Mutual Funds – Your key to grow wealth

Mutual funds are professionally managed fund, which pools investment from several investors to invest in capital assets.

Top Mutual Funds in India for 2019

Equity Linked Saving Scheme aka ELSS is a tax saving mutual fund where one can save up to Rs.1.5 lakh in a financial year under Section 80C
Top Equity Fund
3Yr Return

Small Cap Funds

Mid Cap Funds

Mid Cap Funds

MultiCap Funds

Balanced Funds

MultiCap Funds

Balanced Funds

Balanced Funds

Balanced Funds

Balanced Funds

Top Debt Fund
3Yr Return

Credit Opportunities Fund

Gilt Fund

Liquid Fund

Liquid Fund

Short-term Fund

Short-term Fund

Short-term Fund

Short-term Fund

Short-term Fund

Everything you need to know about mutual funds

Mutual Funds are known to be one of the best investment avenues in India. Learn about Mutual Funds, how they work, benefits, and how to invest.
What are Mutual Funds?
Mutual funds Defination: How can I benefit by investing in Mutual Funds?
Types of Mutual Funds
Mutual Funds are broadly classified into Debt, Equity, Hybrid, and tax-saving funds. You can choose the fund(s) based on your investment portfolio.
Benefits of Mutual Funds
Investing in Mutual Funds with calculated risk offers higher returns than conventional options like PPF, NSC, and FDs.
How to invest in Mutual Funds
Set a financial goal and then choose the right Mutual Fund to achieve it.

What are mutual funds?

A Mutual Fund (MF) is formed when capital collected by various investors is invested in purchasing company shares, stocks, or bonds. Shared by thousands of investors, mutual funds investments are collectively managed by a professional fund manager to earn the highest possible returns. This is how mutual funds work, not only in India but, anywhere in the world.
A Mutual fund
Money pooled from various individuals (investors)
Well-regulated (by SEBI)
Access to large portfolios
Professionally Managed
Higher returns than conventional investing
Allows to invest in small amounts
Investing in Mutual Funds is the easiest way to grow your wealth. The fund manager’s expertise is an important factor to consider while choosing the fund. All Mutual Funds are registered with the Securities Exchange and Board of India (SEBI) and hence, your investment is safe.
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Types of mutual funds

Mutual funds are broadly classified into three categories based on their investment traits and risks involved. Understand all mutual fund types and analyse them to check if your requirements would be served by investing in a particular type of mutual fund. Following are the types of mutual funds:
Equity Funds
Equity funds primarily invest in shares of different companies. Your equity funds investment would make a profit when the share prices surge, while they suffer a loss when the share prices fall. Investing in equity funds is apt for those who stay invested for an extended period and are comfortable with moderate to high risk.
Debt Funds
Debt funds primarily invest in fixed income government securities such as treasury bills and bonds, or reputed corporate deposits. Investing in debt funds is less risky than equity funds. Debt Funds are apt for those who are risk-averse and looking for a short-term investment.
Balanced or Hybrid funds
As the name suggests, balanced or hybrid funds invest in both equity and debt instruments to balance the risk and maintain a specific rate of return. The fund manager decides the ratio to reap the best of both debt and equity instruments.

Why Mutual Funds?

Mutual Fund investment offers various benefits that make them the most lucrative investment option.
Expert Money Management
Diversification
Systematic Investment Planning
Safe and Secure
Expert Money Management
Mutual fund companies have fund managers to choose the company shares, sectors, and debt papers in which the pooled mutual fund investment would be invested. This decision would be made by keeping the investors’ interest in mind.
Lock-in Period
The Lock-in period is the duration in which investors cannot withdraw their Mutual Fund investment or sell their Mutual Fund units. It varies across Mutual Funds. Generally, open-ended funds do not have a lock-in period while the tax-saving funds (ELSS) have a lock-in period of 3 years.
Low Cost
Mutual funds investment is a very affordable option for those who wish to invest in small amounts. MF houses levy a small fee called expense ratio, and it ranges from 0.5% to 1.5% of the Mutual Fund investment. The expense ratio cannot exceed 2.5% as per SEBI regulations.
SIP Option
If you don’t have a lump sum to invest, then you can invest in a Systematic Investment Plan (SIP). Our experts at ClearTax have handpicked best mutual fund to invest based on your requirements. The best thing about investing in mutual funds with ClearTax is that you can invest as low as Rs 500 an instalment.
Flexibility to Switch Funds
A good investor knows when to switch funds to keep up or stay ahead of the market. There are various MF schemes that allow you to switch funds. The fund manager will have an eye on the market to ensure the best returns while not getting burnt by the market volatility.
Investments Based on Goals & Focus Sector
Each investor invests in MF with a financial goal to achieve. There are funds with varying risk factors that help you in achieving all kinds of goals.
Diversification
MFs invest across various asset classes and company shares to mitigate risk. When one asset class underperforms, gains from other asset classes will negate the loss. However, it is recommended not to invest in too many (more than 5) as it may get difficult to monitor the performance of all avenues.
Flexible Tenure
EEquity-linked savings scheme (ELSS) is the only MF scheme that comes with a lock-in period of three years. This gives investors enough flexibility in terms of their financial goals, whether short-term or long-term. Investing over a certain timeframe makes it easier to plan when and how to invest.
Liquidity
Investing in Mutual Funds offer liquidity. You are allowed to redeem your investment at any time. There is no requirement of justifying your decision or searching for a buyer. You just have to place a request with your fund house and they will credit the money into your bank account within 3-7 working days.
Handpicked Funds
There are various MFs based on investment goals, individual risk appetite, sectors, and fund size, among others. Considering the number of available options, it can be a difficult task to research and compare the performance of various funds. ClearTax has handpicked best mutual fund which suits your profile.
Ease of Trading & Transaction Experience
Buying, selling, and redeeming fund units at the current market price per unit (NAV) is quite simple. All you have to do is place a request with the MF House and the fund manager will take care of the rest. The liquid nature of MFs can help you in case of an emergency situation.
Tax Efficiency
Investing in ELSS offers a twin benefit of tax deductions and wealth accumulation. Investments in ELSS are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. You can deduct a maximum of Rs 1,50,000 a year. ELSS offers the highest returns among all Section 80C instruments.
Investment Safety:
All MF houses are under the purview of the Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI). Both SEBI and AMFI are government bodies and hence, you can consider your Mutual Fund investments to be as safe as bank deposits.
Ease of Tracking
Investors might not have the time to analyse the performance of their MF investment. To make things simpler, MF houses provide investors with regular statements which makes it easy to track the performance of the fund(s).

Get Better Returns with Mutual Funds

Rs 1,000 invested monthly for 20 years in different investment options will become
Bank
3.65 Lakh
@4% p.a
Fixed Deposit
4.82 Lakh
@6.5% p.a
Gold
4.3 Lakh
@5.5% p.a
Mutual Fund
15.2 Lakh
@15% p.a
Who should Invest?
MFs make investing easier for you. Each fund is designed to fulfil different goals. It is particularly useful for those who do not have enough time to research and choose wisely.
When to Invest?
Factors to consider before investing
Funds Availability
Market Conditions
Investment Duration
Expected Returns
Investors may find it difficult to analyse funds by considering the factors mentioned above and hence, investing in SIP is the best option they have. There is no specific time that is considered the best to invest. The best time to invest is when you have money in hand. You shouldn’t worry about the market volatility, and not every Mutual Fund invests in equity instruments.

How to Invest?

Thanks to the digital wave, you can easily access MFs nowadays. How to invest in mutual funds depends on person to person. Indian MF investors are given the following options:
Direct Investment
Visit the nearest branch of the fund house to collect an application form or download it from the web. You must go through the fine print carefully and clear all your doubts before investing.
Agents
These are sales professionals who reach out to potential customers and inform them about the various fund options. You can choose a fund based on your income, investment goal, and risk appetite. The agent helps you with the application process, transactions, redemption, and cancellation. They charge a commission for their services.
Online (Distributors/Fund Houses)
Buying/selling MF units online is common today. This helps in saving time and efforts, and most importantly, makes it easier to compare various funds to make an informed decision. ClearTax is one such portal that handpicks the best Mutual Funds from the country’s top fund houses for you, absolutely free of cost. All you need to do is enter your personal details and make the payment. The entire process can be done in less than five minutes.

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.

FAQs (Frequently Asked Questions)

As a taxpayer, you are entitled to deduct up to Rs 1,50,000 a year under Section 80C of the Income Tax Act, 1961.
What is Mutual Fund?
A Mutual Fund (MF) is formed when capital collected by various investors is invested in purchasing company shares, stocks, or bonds. Shared by thousands of investors, mutual funds investments are collectively managed by a professional fund manager to earn the highest possible returns. This is how mutual funds work, not only in India but, anywhere in the world.
What is SIP?
Systematic Investment Plan (SIP) is an investment option offered by MFs which allows investors to invest small amounts on a regularly instead of investing a lump sum. Your frequency of investment can be weekly, monthly, or quarterly.
How to choose the right Mutual Fund?
A right MF scheme can be chosen only by considering past returns, the fund manager’s performance, and consistency of returns. If you are finding it difficult to choose the right MF, then reach out to us. You can invest in top mutual funds in India, handpicked by our in-house experts.
How to redeem Mutual Fund units?
You can redeem MF units anytime. You need to inform your fund house or the agent. Your money will be credited into your bank account within 3- 7 working days, post-redemption.
What is the time period considered for the purpose of Income Tax
Income Tax is levied on the annual income of taxpayers. It is levied based on the income you earn in each financial year (1 April of this year till 31 March of the next year) and not the calendar year. The previous year is a period for which a person has to pay tax. Assessment year is a 12 month period following the previous year, during which a taxpayer files his/her ITR.
What is CRISIL MF ranking?
CRISIL is an analytical company, which provides rankings, research, and advisory services. MF rankings given by CRISIL is based on global factors. The rankings are a significant factor to be considered when choosing to invest in an MF scheme.
Which are the best equity mutual funds?
To term any MF scheme ‘the best’, you need to check if it’s investment objectives are in line with your requirements and investment horizon. If an MF scheme is suitable for your requirements, then you can consider it as the best MF option for you.

The following table shows the top equity funds based on the past five-year return:

Equity Fund Name

5-year Returns

Mirae Asset Emerging Bluechip Fund – GrowthLarge & Mid Cap Fund

18.92%

Franklin Build India Fund – GrowthSectoral/Thematic

14.11%

HDFC Small Cap Fund – GrowthSmall Cap Fund

12.98%

Sundaram Rural and Consumption Fund – GrowthSectoral/Thematic

12.69%

Axis Midcap Fund – GrowthMid Cap Fund

11.79%

DSP Natural Resources and New Energy Fund – Regular Plan – GrowthSectoral/Thematic

11.70%

Which are the best debt mutual funds?
The following table shows the top debt funds based on the past five-year return:

Top Debt Funds

5-year Returns

Edelweiss Government Securities Fund – Regular Plan – GrowthGilt Fund

10.27%

DHFL Pramerica Dynamic Bond Fund – GrowthDynamic Bond Fund

9.58%

Reliance Income Fund – GrowthMedium to Long Duration Fund

8.92%

Aditya Birla Sun Life Floating Rate Fund – Regular Plan – GrowthFloater Fund

8.40%

Axis Banking & PSU Debt Fund – GrowthBanking and PSU Fund

8.36%

Which are the best hybrid mutual funds?

Balanced Fund Name

3 Years

ICICI Prudential Equity and Debt Fund – Direct Plan Growth

11.04%

Mirae Asset Hybrid – Equity – GrowthAggressive Hybrid Fund

10.77%

Principal Hybrid Equity Fund – GrowthAggressive Hybrid Fund

10.64%

SBI Equity Hybrid Fund – Regular Plan – GrowthAggressive Hybrid Fund

9.51%