Ajay Garg is well-renowned fund manager in mutual fund industry and also manages 7 other funds such as Aditya Birla Sun Life MNC FundAditya Birla Sun Life Tax Plan, and Aditya Birla Sun Life Savings Fund.

This fund is our top pick for best ELSS funds for 2018.

Aditya Birla SL Tax Relief 96 Details

AUM ₹4349 Cr
NAV ₹31.43
Expense Ratio 2.32%
Minimum SIP ₹500
Return 1Y 40.42%
Return 3Y 17.69%
Return 5Y 21.69%

Read more about these tax savings funds.

Large Cap Funds

Large-cap funds are considered the least risky of all equity funds. Returns from this fund are the most stable among equity funds.

In India, large-cap companies are usually very stable and can weather tough economic conditions far better than smaller companies. Therefore, when you invest in the best large-cap mutual funds, your money gets invested in stable companies. You can take advantage of the growth of the Indian economy while exposing yourself to as little risk as possible.

Reliance Top 200 Fund

Reliance Top 200 Fund

Review:

The primary investment objective of the scheme is to seek to generate long-term capital appreciation by investing in equity and equity related instruments of companies whose market capitalization is within the range of highest & lowest market capitalization of BSE 200 Index. The secondary objective is to generate consistent returns by investing in debt and money market securities.

With a fund size of ₹4149 crore, this 10+-year-old fund has been one of the best large-cap funds. This moderately high-risk fund has been given a 5-star rating by Groww.

The expense ratio of this fund is 1.98%. However, the returns for this fund constantly outperforms the benchmark index.

A few top holdings of this fund are as follows- ITC Ltd., SBI, ICICI Bank Ltd., HDFC Bank Ltd., Tata Steel Ltd, among others. Among the top priority sectors for this fund are financial services, IT, consumer goods, and automobile among others.

Reliance Top 200 Fund Details

AUM ₹4149 Cr
NAV ₹32.5
Expense Ratio 1.98%
Minimum SIP ₹100
Return 1Y 21.72%
Return 3Y 9.53%
Return 5Y 18.23%

Mirae Asset India Opportunities Fund

Mirae Asset India Opportunities Fund

Review:

The primary investment objective of the scheme is to seek to generate long-term capital appreciation by capitalizing on potential investment opportunities through predominantly investing in equities, equity-related securities.

With a fund size of ₹6123 crore, this approximately 10-year-old fund has been one of the best large-cap funds. This moderately high-risk fund has been given a 5-star rating by Groww.

The expense ratio of this fund is 2.39%. However, the returns for this fund constantly outperform the benchmark index.

The risks for this fund are on the higher side, as compared to the benchmark. However, the funds 1 year, 3 year and 5-year returns have outperformed the benchmark index.

A few top holdings of this fund are as follows- SBI, ICICI Bank Ltd., HDFC Bank Ltd., Reliance Industries Ltd, Maruti Suzuki India Ltd among others. Among the top priority sectors for this fund are financial services, IT, consumer goods, energy and automobile among others.

Facts:

AUM ₹6123 Cr
NAV ₹46.878
Expense Ratio 2.39%
Minimum SIP ₹1000
Return 1Y 21.43%
Return 3Y 12.65%
Return 5Y 20.91%

Know more details about these 3 large cap funds.

Mid Cap Funds

Mid-cap funds are less volatile as compared to small-cap funds and carry lower risk to return ratio.  However, when compared to large-cap funds, mid-cap funds are more volatile and have higher risk to return ratio.

If we consider the life cycle of a business, mid-cap refers to companies which have achieved a middle-level growth and are reflecting rapid growth year on year.

Mirae Asset Emerging Bluechip Fund

Mirae Asset Emerging Bluechip Fund

Review:

The investment objective of this fund is to generate income and capital appreciation from a diversified portfolio predominantly investing in Indian equities and equity-related securities of companies which are not part of the top 100 stocks by market capitalization and have a market capitalization of at least ₹100 Crores at the time of investment.

From time to time, the fund manager may also seek participation in other Indian equity and equity related securities to achieve optimal Portfolio construction.

With a fund size of ₹5364 crore, this 7+-year-old fund has been one of the best mid-cap funds. This moderately high-risk fund has been given a 5-star rating by Groww.

The funds 1 year, 3 year and 5-year returns have outperformed the benchmark index.

The expense ratio of this fund is 2.46%, which is a bit on the higher side. However, the returns for this fund constantly outperform the benchmark index.

Assets under Management (AUM) of this fund is more than ₹5000 crores. The returns are usually influenced by the size of the AUM and returns tend to get lower once the AUM exceeds a certain amount.

A few top holdings of this fund are as follows- Tata Global Beverages Ltd, ICICI Bank Ltd, Kotak Mahindra Bank Ltd, Raymond Ltd, Ceat Ltd, Havells India Ltd, among others. Among the top priority sectors for this fund are financial services, textiles, consumer goods, and automobile among others.

Facts:

AUM ₹5364 Cr
NAV ₹49.579
Expense Ratio 2.46%
Minimum SIP ₹1000
Return 1Y 22.3%
Return 3Y 19.19%
Return 5Y 30.32%

Read details about these top mid cap funds.

Small Cap Funds

These are very high growth funds. They invest in small companies with big potential for growth. They have a higher risk than mid-cap funds.

In small cap funds, a large portion of the investment is done in companies with small market capitalization i.e. having a market cap of less than INR 500 crore. Most of the small-cap funds invest around 60-90% in small caps and rest in mid-caps and large caps to provide some stability to the investment.

Small-cap funds are a highly risky investment as compared to large cap fund category due to their exposure in high performing equities. These funds have exponential growth potential and give high returns on investment and is best suited for investors with high-risk appetite or for seasoned investors.

HDFC Small Cap Fund

HDFC Small Cap Fund

Review:

The investment objective of this fund is to generate long-term capital growth from an actively managed portfolio of equity and equity-related securities including equity derivatives.

With a fund size of ₹2152 crore, this 10-year-old fund has been one of the best small-cap funds. This high-risk fund has been given a 5-star rating by Groww.

The funds 1 year, 3 year and 5-year returns have outperformed the benchmark index.

The expense ratio of this fund is 2.38%, which is a bit on the higher side. However, the returns for this fund constantly outperform the benchmark index.

A few top holdings of this fund are as follows- Dilip Buildcon Ltd, Aarti Industries Ltd, KEC international Ltd, Balkrishna Industries Ltd, Sonata Software Ltd, among others. Among the top priority sectors for this fund are financial services, industrial manufacturing, IT, consumer goods, and automobile, construction among others.

HDFC Small Cap Fund Details

AUM ₹2152 Cr
NAV ₹45.658
Expense Ratio 2.38%
Minimum SIP ₹500
Return 6M 23.72%
Return 1Y 44.88%
Return 3Y 21.18%

Get to know more details about these small-cap funds.

Multi-Cap Funds

These funds invest in companies of all sizes. Multi-cap funds are slightly riskier than large-cap funds but less risky than mid-cap funds.

Multicap funds invest in companies of all sizes, unlike other equity funds that usually restrict themselves to a market cap or sector.

Multicap funds are also very flexible because they do not have to adhere to any predefined limits unlike small-cap funds and other such funds.

Multicap funds can invest anywhere the fund manager deems fit.

This allows the mutual funds to adjust portfolios more dynamically when the market experiences ups and downs.

Motilal Oswal MOSt Focused Multicap 35 Fund

Motilal Oswal MOSt Focused Multicap 35 Fund

Review:

The investment objective of the Scheme is to achieve long-term capital appreciation by primarily investing in a maximum of 35 equity & equity related instruments across sectors and market capitalization levels.

With a fund size of ₹11,411 crore, although this fund is a relatively new one, it has been one of the best multi-cap funds as it has provided excellent returns. This high-risk fund has been given a 5-star rating by Groww.

The funds 1 year, 3 year and 5-year returns have outperformed the benchmark index.

The expense ratio of this fund is 2.2%, which is a bit on the higher side. However, the returns for this fund constantly outperform the benchmark index.

Assets under Management (AUM) of this fund is more than ₹10000 crores. The returns are usually influenced by the size of the AUM and returns tend to get lower once the AUM exceeds a certain amount. This fund has one of the largest fund sizes as compared to other funds in this category. The age is less than 5 years. The risk for this fund is higher as compared to the benchmark.

The fund has about 75% of the funds invested in large-cap funds followed by about 20%.

A few top holdings of this fund are as follows- HDFC Bank Ltd, Maruti Suzuki India Ltd, Housing Development Finance Corporation Ltd, Interglobe Aviation Ltd, Eicher Motors Ltd and Jubilant Life sciences Ltd among others.

Among the top priority sectors for this fund are financial services, energy, consumer goods, and automobile among others. Financial services constitute about 45% of this funds’ total AUM, which signifies that this fund is heavy weight in the financial services sector.

Motilal Oswal Mutlicap 35 Fund Details

AUM ₹11,411 Cr
NAV ₹26.3086
Expense Ratio 2.2%
Minimum SIP ₹1000
Return 6M 2.30%
Return 1Y 20.47%
Return 3Y 16.80%

Know about these multi-cap funds in more detail here.

Sector Funds

Sector funds invest in a sector or industry only. They are therefore one of the highest return funds. The risk is also equally high.

Sector funds are a category of equity mutual funds that invest in only a specific sector. For example, a banking sector fund will invest in only shares of banking companies. Gold sector fund will invest in only shares of gold-related companies.

In these type of funds, diversification is only in that particular sector and not in the entire market. As a result of this, the returns in these funds depend on the performance of that sector in particular.

While these funds may give higher returns than diversified equity funds but the risk in these funds is also on the higher side, if the performance of that sector goes down because of many reasons like political, economic, social, technological, legal etc these funds are hit the worst vis-à-vis the overall stock markets.

These funds are usually benchmarked to the index of their particular sector like the banking sector fund is benchmarked to NIFTY Bank Index, auto sector funds are usually benchmarked to NIFTY Auto Index and so on.

Aditya Birla Sun Life Banking and Financial Services Fund

Review:

The investment objective of the Scheme is to generate long-term growth of capital by investing in a portfolio of equity and equity-related securities. The Scheme would follow an investment strategy that would take advantage of Special Situations and Contrarian investment style.

With a fund size of ₹1,570 crore, this 5-year-old fund has been one of the sector funds. This high-risk fund has been given a 5-star rating by Groww.

The expense ratio of this fund is 2.44%, which is a bit on the higher side. The risk for the fund is higher as compared to the benchmark. The age is less than 5 years.

The fund has more than 65% of the funds invested in large-cap funds followed by about 30% in mid-cap funds.

A few top holdings of this fund are as follows- HDFC Bank Ltd, ICICI Bank Ltd, Yes Bank Ltd, Bajaj Finance Ltd, L&T Finance Holdings Ltd, and PNB Housing Finance Ltd among others.

Financial services is the priority sector as this is a sector fund.  Almost the entire funds for this scheme is invested in the financial services sector.

Facts:

AUM ₹1570 Cr
NAV ₹26.75
Expense Ratio 2.44%
Minimum SIP ₹1000
Return 1Y 18.42%
Return 3Y 15.99%

Read about these funds in more details here. 

Index Funds

Index funds invest in funds that are part of an index.

For index funds, the whole index of the stock market is used as an instrument of investment. Index funds buy all the stocks in a particular index in the same proportion as its respective index, thereby performing in coherence with the index.

ICICI Prudential Nifty Next 50 Index Fund

ICICI Prudential Nifty Next 50 Index Fund

Review:

The investment objective of the Scheme is to invest in companies whose securities are included in Nifty Junior Index (the Index) and to endeavor to achieve the returns of the above index as closely as possible, though subject to tracking error.

The Scheme will not seek to outperform the CNX Nifty Junior. The objective is that the performance of the NAV of the Scheme should closely track the performance of the CNX Nifty Junior over the same period subject to tracking error.

With a fund size of ₹157 crore, this 7-year-old fund has been one of the index funds. This high-risk fund has been given a 5-star rating by Groww.

The expense ratio of this fund is 0.61% only, which is among the lowest. Risks for this fund is lower as compared to the benchmark. The 1Y and 3Y are comparable to the benchmark.

The fund has almost 90% of the assets under management invested in large-cap funds. While the remaining 10% is invested in mid-cap funds.

A few top holdings of this fund are as follows- Titan Company Ltd, JSW Steel Ltd, Bajaj Finserv Ltd, Britania Industries Ltd, Godrej Consumer Products Ltd, Dabur India Ltd, and Shree Cement Ltd among others.

Among the top priority sectors for this fund are financial services, energy, consumer goods, and automobile among others. Consumer goods and financial services constitutes about 27% and 18% of this funds’ total AUM, which signifies that this fund is heavy weight on these 2 sectors.

Facts:

AUM ₹157 Cr
NAV ₹25.9749
Expense Ratio 0.61%
Minimum SIP ₹1000
Return 1Y 21.35%
Return 3Y 14.86%
Return 5Y 20.18%

Debt Funds

Debt funds are low-risk funds that invest bonds and other low-risk investment options.

Debt funds are mutual funds investing in such debt instruments. They are of different kinds depending on the kind of debt instruments they invest in.

Higher the credit rating of the debtor, lesser the chance of default and hence lesser the risk is – however, returns for such instruments can be lower.

Lower the duration of the debt, lessen the probability of interest rate fluctuation and hence lesser the uncertainty of returns.

ICICI Prudential Long Term Plan

ICICI Prudential Long Term Plan

Review:

The investment objective of the Scheme is to generate income through investments in a basket of debt and money market instruments with a view to providing reasonable returns with low-interest risks.

With a fund size of ₹3674 crore, this 7-year-old fund has been one of the best debt funds. This moderately low-risk fund has been given a 5-star rating by Groww.

The expense ratio of this fund is 0.96% only, which is on the lower side. Risks for this fund is higher as compared to the benchmark. The 3Y and 5Y returns are higher than the benchmark.

The fund has almost 45% of the assets under management invested in sovereign debts. While about 35% is invested in A1+ category debt.

A few top holdings of this fund are as follows- Yes Bank Ltd, Indusland Bank Ltd, Housing Development Finance Corporation, HDFC Bank Ltd, Axis Bank Ltd, and 7.88 GOI March 19, 2030, among others.

Among the top priority sectors for this fund are financial services, metals and sovereign debt among others.

Facts:

AUM ₹3674 Cr
NAV ₹21.3054
Expense Ratio 0.96%
Minimum SIP ₹1000
Return 1Y 6.48%
Return 3Y 8.23%
Return 5Y 11.0%

Here is a detailed analysis of these debt funds. 

Balanced Funds

Also known as hybrid funds, these funds invest in both equity and debt options. Their risk level is, therefore, more than debt funds but less than equity funds.

Balanced funds are funds that invest some proportion of their total corpus in equities and the remaining in debt securities. They provide a diversified portfolio of debt and equity and thus help in minimizing risk exposure of the investor.

These are broadly of two types:

  • Equity-oriented balanced funds: Major portion of fund portfolio consists of equities, at least 65%, and rest in debts. Aim here is to minimize risk on investment
  • Debt-oriented balanced funds: Major portion of fund portfolio consists of debt and rest in equity. The aim here is to increase return on investment.

ICICI Prudential Balanced Advantage Fund

ICICI Prudential Balanced Advantage Fund

Review:

The investment objective of the Scheme is to generate long-term growth of capital and current income from a portfolio of equity and fixed income securities.

With a fund size of ₹13,595 crore, this 10+-year-old fund has been one of the best-balanced funds. This moderately high-risk fund has been given a 4-star rating by Groww.

The expense ratio of this fund is 2.27% only, which is on the higher side. Risks for this fund is higher as compared to the benchmark. The 1Y, 3Y and 5Y returns are higher than the benchmark.

The Assets under Management (AUM) are invested in the following manner- 70+% in equity and around 20% in debt.

Within equity, the fund has almost 65% of the assets under management invested in large cap. While about 30% is invested in mid-cap stocks.

A few top holdings of this fund are as follows- ICICI Bank Ltd, Housing Development Finance Corporation, HDFC Bank Ltd, Infosys Ltd, ITC Ltd, Axis Bank Ltd and 8.13 GOI June 22, 2045, among others.

Among the top priority sectors for this fund are financial services, consumer goods, Pharma, energy, automobile and IT among others.

Facts:

AUM ₹13,595 Cr
NAV ₹744.02
Expense Ratio 2.27%
Minimum SIP ₹1000
Return 1Y 12.61%
Return 3Y 9.50%
Return 5Y 16.76%

Know more about these balanced funds’ performance here. 

Happy investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.