Looking for the best mutual fund to invest in 2017? Here are the top 25 mutual funds to invest for the year, with top 3 in each category.
Large Cap Funds
These are the types of equity mutual funds that invests a major portion of their corpus in companies with large market capitalization, typically more than Rs. 10,000 crore. These are more suitable for equity fund investors looking for stable and sustainable returns on a long-term basis. Here are the top 3 mutual funds for 2017, in the large cap domain:
- Birla Sun Life Frontline Equity Fund – The fund has been almost invincible in the past ten years, beating both its category average and benchmark returns. While the fund has done a substantially good job in the bull markets, it showed its worth even in the bear markets of 2008, 2011 and 2015.
- SBI Bluechip Fund – This is a growth-focused fund with emphasis on optimum capital allocation. Though the performance dipped in 2008, the rise in the following years has been commendable. In the past five years, the fund has emerged as one of the best large cap funds in the horizon, beating both the category average and benchmarked returns comprehensively.
- Mirae Asset India Opportunities Fund – The fund has given stupendous returns since inception. Though the fund has to be tested in a bear market scenario of 2008, it is still a fund to reckon with, considering it managed to contain the downside well in 2011.
Mid Cap Mutual Funds
Mid cap mutual funds, although riskier than large cap funds, have a huge scope for wealth creation in the long run. These are often funds that have market caps which are in the size between Rs. 5000 and Rs. 10,000 crore. Here are the top 3 mid cap mutual funds for 2017:
- Birla Sun Life Pure Value Fund – This fund has proved to be a winner in both markets – the bull as well as the bear. The returns in the past five years, has been no short of phenomenal. Almost 85 to 90 percent of the corpus is vested in equities and that too, in sunshine sectors.
- Mirae Asset Emerging Bluechip Fund – For the past five years, the fund has been riding the crest as far as returns are concerned. Mirae Asset Emerging Bluechip Fund looks out for businesses with sound growth prospects and return on capital employed. However, the fund’s performance is yet to be tested in a 2008-like bearish scenario. But there is a high chance, the fund will emerge strong as it has done, in the years since its inception in 2010.
- HDFC Mid Cap Opportunities Fund – This fund is synonymous with consistent performance over the years since the past ten years (launched in 2007). The fund usually invests 75 percent of the corpus in mid-caps, while the rest is allocated in large caps.
Small Cap Mutual Funds
These funds are like children who grow up to become national level champions. Investing in them is investing in long-term substantial wealth creation; these record even high growth rates than large cap and mid-caps. However, they do entail the highest amount of risk, as well. Exercising prudence and choosing the right small cap mutual funds based on historical data, performance in both market cycles, fund management team; prove to be beneficial. Here are the top 3 small cap mutual funds
- Franklin India Smaller Companies Fund – This is a good fund for investors who want less choppy ride with small caps. The fund managers look out for companies that can compound earnings at a high rate, give good return on capital, have sound management principles, and avoid companies that cannot register free cash flows.
- DSP BlackRock Micro Cap Fund – As a stable small cap mutual fund, it has done particularly well since 2008. It has also beaten its benchmark every year since that year, except for 2012. The fund invests 65 percent of the corpus that are not among the top 300 companies, by market cap, giving it ample amount of portfolio options. It has been seen that the fund has been largely overweight on small caps, compared to its peers; and underweight on large cap and mid cap holdings.
- Reliance Small Cap Fund – A fairly new fund launched in 2010, Reliance Small Cap Fund does not lean too much into value stocks or growth stocks. It sticks to the middle of the road strategy of finding good business at a fair price. The fund looks for reasonable valuations, business scalability and good management as decision making factors for stock picks. The fund has beaten both the benchmark and category average by good margins since its inception. What’s more commendable that it was able to contain losses in 2011 and 2013, better than the category average.
Multicap equity diversified funds
Multi cap funds are great for investors who are looking for optimum returns and diversification of risks by investing in a blend of stocks in large cap, mid-caps and small caps. So, you can benefit from high returns from mid caps and small caps, while aiming for stability and consistency through large cap funds. Check out the top 3 multi cap equity diversified funds for 2017
- ICICI Prudential Value Discovery Fund – The fund launched in 2004, is contrarian as it gets. It follows a value based approach, looking for stocks with high growth potential, available at discounted prices. The fund has beaten both its benchmarked and peer returns in the past eight years.
- Franklin India High Growth Companies Fund – This fund has done exceptionally well in the past three years. One of the top mutual funds from the Franklin India house, the fund tends to have higher allocation in mid caps than its peers. The fund looks out for companies with high growth potential. Though the strategy is largely growth oriented, the fund includes value investing approach, as and when it is necessary.
- Birla Sun Life Equity Fund – Launched in August 1998, this fund has a history to boast and a performance to be proud of . The fund invests 90 percent of corpus in equities and 10 percent in debt and money market securities. If you are someone with moderate risk appetite and is looking for a fund with a history of consistent performance across various market cycles, this is a fund to latch on to.
Tax Saving Funds
These are equity mutual funds that not only offer exceptionally good wealth creation on a long-term, but also benefit investors with tax advantage. Invest in an ELSS (Equity Linked Savings Scheme) fund for a tax exemption of a maximum of Rs. 1.5 lakh in a financial year, in accordance with section 80C of the Income Tax Ac. Besides, the returns are also tax-free when you invest in a tax saving fund.
- Reliance Tax Saver Fund – Launched in 2005, the fund has proven itself as one of the best performers for ELSS mutual funds. In fact, it has been a consistent category topper since the past three, five, seven and ten years. While most funds in the ELSS category follow a multi-cap approach, this fund tends to favor mid and small caps. The fund combines both growth and value-based investing for optimum returns.
- DSP BlackRock Tax Saver Fund – Consistency is its strong virtue. The fund in its true element of a multi cap fund, pools in 70 percent of the portfolio in stable large caps, while 30 percent of the corpus is allocated to mid-caps and small caps.
- Franklin India Taxshield Fund – This fund is conspicuous by being large-cap oriented among most ELSS Funds that are multi-cap oriented. Franklin India Taxshield Fund may not be the highest performing fund in bull markets but it has been quite formidable in containing losses than its peers. The higher large-cap tilt makes it a favorite for investors who wants a less bumpy ride in unpredictable markets.
- Axis Long Term Equity Fund – Agreed that the fund’s performance slowed down in 2016, because the fund took a different approach towards cyclical sectors. Barring the past year, it was a topper in ELSS category for three years. The fund is largely large -cap titled compared to its peers. It is still a quality tax saving fund, and cannot be ruled of contention.
Hybrid or balanced funds give you the best of both worlds – equity and debt. So, you benefit from growth and stability, respectively. Balanced funds, however have a minimum of 65 percent of portfolio invested in equities, while the rest is invested in debt and money-market instruments. Here are the top 3 balanced funds investing in 2017
- ICICI Prudential Balanced Advantage Fund – If you are looking for a smooth sailing with your invested money, you can consider this fund. Based on dynamic asset allocation strategy, it has a variant approach than standard balanced funds, wherein the fund sharply brings down equity exposure if the valuations turn high and raises it, when the valuations go low. Since its launch, the fund has beaten it benchmark returns consistently. Though the returns are decent in the bull market, the fund does a superb job in contain losses in falling markets.
- SBI Magnum Balanced Fund – A veteran in the mutual fund space, this fund was formed in 1995. Since 2011, the fund has performed impressively, outpacing both its peers and benchmark returns. The fund maintains a 75-25 equity-debt mix, with a higher amount of tilt towards mid-caps.
- HDFC Balanced Fund – The fund maintains a 70 percent equity allocation and like SBI Magnum Balanced Fund, has higher tilt toward mid-caps than its peers. The fund contained downsides of 2008 and 2011 more effectively than its peers. But it is a superb performer for bull markets among the funds in its category. In fact, the ten-year performance of this fund can be compared to the ones of pure equity mutual funds.
Short Term Debt Funds:
These are funds that invest in money market instruments, government securities and corporate bonds, usually with a maturity period of 1 to 2 years. These funds give good returns when the interest rates are down Here are the top 3 debt funds for 2017
- HDFC Short Term Opportunities Fund – The fund was launched in 2010, and has delivered 9.65 percent in 1 year and 9.48 percent per annum in three years. The fund is benchmarked against Crisil Short Term Bond.
- Birla Sun Life Short Term Fund – This fund launched in 2005, delivered 10.58 percent in the past one year and 10.04 percent per annum in the past three years. The Fund has been benchmarked against Crisil Short-Term Bond.
- UTI Short Term Income Fund – This fund launched in 2007, delivered 10.33 percent in the past one year and 9.73 percent per annum in the past three years. The Fund has been benchmarked against Crisil Short-Term Bond.
Ultra Short Term Funds
If you are looking to park your money for a period of anywhere above 3 to 6 months or 1 year, you can choose ultra short term funds. These are debt funds that invest in securities with a residual maturity of above 90 days. Here are the top 3 ultra short debt funds worth investing in 2017
- Franklin India Ultra Short Term Fund – The fund is benchmarked against Crisil Liquid. Launched in 2007, the fund has returned 9.85 percent and 9.81 percent per annum in the past 1 and 3 years.
- Birla SL Savings Fund – This fund is benchmarked against Crisil Liquid. The fund was created in 2003 and had done remarkably well as an ultra-short term fund. The returns in the past 1 year was 9.63 percent and 9.33 percent per annum in the past 3 three years.
- ICICI Prudential Flexible Income Fund – Launched in 2002, the fund has delivered 9.39 percent and 9.17 percent per annum in the past 1 and 3 years. It is benchmarked against Crisil Liquid.