Mutual funds are considered one of the most effective and easiest ways to invest your money in stocks, bonds, and other securities without worrying about the complexity associated with the typical stock market investment. Since mutual funds are managed by dedicated fund managers, one can expect to get the best returns at lower charges.
In the present context, mutual funds have emerged as the best investment tools for all types of people as they provide investors an opportunity to spread their investments across different asset categories without the need to manage them separately. So, if you are looking to invest in the best mutual fund, here, we are explaining the best mutual funds in India that you can choose to consider. Let’s start.
What is a Mutual Fund?
A mutual fund can be defined as a pool of money that is accumulated from different investors who are driven by one common investment goal. This money is invested in bonds, stocks, and other securities mainly for growth purposes. The shared holdings in a mutual fund are called a portfolio.
How do mutual funds work?
Put simply, mutual funds pool money together from different people and invest the same in various stocks, bonds, and other securities. Mutual funds give investors the benefits of immediate diversification (along with a lowered risk level) since the money is invested in a variety of businesses. Investors in mutual funds participate in the fund’s gains and losses.
Index funds and ETFs are two forms of passive-investing mutual funds that you have undoubtedly heard of before. But there are also mutual funds that are actively managed. These are mutual funds that are managed by investment professionals who decide which stocks to acquire and sell depending on the fund’s objectives.
With mutual funds, investors have a wide range of options for trying to increase their money, including equities funds, fixed-income funds, and funds that provide a mix of both. Due to these categories, there are even more specific funds to pick from. For instance, “sector funds” let you invest in a particular field, like renewable energy, while “growth funds” let you concentrate on businesses that will increase in value.
The returns from the best mutual fund in India are provided in primarily three ways:
- The gains are passed on to the investors in the form of dividends and interest payments. Investors have the option to retain their profits or reinvest the same in other shares which are known to produce awesome results.
- Capital appreciation is seen by investors when they sell their holdings at an upper price than what they paid initially.
- Fund managers invest the money in high-performance stocks which ensures unmatched results in the form of big gains.
What are large-cap, mid-cap, and small-cap mutual funds?
If you are looking to invest in mutual fund in India, you may come across three major types of mutual funds – large cap, mid cap, and small cap mutual funds. What do they mean? To understand their terminology, it is necessary to first understand market capitalization.
What is market capitalization?
Market capitalization, often known as market cap, is technically defined as “the market value of the outstanding shares of a corporation.” Market capitalization may be defined as the market value of all the shares held by a company’s shareholders.
Market capitalization = total number of shares multiplied by the market value of each share
Given their market capitalization, mutual funds are divided into three categories – Large Cap, Mid Cap, and Small Cap.
Large Cap Funds
The track record of large cap corporations is often quite good. These businesses have a market valuation of at least Rs. 20,000 crores, which is quite high. These stocks are frequently included in broader market indexes like the Nifty and the S&P because of their significant market presence.
Mid Cap Funds
According to SEBI, mid-cap firms are those with market capitalizations between 101 and 250. Its market capitalization typically lies between Rs. 5,000 and Rs. 20,000 crores. Mid cap firms may or may not be extensively included in broad market indexes due to their moderate to high market presence.
Small Cap Funds
Small-cap organizations are automatically categorized as those whose market capitalization ranks from 251st to higher. Small-cap businesses typically don’t have a long history. These firms may be relatively recent start-ups or those that are still in the planning stages.
Top Small Cap Mutual Funds in India
| S.No. | Mutual Fund | Launch Date | NAV | AUM |
| 1 | Quant Small Cap Fund Direct Plan Growth | 15-Apr-96 | ₹ 148.67 | ₹6,178.85Cr |
| 2 | Nippon India Small Cap | 30-Jun-95 | ₹ 100.37 | ₹2,77,915.13Cr |
| 3 | Kotak Small Cap Fund | 05-Aug-94 | ₹ 183.84 | ₹2,85,392.44Cr |
| 4 | Axis Small Cap Fund | 04-Sep-09 | ₹ 70.60 | ₹2,61,160.43Cr |
| 5 | ICICI Prudential Small Cap Fund | 12-Oct-93 | ₹ 57.95 | ₹4,70,643.89Cr |
Top Mid Cap Mutual Funds in India
| S.No. | Mutual Fund | Launch Date | NAV | AUM |
| 1 | Axis Midcap Fund | 4- Sep – 09 | ₹ 74.51 | ₹261160.43 Cr |
| 2 | PGIM India Midcap Opportunity Fund Direct Growth | 13 -May -10 | ₹ 47.61 | ₹16371.27 Cr |
| 3 | Invesco India Midcap Fund Direct Growth | 24 – July -06 | ₹ 101.21 | ₹44138.01 Cr |
| 4 | Kotak Emerging Equity Fund Direct Growth | 05 – Aug – 94 | ₹ 85.03 | ₹285392.44Cr |
| 5 | Tata Midcap Growth Fund Regular Growth | 30 – June – 95 | ₹ 241.67 | ₹86582.73 Cr |
Top Large Cap Funds in India
| S.No. | Mutual Fund | Launch Date | NAV | AUM |
| 1 | Quant Focused Fund Direct-Growth | 15-Apr-96 | ₹ 58.58 | ₹6,178.85Cr |
| 2 | ICICI Prudential BHARAT 22 FOF Direct Growth | 12-Oct-93 | ₹ 17.11 | ₹4,70,643.89Cr |
| 3 | ICICI Prudential Bluechip Fund Direct Growth | 12-Oct-93 | ₹ 73.64 | ₹4,70,643.89Cr |
| 4 | IDBI India Top 100 Equity Fund Direct Growth | 29-Mar-10 | ₹ 43.81 | ₹4,192.92Cr |
| 5 | ICICI Prudential Bluechip Fund IDCW | 12-Oct-93 | ₹ 23.59 | ₹4,70,643.89Cr |
Why invest in Mutual Funds?
There are numerous reasons why today’s investors love to invest in mutual funds. Some of them are:
- Effective Management – The research is done for you by the fund managers. They choose the securities and keep an eye on the results.
- Diversification – “Don’t put all your eggs in one basket” or diversification Mutual funds frequently make investments across a variety of businesses and sectors. This reduces the risk of you losing money if one stock fails to perform.
- Affordability – The investors can choose to invest in mutual funds either as a lump-sum amount or in small monthly installments in the form of SIP.
- Liquidity – Investors in mutual funds can conveniently redeem their shares at any time for the current net asset value (NAV) plus any redemption costs.
Best Mutual Funds For Investment in 2024
| S.No. | Mutual Fund | Launch Date | NAV | AUM |
| 1 | Axis Bluechip Fund Direct Plan Growth | 04-Sep-09 | ₹ 47.31 | ₹2,61,160.43Cr |
| 2 | Axis Midcap Direct Plan Growth | 04-Sep-09 | ₹ 74.51 | ₹2,61,160.43Cr |
| 3 | Quant Small Cap Fund Direct Plan – Growth | 15-Apr-96 | ₹ 148.67 | ₹6,178.85Cr |
| 4 | Mirae Asset Large Cap Fund Regular Growth | 26-Apr-19 | ₹ 77.61 | ₹1,02,127.67Cr |
| 5 | Tata Digital India Fund Direct Growth | 30-Jun-95 | ₹ 37.00 | ₹86,582.73Cr |
| 6 | UTI Flexi Cap Fund Direct Growth | 14-Nov-02 | ₹ 237.68 | ₹2,23,499.21Cr |
| 7 | Parag Parikh Flexi Cap Fund Direct Growth | 10-Oct-12 | ₹ 52.08 | ₹23,031.09Cr |
| 8 | SBI Small Cap Fund Direct Growth | 29-Jun-87 | ₹ 123.05 | ₹6,43,285.27Cr |
| 9 | Mirae Asset Hybrid Equity Fund | 26-Apr-19 | ₹ 24.88 | ₹1,02,127.67Cr |
| 10 | SBI Equity Hybrid Fund Direct Plan Growth | 29-Jun-87 | ₹ 216.69 | ₹6,43,285.27Cr |
- Axis Bluechip Fund Direct Plan Growth
If you are looking for the best mutual funds to invest in 2024, Axis Bluechip Fund Direct Plan Growth is one option worth exploring. It is a diversified equity fund in which the amount is invested across different industrial sectors. Managed by the prestigious Axis Bak Group, the fund has been performing well since its inception in 2010.
The fund is one of the most well-liked funds in India and has a long-standing history of providing investors with profits. The fund has a remarkable track record of providing investors with profits by investing in equities from various industries.
- Axis Midcap Fund
Axis Midcap Fund has made 88.38% investment in local equities of which 10.71% is in Large Cap stocks, 41.76% is in Mid Cap stocks, 17.61% in Small Cap stocks. The best mutual fund has 0.73% investment in Debt, of which 0.73% in Government securities. The Axis Midcap Direct Plan Growth was started 2013 and the average annual returns given by this fund is 3.47% since its beginning.
If you are looking for the best SIP mutual funds to invest for 3-4 years to accrue great returns, this fund is perfect for your investment needs. However, you should also be ready to bear moderate losses on your investment in this mutual fund.
- Quant Small Cap Fund Direct Plan – Growth
It is one of the best small cap mutual funds to consider for investment in 2024. The best mutual fund has shown persistently awesome annualized returns than segment average for 1 year, 3-year, and 5-year time frame.
The Quant Small Cap Fund Direct Plan Growth was started in 2013 and the average annual returns provided by this fund is 13.96% since then. It is very easy to invest in this small cap fund through SIP or lump-sum amount. The NAV under the Quant Small Cap Fund Direct Plan Growth is ₹150.58 as of 21 Feb 2023.
- Mirae Asset Large Cap Fund
Being one of the best performing mutual funds, Mirae Asset Large Cap puts your invested money in large-cap stocks. The fund was set up on April 04, 2008, and has been handled by the Marie Asset Mutual Fund House since then. It is benchmarked against the NIFTY 100 Total Return Index.
The fund is poised to leverage the consistency of large caps along with some conviction midcap concepts. The fund has the elasticity to invest across diverse sectors and themes. The investment strategy is based on investing in high-quality companies for a fair price and holding them for a considerable amount of time.
The strategy looks for businesses with a stable competitive advantage or stocks with significant pricing power and sector leadership.
- Tata Digital India Fund Direct-Growth
Tata Digital India Fund Direct-Growth is one of the best mutual funds to invest in 2024 by Tata Mutual Fund. This scheme is being managed by its fund manager Meeta Shetty. The mutual fund has an AUM of ₹6,725.09 Crores and the newest NAV is ₹37.420 as on 22 Feb 2023.
The returns provided by Tata Digital India Fund Direct-Growth scheme in the last 1 year is -6.33%, 116.14% in the last 3 years, and 274.05% since the launch of the fund. You can invest in this mutual fund through either SIP or lumpsum investment.
- UTI Flexi Cap Fund
Previously known as UTI Equity Fund, UTI Flexi Cap Fund puts the invested 96.60% of the amount in local equity and the likewise securities. The fund invests in stocks that carry the power to exhibit unparalleled strength for growth for longer periods. In addition, the fund is managed by industry pioneers like Ajay Tyagi, which means it promises sustainable returns to investors.
The UTI Flexi Cap Fund Direct-Growth has been in the market since 2013 and the average annual returns offered by this fund is -5.36% since the beginning. Being an open-ended equity fund, the money is invested in bonds, stocks, money market instruments, etc. apart from equities, other categories are also considered like fixed-income assets and money market tools.
- Parag Parikh Long Term Equity Fund
Parag Parikh Long Term Equity Fund is one of the best mutual funds to invest in for investors looking for long-term investment. It is best suited for investors looking to invest for a duration of 10-15 years or longer (at least 5 years).
Mr. Rajeev Thakkar and Mr. Rukun Tarachandani will oversee the domestic equity element of the programme, while Raunak Onkar will oversee the foreign investment portion. The investment component referred to as “fixed income” is Raj Mehta’s responsibility. Launched by PPFAS Mutual Fund, this fund was launched in 2012. It is a mutual fund with very high risk. There is no limitation in terms of market capitalization and industrial sector. The mutual fund scheme projects to attain long-term capital appreciation by investing mainly in equity and equity related instruments.
- SBI Small Cap Fund
SBI Small Cap Fund Direct Growth is an Equity Mutual Fund Scheme by SBI Mutual Fund. This scheme was released for investors in 1987. Rama Iyer Srinivasan is the Existing Fund Manager of SBI Small Cap Fund Direct Growth fund. The fund currently has an Asset Under Management (AUM) of ₹6,43,285 Cr and the Latest NAV as of 21 Feb 2023 is ₹124.52.
It is a very high-risk mutual fund and one would need minimum Rs. 500 to invest in the best mutual fund.
- Mirae Asset Hybrid Equity Fund
Mirae Asset Hybrid Equity Fund Direct Growth is a Hybrid Mutual Fund managed by Mirae Asset Mutual Fund. This was launched for investors in 2019. The fund managers are Mahendra Jajoo, Neelesh Surana, and Sudhir Kedia. The fund presently has an Asset Under Management (AUM) of ₹1,02,128 Cr and the newest NAV as of 22 Feb 2023 is ₹24.86.
Being one of the best mutual funds, it aims to make capital appreciation along with existing income from a mixed portfolio of equity & equity-related apparatuses and debt and money market instruments.
Depending on your investment goals and risk tolerance, you can choose to invest in Mirae Asset Hybrid Equity Fund Direct Growth by lump sum or systematic periodic investment.
- SBI Equity Hybrid Fund
It is a Hybrid Mutual Fund Scheme managed by SBI Mutual Fund and was launched in 1987. Rama Iyer Srinivasan, Dinesh Ahuja is the Current Fund Manager of SBI Equity Hybrid Fund Direct Plan Growth fund. The fund currently has an Asset Under Management (AUM) of ₹6,43,285 Cr and the NAV is ₹217.22.
The SBI Equity Hybrid Fund Direct Plan Growth is considered a very high risk category mutual fund. In the case of units redemption over 10% of the investment,1% will be levied for redemption within a year.
By investing in a combination of debt and equity, the scheme intends to give investors long-term capital appreciation along with the easy liquidity associated with open-ended funds. The plan will invest in a diverse portfolio of high growth company stocks and offset the risk by placing the remaining funds in fixed income securities.
Things to consider while investing in the best mutual funds in India
If you are looking for the best mutual funds to invest in 2024 or top mutual funds companies in india, it is necessary that you take into account all the underlying factors that usually affect the returns you get out of your mutual fund investment. These factors are defined below:
- Investment Objective
The most important element to take into account is this. Your chosen fund must align with your overall investing goal. Are you attempting to follow a prudent or aggressive investment strategy? What are the goals of the fund, and has it consistently adhered to these goals? For instance, it makes little sense to purchase a debt mutual funds that uses a more dynamic approach to rate management if you are investing in it for stability and an income stream.
- Risk Taking Capacity
When purchasing mutual funds, you should also take your risk tolerance into account. You will have a better understanding of the market returns you might anticipate as a result.
Mutual fund investments are best made when the market is performing well and has significant room for expansion. When investing in mutual funds, it would be great if you also considered how volatile the market is.
- Time Frame
The term “time horizon” describes how long a potential investor intends to retain money in a mutual fund scheme. It might be less than a day or more than 10 years. For various time horizons, different fund categories are most effective. This is thus because some funds invest in debt with shorter maturities, while others invest in debt with longer maturities. If the investment horizon is more than five years, equity funds should be picked in the ideal scenario.
- Performance Benchmark
A benchmark index is used to compare a mutual fund scheme’s performance and stock allocation. The benchmark index serves as a reference for the scheme’s investment strategies. As a result, the asset allocation of a benchmark index should be consistent with the investment objective of the plan. For instance, the benchmark index for a mutual fund focusing on large firms should be one of large cap companies, whereas the benchmark index for a mutual fund focused on banking should be one of banking stocks.
- Consistency
The best mutual fund is one that can regularly produce positive returns for its owners over time, as opposed to merely experiencing brief gains. The fund needs to be able to deliver reliable returns throughout both bullish and negative stock market situations.
- Categorical Performance
Evaluating the mutual fund’s performance in respect to its active peer group is equally important when selecting a mutual fund plan. This makes it easier to have a thorough understanding of the fund’s performance. It is only appropriate to compare mutual fund plans of the same kind. For instance, it is only feasible to compare large cap mutual funds to other large cap mutual funds, not to mid-cap or debt funds.
- Fund Manager’s Experience
While selecting the best mutual fund in India, it is crucial to consider the management’s track record and the level of commitment and time they have been in control. The fund manager’s track record with the concerned fund, as well as other funds they now manage or have previously looked after, should be taken into account by a sagacious investor.
Other Aspects To Consider While Choosing The Best Mutual Funds in India
First and foremost, every investor has their own investment goals and plans, so it is advisable for investors to choose from the best performing mutual funds that match these objectives perfectly.
For people new to equity mutual funds, aggressive hybrid schemes—also known as former balanced schemes or equity-oriented hybrid schemes—are the best option. These programs invest in a combination of loans and equity (65-80%).
They are seen as being significantly less volatile than pure equities schemes because of their mixed portfolio. The greatest investment vehicle for extremely cautious equities investors wanting to build long-term wealth without much volatility is an aggressive hybrid plan.
Even when investing in equities, some equity investors prefer to be safe. Those people are the target audience for large cap schemes. These mutual fund schemes are somewhat safer than other pure equities mutual fund schemes since they invest in the top 100 stocks.
Also, they have a lower volatility than mid-cap and small-cap schemes. In conclusion, if you want to invest in large size schemes and find moderate returns with some consistency, you should.
Regular equities investors intending to make stock market investments don’t need to look past flexi cap mutual funds. These plans invest across sectors and market capitalizations according to the fund manager’s judgement.
By investing in these plans, an ordinary investor can take advantage of the upward trend in any of the industries or groups of companies.
Mutual Funds and Other Investment Alternatives
Below is the comparison of mutual funds and its alternatives like NPS and Fixed Deposits.
| Mutual Funds | NPS | Fixed Deposts |
| Easy to invest as one can invest in some mutual funds with just Rs. 100 as a monthly investment amount (SIP) | The primary purchase price is Rs. 100 | The primary purchase price is Rs. 101 |
| Risky investment | Low to the mid-level risk associated | No risk |
| Allow investors to save taxes through tax-saving mutual funds | The contributions to NPS can be deducted from the taxable income under Section 80 C. | Tax benefits can be availed under Section 80 C |
| Excellent returns have been witnessed in recent years, typically >10% | Investors can expect returns of 9-12% on their investment | Low returns of 6 to 7% |
| No commitment associated other than ELSS funds | Need to be continued till retirement | Lock-in periods of 5 years |
Are there any disadvantages of mutual funds?
Though investing in mutual funds is a wonderful choice, there could be several disadvantages associated with mutual funds investment.
Lower returns than stocks
Various studies indicate that the typical returns on mutual fund investments are lower than investments in stocks. In addition, there are some types of mutual funds like index mutual funds and tax-based mutual funds that do not capital gain distributions every year. In addition, mutual funds work by diversifying the investments which lower the risk and in turn lower returns.
Lock-in period
There are set lock-in periods for ELSS and FMPs. They cannot be utilized in an emergency since they are very illiquid. FMPs should ideally not be used by novices to mutual funds. This may not be a feasible choice for those who want to access any time funds from mutual funds.
High costs
Although cost was a benefit with mutual funds, it is also a drawback for mutual funds. There are certain best mutual funds in India that come at a significant cost. You will be charged exit fees if you leave before the designated hour. You are not permitted to withdraw the money before the allotted time.
Long-term investment commitment is required for better returns
It is generally believed that an investor can expect to get better returns when invested for longer periods. Since returns are calculated in a compounding pattern, investors can take the benefit of compounding when they keep investing for as long as they can.
Excessive diversification
While diversification lowers risk, it also dilutes investment gains. Often times, fund managers diversify their holdings too broadly by covering different asset categories. This means over-diversification. Investors should perform goal-based financial planning prior to investing to prevent this.
Mutual Fund FAQs
What is a mutual fund?
A mutual fund is a sort of collective investment plan that is professionally managed and pools money from several individuals to invest in securities such as stocks, bonds, short-term money market instruments, and/or other assets.
What does NAV mean?
Net Asset Value serves as a measure of a mutual fund’s performance for a specific scheme (NAV). NAV refers to the market value of the securities in a scheme divided by the total number of units in the scheme.
What is ASBA?
ASBA Full Form (Application Supported by Blocked Amounts), or ASBA, is a service offered by banks to participants in new fund offerings (NFOs) of mutual funds. If you submit an ASBA application for units during the NFO, your application amount is frozen in your bank account and only deducted upon unit allocation.
What is a direct mutual fund?
Direct mutual funds are funds that are directly provided by the fund house. These funds don’t make the involvement of a third party, agent, or distributor. Since there is no involvement of a third party, there are zero commissions or brokerage charges in these funds.
What is Total Expense Ratio?
A scheme’s yearly fund running costs are shown as a proportion of the fund’s daily net assets in an expense ratio. Administration, management, advertising-related costs, etc. are examples of operating expenditures for a scheme.
Can non-residents Indians (NRIs) invest in mutual funds?
Yes, NRIs can also invest in mutual funds.
The Conclusion
Though there are different types of mutual funds available in India to choose from, choosing the best mutual fund or the best SIP to invest may be tricky. As already mentioned above, there are several factors that can help an investor determine the effectiveness of a mutual fund. So, it is advisable to do a thorough study of all the top mutual funds in India and decide the best one to invest in.