Top Mutual Funds to Invest in 2020
India has always been a land of diversity. The same reflects today in a retail investor's portfolio as well. In a country that has been growing and developing consistently, mutual funds have become a popular financial tool for all and sundry. So, even if you have the capital to buy each stock individually, investing in a mutual fund would offer better risk management and cause less pain to your pockets too.
The world of Mutual funds offers various options for an investor, but all funds can be broadly classified into three categories, namely Equity Funds, Debt Funds and Hybrid Funds. These Mutual Funds can be further divided as open-ended or close-ended mutual fund schemes.
Equity Funds, just as the name suggests, is a Mutual Fund that primarily invests in stock markets and are more focused on growth-oriented stocks. These are preferable to people who are seeking a high return on their investment. Although one must keep in mind the direct relationship between risk and return before choosing this kind of Mutual Fund Scheme. These are the most popular option available in the market.
The second kind are Debt Funds that invest in corporate bonds and treasury bills. These can prove to be a good option for people who want a constant source of income and comparatively less risky than other kinds of funds.
The third kind are Hybrid funds which take a portion of both Debt and Equity in their structure, which means that these kinds of funds invest in stock markets similar to equity funds as well as in corporate bonds and treasury bills like debt funds.
We are already a month into 2020, but it is better late than never. You should start planning and investing now. Here are a few Mutual Funds that are likely to perform well during this year:
1. Axis Blue-chip Fund - Growth: A fund that invests in Large cap stocks and has consistently given positive returns in the past 3 years with the average annualized return at 19.62%. The recommended investment horizon for this fund is more than 3 years with the risk associated with it being Moderately High. With a roughly 80:20 proportion of Debt and Equity, the fund has been a consistent performer, thus making it a good option for investment purposes.
2. Mirae Asset Large Cap Fund Regular - Growth: A competitor of the Axis blue-chip Fund – growth, the Fund almost completely consists of Equity. It focuses on large cap stocks and has moderately higher risk associated with it. The current annualized return for the fund is at 14.86%.
3. ICICI Prudential Corporate Bond Fund - Growth: This is primarily a debt fund with almost no equity investments currently. The current annualized return for the past 3 years stands at 7.38% and can be considered by investors with a lower risk appetite. Also, during a time of volatility or bearish outlook, a debt fund might seem like a more lucrative option to investors.
4. HDFC Corporate Bond Fund - Growth: A peer for the ICICI Prudential Corporate Bond Fund, it has a similar risk bracket and a similar asset class allocation. The current 3-year annualized return for the fund is at 7.5% and it has given a return of 10.19% in the last 1 year.
5. Edelweiss Aggressive Hybrid Fund Regular - Growth: Just as the name suggests, this is hybrid fund, focusing on aggressive growth prospects. Meant for conservative Equity investors or risk loving debt investors, this fund has a risk profile of ‘Moderately High’. The current annualized return for the fund stands at 11.16% and the last one-year return has been at 11.73%.
We all have heard the fact that investments are subject to market risks, and mutual funds are no different. A good return can be tempting but it always comes with its own set of risks. It is better to analyze the risk along with the return before planning any investment.