Best Mutual Fund to invest in 2021 in India

Are you planning to start your investment journey? Do you wish to invest in the stock market and are looking for a simple way to do so? If the answer to these questions is yes, then this blog might help you. In this blog we have shared some important terms related to mutual funds, names of some of the best performing mutual funds and some quick pointers that you should keep in mind when investing in mutual funds. 

A Mutual Fund is basically a scheme in which a fund manager raises money from retail investors and invests that money in the stock market. If you wish to build a retirement fund or are looking to invest your money for a time period of at least 3-5 years then mutual funds might be the right choice for you. 

There are many factors that you must consider before choosing the ideal mutual fund for you. Following is a list of some of the things that you should definitely look at –

  • Exit Load – The fees that you have to pay when redeeming a mutual fund.
  • Entry Load – The fees that you have to pay when buying in a mutual fund.
  • Expense Ratio – The fees that a fund house charges for managing your money. 
  • Drawdown Ratio – The ratio in which the portfolio value of the fund fell as compared to a market index like nifty 50.
  • Average return of the last 5-10 years – Always look at the average return as it will show consistency and will be a better metric to judge any fund or fund manager. 

Following are some of the top rated mutual funds that you could consider investing in, in 2021. 

  1. Axis Bluechip Fund 
  2. Mirae Asset Large Cap Fund  
  3. Parag Parikh Long Term Equity Fund  
  4. Kotak Standard Multicap Fund 
  5. Axis Midcap Fund 

Some things that you should keep in mind to make the most of the mutual funds that you invest in – 

  • Invest for the long term – Investment in equity related instruments will only be fruitful if you invest for the long term. Do not switch funds too often as the entry load and exit load might eat up a decent chunk of your returns. A 1% fee might not sound like too much but when you calculate the difference that it causes to your overall returns in the long term, then you will realise the impact that it can have. 
  • Diversify – The best way to diversify your mutual fund portfolio is to diversify across different types of investment options. If you buy three mutual funds from different companies but they are all large cap mutual funds then there is a high chance that they might all have a lot of common stocks and your portfolio will not be truly diversified. If you buy a large cap mutual fund, a mid cap mutual fund and a small cap mutual fund then the chances of them having different stocks is much higher and your portfolio will hence be much more diversified. Refrain from buying more than two mutual funds from the same category. 
  • Systematic Investment Plan – Invest in mutual funds through an SIP format. Markets are volatile and even the most sophisticated fund manager cannot time it to perfection. The best way to solve this problem is to not try to time the market at all. Instead invest in small portions. If you invest some amount every month then in the long term your buying price will get averaged out and you will be in a much better position than you would be in if you were trying to time the market. 

Disclaimer – The details mentioned in this blog are for educational purposes only. Please consider your financial advisor before taking any investment decisions. The descriptions of the funds mentioned above are not investment recommendations/advice and do not take into account your specific financial situation or needs. 

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