Top 10 Mutual Funds to Invest

Mutual funds are one of the best ways to grow your money over time. They pool money from many investors to invest in stocks, bonds, or other assets. If you are looking for the best mutual funds to invest in 2024, read this post till the end.

What are the Best Mutual Funds?

The best mutual fund for the long term matches your financial goals, investment timeline, and risk appetite. Some top-performing funds may include large-cap, mid-cap, small-cap, or hybrid funds. Large-cap funds invest in big, stable companies, while mid-cap and small-cap funds invest in growing companies with higher growth potential but more risk. A hybrid fund mixes stocks and bonds, offering balanced returns with relatively lower risk. 

If you're looking for the best mutual funds to invest in 2024, it's important to consider factors like past performance, fund manager expertise, and expense ratios.

How do you select the Best Mutual Fund?

Some of the best mutual funds to invest in 2024 may include equity-focused funds for long-term growth or hybrid funds for balanced returns. 

Picking the right best mid-cap mutual funds becomes easier if you consider these aspects:

Know Your Investment Objective
Decide if you plan to invest for a short-term or long-term goal, like retirement. This will help you select suitable funds..

Understand Risk Appetite
If comfortable with ups and downs, invest in equity funds. If you want stable returns, debt/balanced funds are ideal.

Check Past Yearly Returns
See how much returns the fund has given over the last 5-10 years in different market conditions. This indicates performance.

Research Fund Manager
An experienced fund manager plays a significant role in generating good investment returns.

Evaluate Expense Ratio
This is the fee charged by the fund to manage money. Lower fees mean more of your money gets invested for better returns.

Top 10 Best Mutual Funds to Invest in 2024

As markets evolve, regularly reviewing your portfolio will help you stay aligned with the best mutual funds to invest in 2024 for optimal financial growth.

Here are the top 10 best highest-return mutual fund in the last 10 years:

Overview of Top 10 Mutual Funds

Here's an overview of the top 10 mutual funds mentioned, highlighting their focus areas, potential benefits, and risks:

Bandhan Infrastructure Fund
This fund invests primarily in infrastructure-related sectors like construction, energy, and transportation. It aims to capitalise on India’s growing infrastructure development. The fund can be volatile due to its sectoral focus but offers high growth potential for those willing to take on more risk.

Nippon India Small Cap Fund
This fund targets smaller companies with high growth potential. Small-cap funds are known for their aggressive growth strategies but have higher volatility than large-cap or mid-cap funds. It suits investors with a higher risk appetite seeking long-term capital appreciation.

ICICI Prudential BHARAT 22 FOF Direct-Growth
This fund-of-fund scheme invests in Bharat 22 ETF, which comprises 22 stocks from public sector companies, financial institutions, and other sectors. It is a diversified investment but heavily reliant on government policies, which could impact returns.

Motilal Oswal Midcap Fund Direct-Growth
A high-performing midcap fund, it invests in medium-sized companies expected to become large. With a strong focus on growth, it comes with significant risk and volatility, making it suitable for investors looking for high returns over a longer time horizon.

DSP The Infrastructure Growth and Economic Reforms Regular Fund Direct-Growth 
This fund focuses on companies poised to benefit from economic reforms and infrastructure growth. Due to its narrow sector focus, it's a high-risk fund that appeals to those who are bullish on India’s infrastructure story.

Invesco India Infrastructure Fund Direct-Growth
Like other infrastructure funds, this one invests in companies directly or indirectly involved in infrastructure development. It aims to leverage growth in the construction, power, and telecom sectors, offering high returns but with substantial risk.

Canara Robeco Infrastructure Direct-Growth 
This fund focuses on sectors that will benefit from India's infrastructure boom. Given the cyclical nature of the sector, it is ideal for investors with a high-risk tolerance and a longer investment horizon.

Franklin Build India Direct 
Franklin Build India focuses on companies involved in building India’s infrastructure, such as construction, cement, and industrial manufacturing. The fund exposes the growing infrastructure sector but is subject to market fluctuations and sector-specific risks.

SBI PSU Direct Plan-Growth 
This fund invests primarily in public sector undertakings (PSUs), which are government-owned companies. It exposes investors to a diversified set of industries, though performance can be closely tied to government policy and market sentiment towards PSUs.

JM Aggressive Hybrid Fund Direct-Growth 
This hybrid fund balances investments between equity and debt, making it less volatile than pure equity funds. It aims to provide growth from equity investments while maintaining stability with debt securities, making it suitable for moderate-risk investors looking for steady returns.

How is Tax Applied to Best Mutual Funds in India?

There are two ways to earn from mutual funds: capital gains when you sell fund units or as dividend income periodically.

Dividends received are taxed as per your income tax slab.

Capital gains are taxed differently depending on the holding period and fund type. Gains from equity funds held less than 1 year attract a 15% short-term capital gains tax. If held over 1 year and gains exceed ₹1 lakh, the long-term capital gains tax is 10%.

For debt funds, holding less than 3 years means short-term capital gains tax as per income slab. After 3 years, a 20% tax applies on gains after the indexation benefit.

Similar equity taxation applies in hybrid funds if over 65% is invested in equities. Otherwise, debt fund taxation rules apply.

In essence, dividends and capital gains from mutual funds attract different tax rates based on parameters like holding period, fund type and investor income tax slab.

How to Track the Performance of Mutual Funds 

When considering the best mutual funds for 2024, it's essential to evaluate both equity and hybrid funds based on past performance and future potential. Some of the top mutual funds to invest in 2024 may include large-cap or sector-specific funds, depending on your risk appetite. For those seeking long-term growth, selecting the best mf to invest in 2024 will depend on diversification and market outlook.

1. Benchmark Comparison:

When examining a mutual fund, what is the first item you should look for?
Analyzing the benchmark's performance should come first. You are undoubtedly aware that each fund has a standard against which its performance is monitored and evaluated.
A mutual fund that consistently outperforms its benchmark over the long run is good. The excess that a fund produces above its benchmark is referred to as the fund's "alpha."
Most significantly, when you invest in a mutual fund, it is your hard-earned money. Anticipate that the fund will outperform its benchmark and generate a bigger alpha. It can be the first parameter you analyze.

2. Use of Fund Fact Sheets:

Comparing two distinct funds is not possible when comparing funds; also, doing so will never yield accurate results.
To put it simply, you can never determine which is superior since you can only compare apples to other apples, not apples to mangoes. You can always tell which apple is better than the rest, unless it's an apples to apples situation.

3. NAV Tracking:

Although the NAV and expenditure ratio may not seem like much at first, you should be aware of the toll it might have on your assets and the value of asset. Expense ratio: What is it?
The cost that the fund house charges you to manage your portfolio is called an expense ratio. These costs include cover investor transactions, distribution, manager fees, and other charges.

4. Online Tools & Platforms:

You will probably receive different responses from each financial advisor you speak with if you try to speak with as many as you can. They may advise you on what to consider when making an analysis and how to choose the finest mutual fund for your needs. A year of subpar performance might be attributed to a fund internal issue.
Is that an appropriate method for gauging a fund? Without a doubt not. Thus, remember to assess both inwardly and outside.
 

Who Should Invest in Mutual Funds?

Here are the key people suited for mutual fund investing:

Long Term Investors
Those with longer investment horizons are looking for wealth creation.

Retirement Planners
Retirement planning is made easier through mutual funds' high return potential over decades.

Monthly Savers
People who can invest small surplus money regularly through SIPs.

Seeking Better Returns
If you want returns higher than traditional fixed-income options. 

Risk Takers
People with reasonable risk tolerance aiming for higher returns.

Passive Investors
Those are seeking expert fund management without self-picking stocks.

Portfolio Diversification
Investors want a balanced basket of equity, debt, etc., for risk balancing.

Best Mutual Fund Trends to Watch in 2024

1. ESG and Sustainable Funds:

Environmental, Social, and Governance (ESG) funds are gaining popularity in India as investors increasingly prioritize sustainability. These funds invest in companies with strong ESG practices, promoting responsible investing. With India's commitment to decarbonizing its energy sector by 2030, ESG funds are expected to play a significant role in the country's sustainable development.

2. Passive Investing

Passive investing, particularly through index funds and ETFs, has seen a surge in India. Investors are drawn to the lower costs and consistent returns of passive funds compared to actively managed funds. This trend is driven by the desire for stable, long-term growth with minimal management fees.

3. Sector-Specific Funds

Sector-specific funds are becoming increasingly popular among Indian investors. These funds target specific sectors like infrastructure, pharmaceuticals, and banking, offering exposure to high-growth industries. Investors are attracted to the potential for higher returns, despite the higher risk associated with these focused investments.

4. International Funds

International mutual funds allow Indian investors to diversify their portfolios by investing in global markets. These funds provide exposure to leading companies worldwide, helping to mitigate risks associated with domestic market volatility. As global markets offer new opportunities, international funds are becoming a key component of diversified investment strategies.