Top Performing Mutual Funds to Invest in 2019
Top SIP Mutual Funds in India for 2019
in a financial year under Section 80C
What are Mutual Funds?
A mutual fund is an investment pooling entity which is professionally managed by an asset management company (AMC). It brings together a group of investors and invests their money in stocks, bonds, and other avenues. As a mutual fund investor, you are assigned mutual fund units which indicate your contribution to a particular scheme. You can purchase or redeem these units as needed at the fund’s prevailing net asset value (NAV).
Usually, NAV of a mutual fund changes daily according to the underlying assets of the fund. Mutual funds are safe investment havens as they are compulsorily registered and operated within the SEBI regulations. The main benefit of investing through a mutual fund is that you get access to professional fund management and diversified portfolios at a relatively small amount of investment.
Types of funds to invest
Best Multi Cap Funds 2019
Multi cap funds invest in equity shares of companies which belong to different market capitalization.
Best Debt Mutual Funds 2019
As as investor, you might always be on a lookout for the best debt funds to invest your money.
How to select the best performing Mutual Funds?
Any investment should be made after considering one’s personal life goals. Once you have assessed your needs, match it with your fund’s objectives. Each mutual fund has an investment objective which may or may not match your goal. To arrive at a meaningful decision, select funds which conform to your overall financial plan and risk appetite. A long-term objective cannot be funded with a short-term scheme. Similarly, a risk-averse investor should not invest in a highly risky fund. You can get all the details about the scheme, including its objective, strategy and asset allocation in the key information document and scheme information document.
You may begin the shortlisting process by looking at the fund history. A mutual fund should have a long track record for being considered for investment. It shows the strength of the fund during tough times. A recently launched fund may or may not perform well during bear runs; it is yet to be explored. On the contrary, a fund with a good track record of consistent performance indicates the accuracy of its investment strategies.
A fund which has a history of say at least 5 years may seem eligible for shortlisting. At this point, you need to consider keeping your investment horizon in perspective. If you have a longer horizon, you may look at 7 or 10 year returns.
Risk and return go hand in hand. Returns are the increase in the value of the initial investment as a result of investing in a security like a stock or bond. Risk is the uncertainty concerning the actual returns not falling in line with the expectations. Before finalizing a mutual fund, you need to examine its risk-return potential.
This can be easily done with the help of financial ratios. Sharpe Ratio and Alpha come handy to indicate the relevant information. Sharpe Ratio shows the extra return that the fund has generated for every additional unit of risk taken. A fund having a higher Sharpe Ratio is better than the fund having a lower Sharpe Ratio. Similarly, Alpha tells you how much extra return has the fund manager generated as compared to the benchmark. The higher the alpha, the superior would be the fund.
Expense ratio is an essential parameter that needs to be analysed while selecting a mutual fund scheme. It is an annual fee, expressed in percentage, that the fund house charges for managing your money. The extent of expense ratio charged affects the fund’s returns. Thus, a higher expense ratio translates into lower returns for the investor. So, you may choose a fund which has a lower expense ratio as compared to peer funds in the category.
Performance of Fund manager
Fund manager plays a crucial role in the performance of a fund. Even though the entire investment is process oriented, still fund manager is the one who has to take care of the ultimate responsibility and keep the show going on smoothly. It is important to know the track record of the fund manager. You may check performance of the fund during market rally and slump. A fund which has given consistent returns and contained losses during the bear runs shows robust fund management. The fund’s alpha reflects how much extra returns did the portfolio generate due to fund manager’s efforts.
Two primary ways of investing in a mutual fund is through SIP or one-time investment. One-time investment is considered when the investor has a big corpus to invest. While a SIP (systematic investment plan) is a recurring investment where throughout a period of time, investors deposit a recurring amount either monthly, quarterly or annually. SIP has various benefits over one-time investment.
|SIP Investment||One-time Investment|
|Periodic investments in a tenure||One-time investment in a tenure (lump sum)|
|Earns better during market lows||Earns better during market highs|
|SIPs can protect investments from potential market crash||One-time investments can lead to major loss during market crash, which happens often enough|
How to Invest in Mutual Funds
Investing in Mutual Funds is made paperless and hassle-free at ClearTax.
Using the following steps, you can start your investment journey:
Why Cleartax Invest
ClearTax Invest was launched with the idea to help individuals with smart investing strategies..
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At ClearTax, you can invest by browsing through only the best funds in India. Investing with us is a simple process. Don’t worry about the security, Cleartax works on bank grade security. If you need assistance, avail ClearTax 24×7 services.
Mutual Fund Calculator
The Mutual Fund Calculator will give you the investment value at maturity by calculating fund returns according to your investment horizon. You can adjust the variables of the calculator like SIP/lump sum, amount of investment, frequency of SIP, expected rate of return and duration of SIP.