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Indians are experiencing an ever-growing investment rate, as Indians invested Rs. 71,443 crores in mutual funds. Consequently, the mutual fund industry witnessed a rise of 5.7% in investments, with people rigorously investing in the top mutual funds in India. Hence, Indians started considering mutual funds as one of the best investment and earning options. The craze for mutual fund investment is so high that people have quit their well-paying jobs to become full-time investors and gain maximum returns by investing in the best mutual funds.
This paradigm shift is outstandingly influencing the economy and individuals’ personal and financial lives. If you are also thrilled to witness the success stories of investors and are ready to build your mutual funds portfolio, we are here to help you.
Today, we will discuss the best mutual funds in India, which can be a part of your portfolio if you wish for a safe and generous return on your investments!
Types of Mutual Funds
The portfolio of a smart investor is generally a mix of several kinds of funds. This ensures stability and growth within a fixed tenure. Below are the common types of mutual funds in the stock market, which can help you understand which is the best mutual fund to invest in.
Equity Funds
These mutual funds allow you to invest in the shares of a company and become a shareholder (if you acquire a prescribed amount.) Investing in a good company at the right time can yield high returns but can also be risky. It depends on the performance of the stock market and the company.
Debt Funds
It is considered a stable and secure investment option, with investment in fixed-income securities like government securities, corporate bonds, and treasury. The risk involved in these investments is minimal, and it guarantees fixed income to a certain amount.
Hybrid Funds
Investors choose a Hybrid fund that utilizes debt and equity instruments to balance out debt and equity. The investors can use a fixed or varied investment ratio, depending on their fund house.
Solution-Oriented Funds
These funds come with a specific goal, such as children’s education, marriage, building a home, or even for your post-retirement expenses. The lock-in period of these funds is a minimum of 5 years. These contain some of the best long-term mutual fund options in India.
Growth Funds
The funds the users invest for growth and capital appreciation are known as Growth funds. It is beneficial for investors who aim to procure high RoI.
Liquidity-Based Funds
For short-term goals, investors prefer investing in liquidity-based funds. These funds are short-term and highly liquid, with few lock-in periods, and are not the best long-term mutual funds term.
Pension Funds
The paramount motive of these investments is to secure the investor’s future after retirement. They have higher lock-in periods and provide outstanding returns when untouched for several years. Given their benefits and popularity, they have become the best mutual funds to invest in.
Open-Ended Funds
When there is no limit on the amount or units of funds investors can purchase, they are known as open-ended funds. They are the most sought-after option for investors who want to invest in liquid stocks.
Close-ended Funds
The funds which come with a cap or a pre-decided unit limitation and can only be purchased within a fixated period are known as close-ended funds. You can redeem these funds only on or after the maturity date; thus, they aren’t very liquid.
Interval Funds
Interval funds lie somewhere between open-ended and close-ended funds. Investors can purchase or redeem them within the open trading window for specific periods.
Factors to Consider While Choosing Mutual Funds
Investing is a smart game involving a lot of analysis and calculated risk. Investors spend a lot of time deciding the best mutual fund to invest in. You must assess the previous performance of the mutual fund schemes, analyze their future potential and compare them with other stocks before finally investing in them. Below are a few major factors you must consider before investing.
- Performance of the Stock- You must examine the stock’s performance for the past 4-5 years and compare it with the benchmark in the industry. You must invest in stocks that give consistent performance compared to the best mutual funds.
- Net Asset Value- It is important to carefully inspect the Net Asset Value of the stock (market value per unit). Sometimes, a fund with a high NAV offers less returns, and one with a low NAV offers higher returns. However, it is unnecessary, and a fund with a higher NAV can also give stabilized returns if it is a well-performing stock of an established company.
- Expense Ratio- The cost and fees involved in purchasing a stock, such as managerial and operational charges, are known as Expense Ratio. You need to ensure that your stock does not end up charging more in terms of fees than it offers in terms of returns, making it a top mutual fund to invest in 2023.
- Exit Load- Some funds charge an exit load when you try to make a premature exit. Ensure that the exit load on a stock is not too heavy that it diminishes all your profits.
- Performance of the AMC- The performance of the Asset Management Company (AMC) plays a major role in defining the success of the stock. The track record of the AMC should be good, for which you need to analyze the success of its past schemes.
- Time Horizon- Ensure that the type of fund you are investing in aligns with your investment strategy. E.g., if you wish to invest in the short term, you must choose a liquid stock. However, if your goals are to plan for future events such as retirement, you can invest in the best mutual funds for long-term investment.
- Risk Tolerance- Do you have the capacity to tolerate risks? Some volatile stocks can either shoot up and provide you with immense gains or suddenly crash and offer you loss. Investing in such stocks is a calculated risk, and thus you must decide the level of risk you are willing to take. Almost all stocks display the level of risk attached to them via a viscometer, and you need to study it carefully before investing in a stock.
Top-performing Mutual Fund Categories in 2023
Investments in mutual funds can be lucrative if reputed mutual funds are chosen. An investor can consider investing in the best-performing mutual funds in India with the best return ratios and lowest risk profiles. The fund performance and expense ratio over the past years can also be considered while investing. Many types of mutual funds, like SIPs, Hybrid mutual funds, equity mutual funds, etc., can provide the best returns according to one’s preferences. Have a look at the best mutual funds in India and their returns.
Best Equity Mutual Funds in 2023
Equity mutual funds are considered one of India’s top mutual funds. All thanks to their expense ratio and long-term returns, they have become an avenue for most investors today. If you are wondering which is the best mutual fund to invest in in 2023, then the below-mentioned are amongst the top choices.
| Name of the Fund | 3-year Return | Expense Ratio |
| Quant Small Cap Fund Direct Plan-Growth | 59.41% | 0.62% |
| Nippon India Small Cap Fund direct-growth | 47.55% | 0.8% |
| Quant Infrastructure fund Direct growth | 50.24% | 0.64% |
| Quant Tax Plan Direct-Growth | 41.51% | 0.57% |
| Aditya Birla Sun Life Digital India funds direct growth | 35.06% | 0.81% |
| Quant flexi cap fund direct growth | 39.55% | 0.58% |
| ICICI Prudential Technology Direct Plan-Growth | 37.52% | 0.95% |
| Quant Active Fund Direct-Growth | 39.55% | 0.58% |
| Axis Small Cap Fund Direct-Growth | 38.53% | 0.55% |
| Quant Mid Cap Fund Direct-Growth | 39.08% | 0.63% |
Best Debt Mutual Funds in 2023
A debt mutual fund involves investment in fixed-income sources like treasury bills and corporate bonds. Government securities etc. In this, an investor can earn money in two ways. Either by coupon or accrual income or by simply earning through gains from the fluctuation of bond prices. They are the best mutual funds for the long term because of their credibility. Moreover, debt funds have an ideal investment potential, especially for investors looking for a steady capital source. Some of the top mutual funds to invest in 2023 are mentioned below.
| Name of the fund | One Year Return |
| Aditya Birla Sun Life Medium Term Fund | 0.87% |
| Bharat Bond ETF FOf | 0.06% |
| SBI Magnum Constant Maturity Fund | 0.33% |
| Nippon India Income Fund | 0.58% |
| LIC MF Bond Fund | 0.21% |
| DSP 10Y G-Sec Fund | 0.31% |
| Bharat Bond FOF- April 2030 | 0.06% |
| Bharat Bond FOF- April 2031 | 0.06% |
| Bharat Bond FOF- April 2032 | 0.06% |
| Kotak Nifty SDL Apr 2032 Top 12 Equal Weight Index Fund | 0.2% |
Aditya Birla Sun Life Digital India Fund Direct-Growth is among the highest-return mutual funds.
Best Hybrid Mutual Funds in 2023
A hybrid fund is a blend of equity and debt investments. Essentially, two or more assets of different types of bonds, stocks, commodities, and other securities are combined. Investors wishing to have a debt and equity portfolio must invest in Hybrid mutual funds. Moreover, a hybrid mutual fund can give you capital protection and higher return. Here is a list of the best mutual funds for long-term investment.
| Name of the fund | Return |
| Quant Multi Asset Fund | 38.83 % |
| ICICI Pru Equity & Debt Fund | 29.98% |
| Quant Absolute Fund | 36.88 % |
| ICICI Pru Multi-Asset Fund | 29.57% |
| Kotak Equity Hybrid Fund | 27.08% |
| Mirae Asset Hybrid Equity Fund | 21.61% |
| Canara Rob Equity Hybrid Fund | 19.59% |
| Baroda BNP Paribas Aggressive Hybrid Fund | 20.57% |
| HDFC Balanced Advantage Fund | 29.09% |
| Edelweiss Aggressive Hybrid Fund | 24.55% |
Best Mutual Funds for SIP in 2023
SIPs involve regularly investing in a mutual fund instead of all at once. It is considered one of the best mutual funds to invest in as it gives investor leverage to invest according to their needs and financial goals. Investors can diversify their investments and invest in the below-mentioned top 10 mutual funds for SIP.
| Name of the fund | Return |
| Quant Active Fund | 19.82% |
| Parag Parikh Flexi Cap Fund | 19.23% |
| Quant Large and Mid Cap Fund | 17.78% |
| Quant Focused Fund | 19.54% |
| Edelweiss Large & Mid Cap Fund | 19.12% |
| Canara Robeco Emerging Equities Fund | 18.07% |
| Mirae Asset Emerging Bluechip Fund | 18.65% |
| Sundaram Focused Fund | 17.6% |
| SBI Focused Equity Fund | 15.61% |
| Motilal Oswal Focused Fund | 14.28% |
Taxation on Mutual Funds
In India, taxes are implied on the capital gains acquired by an investor. The amount of taxes depends upon the types of tax and the investment period. Stocks incur either short-term capital gains (for investments shorter than 12 months) or long-term capital gains (for investments longer than 12 months). Below are the famous types of funds and the taxes implied on them.
Taxation on Dividends
Earlier, no tax was implied on dividends received by the investors, as the companies had to pay DDT (Dividend Distribution Tax) before imparting dividends to the investors. However, as of now, the dividends acquired by the investors are considered part of their taxable income, and then they have to pay the tax on their overall income based on the tax slab in which they are.
Taxation on Equity Funds
The tax rate for short-term capital gains in the case of equity funds is flat at 15%, no matter what your tax bracket is. In the case of long-term capital gains, there is a tax-exempt of Rs 1 lakh, and above that, you have to pay a tax of around 10%.
Taxation on Debt Funds
Debt funds are always considered short-term investments, and thus there is no scope for long-term investment gains. Gains from debt funds are also added to your taxable income and taxed as per your income slab.
Taxation on Hybrid Funds
As hybrid funds contain a mixture of several funds, they are taxed as mentioned below-
| Fund type | Short-term capital gains | Long-term capital gains |
| Equity fundsHybrid equity-oriented funds | 15% + cess + surcharge | Any gains above Rs 1 lakh are taxed at 10% + cess + surcharge |
| Debt fundsHybrid debt-oriented funds | Investor’s income tax slab rate | Investor’s income tax slab rate |
Taxation on SIPs
SIPs are long-term investment plans which help investors secure their future. It is different for other terms of investments in mutual funds, as SIPs last for 10-30 years on average. Generally, investors utilize it for gigantic retirement plans or special future goals that require a lot of money.
In the case of SIP (Systematic Investment Plan), the gains are often long-term and often whopping. In this case, the taxes are applied at 15% of the gains if the profits exceed Rs. 1 Lakhs.
Securities Transaction Tax (STT)
STT is the tax applied when you sell or purchase a stock, in the case of an equity or a hybrid equity fund. The investor has to pay a fee of 0.001% of the total amount you are selling or purchasing. However, STT is not applied while selling debt fund units.
Invest in the Best Mutual Fund!
Planning systematically, analyzing stocks before investment, and holding them for longer periods help you make the most of your investment. With the perfect strategy, you can invest in these best mutual funds to invest, and gain immense profits, just like several other Indian investors are doing today.
Ensure you have a diversified portfolio to create an investment plan that blends risk and stability. This way, you will ensure stable growth, with a possibility of a sudden hike in capital gains. All in all, calculated risks and data-driven investments do the trick! So embark upon your investment journey today, starting with the safest and most beneficial stocks mentioned above!
Want to explore helpful techniques to save and grow your hard earned money? Dive in to our guide on Save Money.
Frequently Asked Questions ( FAQ’s )
Which mutual fund is best to invest in now?
There are several good companies whose stocks are offering the best returns in the Indian market today. Today’s best mutual funds include Baroda, BNP Paribas Aggressive Hybrid Fund, HDFC Balanced Advantage Fund, Kotak Equity Hybrid Fund, Edelweiss Aggressive, and more. You can gain maximum profits with a diversified portfolio, including the best-performing stocks.
Which mutual fund is best for the best returns?
As of 2023, several stocks are known to offer a great 3-year return, such as Axis (38.85%0, Quant Active (38.95%), Quant Mid-Cap (40.54%), Aditya Birla Sun Life (35.10%), Nippon India small Cap (47.93%), etc. In terms of a 5-year return rate, companies such as Quant Infrastructure Fund (24.55%), Quant Small Cap Fund (27.11%), ICICI Prudential Technology (21.07%), etc., perform quite well.
Which SIP has the highest return?
Several SIP plans in India offer immense returns to the users, such as Bharti AXA (26.77%), HDFC Standard (26.76%), ICICI Prudential (26.27%), etc., which offer amazing returns within a 3-year time. You can even create your own SIP investment with a diversified portfolio and some well-performing stocks.
Which is the rank 1 mutual fund in India?
According to the rank offered by Forbes, the Axis Small-Cap Fund Scheme is currently on Rank 1. It has an expense ratio of 0.51%. The 3-year performance of the stock is around 24.1%, and the 5-year performance is 20%. With a low expense ratio and high levels of return, the stock is the best-performing in India.
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