The best mutual funds to invest in India in the current volatile market: Axis Bluechip, Mirae Asset Large Cap, UTI Flexi Cap

Scouring the market for the best mutual fund could lead to mixed results. Consult with experts to pin down a steadily performing fund to invest in.

Not sure which mutual fund schemes to invest in the current volatile market

Pinning down a particular fund or the top 10 performing mutual funds is a dubious activity. Unknown to the person conducting the search, there could be specific parameters set in terms of performance. The search could zero in on a not-so-happening fund after all, as the returns in 1 year could be good but could turn bad the following year.

Similarly, a 3-year fund that is tracked could have performed brilliantly in the first and second years, with a dismal performance in the third. The not so well versed investor could end up picking a mutual fund that looked good on paper but then, for some reason, the performance fells. So ideally, if the investor is not that good a reader of the mutual fund market, he can think of which sector to buy.

Again, one must be careful of losing focus or being directed to a mutual fund that happens to be the flavour of the month. The defense sector could be a high-performing sector during war and conflict. The IT sector could be the flavour of the month, so to speak, and the same goes with the infra sector. Therefore, it is important to seek advice from a friend or expert who is familiar with this investing genre before choosing a fund after further investigation. The sector you invest in should broadly accommodate your investment needs, like the amount of investment required, the returns you can expect, etc. Having done that, you can check the feasibility of the mutual fund in question.

For instance, calculate the returns it has provided in 1, 2, and 3 years and then lock your money accordingly. You could also spread your investment in different sectors or funds based on the amount you have for investment and make sure you visit and find out the status of your fund at least once a year. If you see that the fund is not up to your expectations in performance, reassess your portfolio and do a similar study at the time of investment, and include the correct funds in your portfolio.

READ ALSO: Difference between Multi-Cap and Flexi Cap

To be able to identify the best investment fund for yourself, you need to understand that there are plenty of different funds in each sector to invest in. How would you identify the greatest, most ideal fit? Additionally, despite the fact that there are numerous funds accessible, just 10% of Indian households invest in mutual funds and view them as important tools for investing. However, investment in mutual funds perhaps involves the least hassle, with full flexibility, and provides comprehensive investment goals.

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These mutual funds are scheme-driven and are based on a maturity period. So, you can pick out the scheme that suits your needs.

There are 3 types of schemes:

  • Open-Ended Funds:

This is a fund that is bought directly from a fund manager and sold directly to the mutual fund. You can buy and sell at any time. Your fund's value is bought and sold on the net asset value, or NAV. 60% of funds are open-ended funds.

  • Close-Ended Funds:

There is a minimum duration for keeping your investment with this type of fund. The New Fund Offer time is a launch term that you can purchase. Here, the listed NAV on the stock exchange is not taken as the price can vary due to demand and supply. These funds sometimes allow you the option to sell your scheme directly to the mutual fund at NAV rates prevailing at that time.

  • Interval Funds

This fund works as a go-between for an open-ended and a close-ended fund. They can be traded at the stock exchange or they can be sold during redemption at NAV rates on certain mentioned dates.

So, it is advised that the scheme that best works for you be selected based on growth stability and income.

Now you need to choose your investment strategy and asset allocation as all mutual funds are different from each other in this case. The idea is that you need to decide where you want to place your investment.

READ ALSO: ETFs VS Mutual Funds

The various mutual funds on the market fall into the following large categories:

  • Equity Schemes:

These are of various types, but broadly speaking, three main categories.

(a) Large Cap: This is a fund with a mix of top 100 companies. These are stable returns and very low-risk schemes.

(b) Mid cap: This fund takes companies ranked from 101 to 250 and provides a mix thereof of a balance of risk and stability.

(c) Small Cap: These are funds with a mix of companies that are ranked above 250. These are high-risk schemes but offer high returns.

  • Debt Schemes:

These are mutual funds that invest in fixed income securities like bonds, treasury bills, gilt funds, monthly income plans, etc.

  • Hybrid Schemes:

They take a cross-section of schemes from multiple asset classes and are considered low in risk.
Solution-Oriented Schemes: These have a lock-in period of 5 years and are suitable for long-term investment.

  • Other Schemes (Index Funds) or Foreign Overseas Funds:

Index funds reflect the stock market's performance. Overseas, or foreign funds, invest in overseas market schemes and income securities of foreign markets.

READ ALSO: Why Solution-oriented funds?

Once you are able to decide what your requirements are for your investment, then you can choose the appropriate mutual fund for your investment. Given below are some of the stable performing mutual funds in India at the moment.

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Since the list is vast, it is advised that you consult a fund advisor to guide you. Also, it is important to research on your own the risks involved before investing. In other words, gain knowledge and then invest for the best returns.

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