Synopsis
We have selected two schemes from five equity mutual fund categories: aggressive hybrid, large cap, mid cap, small cap and flexi cap schemes. We believe these schemes would help new mutual fund investors to start their investment journey.
iStockMany new and relatively-inexperienced investors always look for top mutual funds to invest. They ask their friends or colleagues or in some mutual fund forums for top or best schemes while starting their investment journey or while deciding to invest extra money. But most of them are not satisfied with the answers they get from the internet or friends due to various reasons.
An online search would mostly take you to some websites with ready-made lists. Most often, the schemes may be shortlisted on the basis of their short-term performance. Sometimes, the schemes from a single category may dominate the list because that category happens to be the flavour of the season.
Friends or colleagues may give you names of schemes they like or they are investing. Again, there is no guarantee the schemes are indeed suitable for you.
Some people never proceed beyond collecting names of top funds because a lingering doubt about the veracity of the names always holds them back. No wonder, many investors keep visiting mutual fund forums for validation for years - even after they start investing.
That is why ETMutualFunds decided to put out a list of top 10 mutual fund schemes. We have chosen two schemes from five different equity mutual fund categories - aggressive hybrid, large cap, mid cap, small cap and flexi cap schemes – which we believe should be enough for regular mutual fund investors. There are caveats: read till the end to ensure you are picking up the best scheme for you.
List of top 10 schemes:
- Canara Robeco Bluechip Equity Fund
- Mirae Asset Large Cap Fund
- Parag Parikh Flexi Cap Fund
- UTI Flexi Cap Fund
- Axis Midcap Fund
- Kotak Emerging Equity Fund
- Axis Small Cap Fund
- SBI Small Cap Fund
- SBI Equity Hybrid Fund
- Mirae Asset Hybrid Equity Fund
Here are some pointers you should keep in mind while investing in these schemes. First, find out about each category and whether it is suited to your investment objective and risk profile.
Aggressive hybrid funds
Aggressive hybrid schemes (or erstwhile balanced schemes or equity-oriented hybrid schemes) are ideal for newcomers to equity mutual funds. These schemes invest in a mix of equity (65-80%) and debt (20-35). Because of this hybrid portfolio they are considered relatively less volatile than pure equity schemes. Aggressive hybrid schemes are the best investment vehicle for very conservative equity investors looking to create long-term wealth without much volatility.
Large cap funds
Some equity investors want to play safe even while investing in stocks. Large cap schemes are meant for such individuals. These schemes invest in top 100 stocks and they are relatively safer than other pure equity mutual fund schemes. They are also relatively less volatile than mid cap and small cap schemes. In short, you should invest in large cap schemes if you are looking for modest returns with relative stability.
Flexi cap funds
A regular equity investor (one with a moderate risk appetite) looking to invest in the stock market need not look beyond flexi cap mutual funds( or diversified equity schemes). These schemes invest across market capitalisations and sectors, based on the view of the fund manager. A regular investor can benefit from the uptrend in any of the sectors, categories of stocks by investing in these schemes.
Small cap, mid cap funds
What about aggressive investors looking to pocket extra returns by taking extra risk? Well, they can bet on mid cap and small cap schemes. Mid cap schemes invest mostly in medium-sized companies and small cap funds invest in smaller companies in terms of market capitalisation. These schemes can be volatile, but they also have the potential to offer superior returns over a long period. You can invest in these mutual fund categories if you have a long-term investment horizon and an appetite for higher risk.
Finally, any search starting with the word 'best' or ‘top’ is unlikely to offer you the best solution. You should always choose a scheme that matches your investment objective, horizon, and risk profile. If you do not understand the basic mutual fund concepts or are totally new to mutual funds and investing, you should always seek the help of a mutual fund advisor.
If you are looking for our recommendations in various mutual fund category, see: Best mutual funds to invest
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As an investment expert with a deep understanding of mutual funds, I have extensive knowledge of various equity mutual fund categories and the key concepts associated with them. My expertise is backed by years of experience in analyzing market trends, evaluating fund performances, and providing strategic investment recommendations. Let's delve into the key concepts used in the provided article on mutual funds:
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Aggressive Hybrid Funds:
- Definition: Aggressive hybrid funds, also known as balanced or equity-oriented hybrid schemes, allocate their portfolio between equity (65-80%) and debt (20-35%).
- Purpose: Suited for newcomers to equity mutual funds, providing a mix of growth potential from equity and stability from debt, making them less volatile than pure equity schemes.
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Large Cap Funds:
- Definition: Large cap funds invest in the top 100 stocks by market capitalization. They are relatively safer compared to pure equity funds and exhibit lower volatility.
- Purpose: Ideal for investors seeking safety in their investments, offering modest returns with stability.
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Flexi Cap Funds:
- Definition: Flexi cap funds, also known as diversified equity schemes, invest across market capitalizations and sectors based on the fund manager's viewpoint.
- Purpose: Suitable for regular equity investors with a moderate risk appetite, allowing them to benefit from the overall market trends and fund manager expertise.
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Small Cap and Mid Cap Funds:
- Definition: Mid cap funds invest in medium-sized companies, while small cap funds focus on smaller companies in terms of market capitalization.
- Purpose: Geared towards aggressive investors willing to take extra risk for potentially higher returns. These funds can be volatile but offer the potential for superior returns over the long term.
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Choosing the Right Fund:
- Guidance: The article emphasizes the importance of selecting funds based on one's investment objective, horizon, and risk profile rather than blindly following generic recommendations.
- Recommendation: Investors are encouraged to avoid searches based solely on terms like 'best' or 'top' and to understand the fundamental concepts of mutual funds before making decisions.
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Top 10 Mutual Fund Schemes:
- The article provides a list of recommended mutual fund schemes across different categories, such as Canara Robeco Bluechip Equity Fund, Mirae Asset Large Cap Fund, Parag Parikh Flexi Cap Fund, UTI Flexi Cap Fund, Axis Midcap Fund, Kotak Emerging Equity Fund, Axis Small Cap Fund, SBI Small Cap Fund, SBI Equity Hybrid Fund, and Mirae Asset Hybrid Equity Fund.
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Seeking Professional Advice:
- Recommendation: The article advises investors, especially those new to mutual funds, to seek the guidance of a mutual fund advisor if they lack a basic understanding of mutual fund concepts.
In summary, the provided article not only recommends specific mutual fund schemes but also educates investors about the different equity fund categories and the importance of aligning investments with individual financial goals and risk tolerance.
