utual funds pool money from various investors, enabling professional fund managers to make strategic investment decisions. The appeal lies in expert management, diversification to manage risk, and the flexibility to align with diverse financial goals.
With options catering to different risk profiles and objectives, mutual funds provide liquidity, allowing investors to buy or sell shares at the net asset value (NAV). This blog will explore the top mutual funds across ten different categories based on their CRISIL rankings.
Let’s check out the top mutual funds for investment, along with the AUM (Assets under Management) and category of each (as of July 31, 2024):
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Fund name
AUM (Rs cr)
Category
SBI Long Term Equity Fund
Motilal Oswal ELSS Tax Saver Fund
JM ELSS Tax Saver Fund
27,527
JM Flexi Cap Fund
Bank of India Flexi Cap Fund
Flexi cap fund
HDFC Focused 30 Fund
Invesco India Focused Fund
13,795
Focused fund
SBI Nifty 50 ETF
UTI S&P BSE Sensex ETF
SBI S&P BSE Sensex ETF
ICICI Prudential S&P BSE Sensex ETF
2,02,237
45,161
1,23,086
11,241
Index funds/ ETFs
Nippon India Large Cap Fund
Bank of India Bluechip Fund
JM Large Cap Fund
31,801
Large cap funds
Invesco India Large & Mid Cap Fund
Bandhan Core Equity Fund
Quant Large and Mid Cap Fund
Large and mid-cap fund
Motilal Oswal Midcap Fund
Mahindra Manulife Mid Cap Unnati Yojana – Regular Plan – Growth
ITI Mid Cap Fund
14,446
Mid cap fund
ITI Multi Cap Fund
Multi cap fund
Franklin India Smaller Companies Fund
ITI Small Cap Fund
14,475
Small cap fund
SBI Contra FundNew Delhi Investment
JM Value Fund
37,846
Value/ Contra fund
It is time for a closer look at the top mutual funds for investment across categories based on factors like volatility, expense ratios, total returns since inception, and more. Also Read: Top 10 index funds in India by AUM
Note that-
The expense ratio stands for the annual maintenance charge a mutual fund uses to finance miscellaneous expenses like management fees, allocation charges, costs of advertising, and more. Volatility refers to the degree of variation in the price of a mutual fund over time. Standard deviation gauges the dispersion of returns from the mean, offering insights into the fund’s historical price fluctuations. Beta, on the other hand, compares the fund’s volatility to the overall market’s. Total returns since inception offer investors a long-term perspective on how well the fund has performed over its entire existence.The Portfolio Turnover Ratio (PTR) measures the frequency with which the fund’s holdings are bought and sold within a specific periodAhmedabad Stock. A higher turnover ratio indicates more frequent trading, potentially leading to increased transaction costs and capital gains taxes for investors. On the other hand, a lower turnover ratio implies a buy-and-hold strategy with fewer portfolio adjustments. Tracking error quantifies the variability between a mutual fund’s performance and the performance of its benchmark index. A low tracking error suggests the fund closely mirrors the benchmark, while a higher tracking error indicates greater deviation.
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According to the rating agency, a subsidiary of S&P Global, mutual funds are divided into three peer groups–equity, debt, and hybrid. To be included in the ranking, these funds must have a ‘three-year or one-year NAV history and AUM in excess of category cut-off limits and complete portfolio disclosures.’ And they only consider open-ended schemes. The methodology document states a three-year NAV history is considered across all equity, hybrid, dynamic bond, medium duration, medium to long duration, banking & PSU, corporate bond, credit risk and gilt categories, whereas one-year for liquid, low duration, money market, ultra-short term categories.
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Only open-ended funds are considered; both regular and direct plans are ranked separatelyNAV history
− Three years for equity, hybrid, gilt, dynamic, medium to long, medium duration, banking & PSU, corporate bond, credit risk and short-duration funds
− One year for arbitrage, low duration, ultra-short, money market and liquid fundsAUM cut-off criteria:
For equity funds – Rs10 crore
For debt and hybrid – Rs50 crore
For debt fund less than a year – Rs250 crore
For liquid funds – Rs1000 croreComplete portfolio disclosure for all three months in the last quarterFor debt funds, fortnightly portfolios are also considered.
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Based on SEBI guidelines, CRISIL excludes the following funds from rankings.Equity: Dividend yield funds, sectoral/thematic funds Debt: Overnight funds, long duration funds, 10-year constant maturity gilt funds, floater funds Hybrid: Dynamic asset allocation/balanced advantage funds, multi-asset allocation funds, equity savings funds Others: Solution-oriented funds, fund of funds, index/ETFs (other than ones replicating Nifty or Sensex)
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Investment experts always urge investors to park their money based on what they want to achieve with it. Mutual funds are not an exception to this general rule of thumb. Two fundamental questions to answer before investing in mutual funds are:What is the duration of your investment?How much risk are you willing to take?
Once you have your answers, look for the following attributes:
1. Consistency – A fund that consistently performs is a good choice. For example, if the return for a fund is 10 percent in the first year, 12 percent in the next, and 12.5 percent after that, it will be preferred over a fund that gives 32 percent in year one, -13 percent in the next, and maybe 2 percent in the next. Consistency can always be trusted over risky behaviour.
2. Good fit – While selecting the plan, also figure out how it fits with your overall investments, how it will impact your liquidity and tax efficiency, and how it will help you with returns.
3. Who is managing – A consistent fund management team is an advantage when you are investing in a mutual fund. Continuity plays a crucial role in a fund’s long-term performance, so try to avoid funds that see a lot of churn in top management.
4. Past performance – Pay attention to how the mutual fund has performed. History is no guarantee of the future, but it gives you an idea of how the funds were handled in most market situations in the past. If they outperformed the market situation, you might consider such funds.
Kanpur Investment