Want a list of the top performing mutual funds in India? Several financial market experts and industry players have compiled lists of the best equity mutual funds that you can invest in for the future. Equity funds are a specific type of mutual funds which predominantly deploy their capital in purchasing equity shares of companies across segments. They have listed securities in the stock market and are preferred for earning returns in the long haul. As per data released by AMFI (Association of Mutual Funds in India), total equity fund investments have surpassed Rs. 8 lakh crore as of December in the year 2018. The reason behind the growing popularity of equity investments is the typical propensity of the same to generate superior returns in comparison to even FDs and debt funds.
Before checking out high return equity mutual funds to invest in, you should know that there are various types of such funds on the basis of the style of investment, market capitalization, geographical indicators, taxation, growth potential in the future and style of management. Some of the best funds in the equity space are even specific to particular business sectors. They are often known as sectoral funds as a result. Costs of equity funds are worked out through the subtraction of their overall liabilities from their NAVs (net asset values). You can invest in the very best mutual funds in the category with a comparatively smaller capital pool through the SIP (systematic investment plan) route.
Best equity shares that you can consider
Some of the best options that you can consider, according to experts, include the following:
- SBI Equity Hybrid Fund
- Mirae Asset Hybrid Equity Fund
- ICICI Prudential Equity & Debt Fund
- Axis Bluechip Fund
- DSP Midcap Fund
- L&T Midcap Fund
- ICICI Prudential Bluechip Fund
- Kotak Emerging Equity Fund
- Canara Robeco Bluechip Equity Fund
- DSP Natural Resources and New Energy Fund
- Mirae Asset Tax Saver Fund
- Canara Robeco Equity Tax Saver
- Canara Robeco Emerging Equities
- Aditya Birla Sun Life India GenNext Fund
- Invesco India Mid Cap Fund
- UTI Transportation and Logistics Fund
- SBI Focused Equity Fund
- Kotak Standard Multicap Fund
- HDFC Small Cap Fund
- L&T Emerging Businesses Fund
- Motilal Oswal Multicap 35 Fund
Some major aspects worth knowing about equity mutual fund investments
Before you choose and invest in the best equity mutual funds in the country, make sure that you do your homework about the fund in question, its type, costs and charges, expected returns, performance over a sustained time period and the reputation of the online platform, mutual fund firm or company where you wish to invest in. Remember that it is an evolving process and no one mutual fund can be regarded as the permanently best option.
Now for a few core aspects that are worth noting:
- Investors earn through capital gains and dividends when it comes to equity fund investments.
- Taxes on dividends which are known as DDT (Dividend Distribution Tax) are cleared by AMCs (Asset Management Companies) and investors have to pay taxes on the same.
- LTCG (long term capital gains) on ELSS (equity-linked saving scheme) have specific taxation advantages. Investing up to Rs. 1 lakh is exempted from taxes and anything beyond this will be taxed at the 10% slab under Section 80C of the Income Tax Act. Do remember that a 3-year lock-in period applies to all ELSS investments. You cannot thus withdraw your money before the expiration of this tenure.
- STCG (short-term capital gain) will be taxed at the rate of 15% if the returns are redeemed by the investor within a year’s time.
Assessing investment suitability
These funds are suitable for those investors who are seeking gains in the long term. However, they should sync with your tolerance or appetite for taking investment risks along with your future investment objectives/goals. Retail investors usually prefer these investments since they do not require any sizable pool of capital. Owing to the diversified nature of the portfolio of mutual funds, the capital needed will be relatively lower and risks are spread out in the bargain. The long-term duration enables these funds to patiently ride out any fluctuations that arise temporarily in the market.
Another benefit is that equity funds are usually managed by professional entities for fund management which are AMCs or asset management companies. These fund houses do their research and analysis while investing on their clients’ behalf. They have vast industry knowledge and insights that individual investors cannot hope to obtain instantly. Risks are comparatively lower if you are investing in the best and most suitable equity funds. Risk parameters are tracked by AMCs including volatility levels, concentration and liquidity while investments are made on the basis of the same. Smaller ticket sizes ensure that individual investors do not have to bear the burden of deploying higher amounts of capital. This lowers risk and SIPs can be started on a monthly basis in equity mutual funds. The initial amount every month can even be as little as Rs. 500.
Mutual funds are tracked by industry bodies like SEBI (Securities and Exchange Board of India) and this ensures transparency for all major transactions. It is mandatory for funds to release NAV (net asset values) on their sites in addition to the portfolios on a monthly basis. As of 2018, there were more than 9,500 funds in this category available in India. This ensures ample choice for investors as well. The best funds have posted gains exceeding 25% over a period of 3 years as well according to reports. ELSS investments also come with tax benefits while capital losses on equity investments can be adjusted against any capital gains on another fund in the same year as well. This is one feature which is not available on other schemes for investment.