Mutual funds have become the most popular platform for investment over a period of time, mutual funds are one of the best investment whether you want to invest your money in the short term or long term.
However, the most common question every investor usually asks is “Which is the best mutual fund for investment”.
Well, surely there is no simple answer to that especially when there are wide ranges for mutual funds are available in the market.
Which mutual fund can be best for you?
It totally depends on your goals of investment. In this article, we will take look at the top 10 mutual funds of 2020 with the highest return on investment along with a detailed guide to mutual funds investment.
Mutual funds of 2020 with highest ROI
|Fund Name||1 Yr Return||Fund Size (Cr)|
|PGIM India Midcap Opportunities Fund||47.4%||713.06|
|Quant Active Fund||43.85||164.69|
|Kotak Small Cap Fund||33.7%||2539|
|UTI Flexi Cap Fund||30.73%||14605.95|
|BOI AXA Manufacturing &Infrastructure Fund||27.42%||38.40|
|Axis Midcap fund||25.75%||8608.32|
|Canara Robeco Emerging Equities||24.12%||7214.94|
|IIFL Focused Equity Fund||23%||1421.77|
|Mirae Asset Emerging Bluechip Fund||22.5%||14415.74|
|Axis Focused 25 Fund||20.88%||133660.12|
How to pick up a best mutual fund for 2021
Investments in mutual funds do carry some amount of risk but mutual funds do have the potential to provide much higher returns as compared to other options. If you pick right mutual fund it can provide a decent amount of return on investment, however various factors such as liquidity, diversification, the risk to rewards ratio etc must have to be analyzed thoroughly before investment.
There are more than 1500 mutual funds available in the market and every mutual fund serve a specific financial goal or objective.
Before investing in any mutual fund it is important to understand the nature of the particular mutual fund and will your selected mutual fund is suitable for your financial objective.
If an investor is looking to invest his/her money with retirement goals than he/she should go for long term investment (more than 10 years) or if an investor wants to invest to raise money to buy vehicle or property than he/she should go for mid-term investment (3-5 years).
Also Read – Top 10 penny stocks you can buy under Rs. 10
The risk factor is one of the most important factors to keep in mind while mutual fund investment since we have a lot of mutual funds available but all mutual funds are categorized on the basis of risk factor.
If you want to invest for the long term and want stable risk free returns than debt mutual funds can be the ideal pick for you, at the same time you want to invest for short to mid-term and looking for a large amount of return than equity and hybrid mutual funds can serve your objective better.
Although equity and hybrid carry more risk as compared to debt funds but equity funds have the potential to provide large returns.
Past performance of the mutual fund is the most important factor to find out whether a particular fund is worth or not. It is extremely important to look at the 3-5 years performance of mutual funds, you can simply look at time chart of a mutual fund on financial websites.
Especially look at the performance of the mutual fund in different time frames, if a mutual fund has reached its targets year by year than a mutual fund is worth of investment.
If a mutual fund reaching its target continuously for 5 years then there is a high chance it will hit its target in future also.
AUM & other costs
Assets under management (AUM) refers to the size of a mutual fund and it is a very important indicator regarding a mutual fund.
High AUM indicates the high potential of mutual fund and which attracts a large number of investors to invest in the mutual fund.
Other factors such as expense ratio and exit load are very important factors to keep in mind before picking a mutual fund.
Expense ratio is the cost which is usually charged by fund managers or fund house to manage your portfolio, exit load is charged which is charged when you exit from a mutual fund.
These both factors affect your overall earning from mutual funds so always keep these factors in mind.
SIP or lump sum which is better?
Mutual fund investments can be done through a systematic investment plan (SIP) or lump sum mode.
You might be thinking about which one is better for you, the short answer is it depends on your goals.
If you have a large amount of idle money and you want to earn large returns than lump sum investment can be good.
On the other hand, we have SIP, in this mode, you do not have to invest a large amount of money at one time.
In SIP you can periodically invest money in mutual funds it can be monthly or quarterly.
If you have high-risk tolerance than you should go for one-time lump sum investment because this mode of investment have higher risk as compare to SIP especially if you invested lump sum amount when market if high and it declines after some time of your investment.
Since in SIP you are investing periodically so you do not suffer any major loss at one time even market recovers o