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There are different types of Mutual funds like Equity funds, Debt funds, and hybrid Funds based on the asset type. Based on the structure, they are classified as open-ended funds, closed-end funds, and interval funds. Depending on the risk involved, the investment schemes differ.
Equity funds: These funds are suitable for long-time investments and these have potentially high risk. Those who would like to invest in high-return funds can choose equity funds. Also, these funds generally provide high volatility. Equity funds are mostly a group of investments in top securities.
Age: 18-35 years
Investment time frame: Long-term
Return expectation: High
Market Risk: High
Liquidity: High
Debt Funds: Debt funds are mostly government bonds and low-risk funds. These are suitable for short-term investment plans. Also, the market risk involved is less compared to equity funds. An investor who would like to invest in low-risk funds can choose these.
Age: Above 35 years
Investment time frame: Short-term
Return expectation: Low
Market Risk: Low
Liquidity: Low
Hybrid funds: These are a mixture of Equity funds and Debt funds. Hybrid funds are usually used to hedge the market risk involved in equity funds by investing a part in debt funds. For example, the investor can choose either a 50-50 ratio to gain both higher returns and hedge the market risk with debt funds. The investor can choose the ratio depending on the risk factor and the hedging factor.
Age: Any
Investment time frame: Long-term/Short-term
Return expectation: Depends on the Hedging ratio, however, lesser than equity funds
Market Risk: Depends on the Hedging ratio, however, lesser than equity funds
Liquidity: Comparatively lesser than Equity Funds.
Which funds are the best to invest in?
The answer to this question depends completely on the risk factor and the expected return. No Mutual fund is 100% safe. Be it the equity fund or the Debt fund, it involves market risk. The investor profile with factors such as age, income, risk percentage, and investment period plays a major role in choosing the right fund. Here is the list of top 10 performing funds in the market:
- Mirae Asset Large Cap Fund: Equity fund. 3-year return: 12.33%, 5-year return: 16.35%
- Axis Bluechip Fund: Equity fund. 3-year return: 14.85%, 5 year return: 16.49%
- ICICI Prudential Bluechip Fund: Equity fund. 3-year return: 10.76%, 5 year return: 14.55%
- SBI Bluechip Fund: Equity fund. 3-year return: 10.49%, 5-year return: 13.32%
- SBI Flexicap Fund: Equity fund. 3-year return: 9.83%, 5-year return: 14.16%
- Nippon India Low Duration Fund: Debt fund. 3-year return: 6.86%, 5-year return: 7.08%
- UTI-ST Income Fund-Inst: Debt fund. 3-year return: 3.5%, 5-year return: 5.22%
- Aditya Birla Sun Life Savings Fund: Debt fund. 3-year return: 7.29%, 5-year return: 7.56%
- HDFC Short Term Debt Fund: Debt fund. 3-year return: 8.55%, 5-year return: 8.21%
- DSP Credit Risk Fund: Debt fund. 3-year return: 1.79%, 5-year return: 4.24%
How to Invest in Mutual funds?
Contact the best Fund manager who offers the best service at the best price. Open your Mutual fund account and assess your risk factor and profile. Choose the funds to create a portfolio. Finally, invest in each fund to grow your portfolio.
Flattrade is one such brokerage firm that offers the best service at the best price. You can now open your Flattrade Mutual Fund account online in just 10 minutes. Click here to know more about Mutual fund account opening.