Best Indian mutual funds to invest in 2020

Articles > Submitted by PatientInvestor on 4/14/2020 | Views: 364

This is a great time to put money in mutual funds as market have crashed significantly that is giving great opportunity to buy mutual funds for long term. It is unlikely that market will go to its previous high soon as Corona has hit almost all sectors very badly.

Table of Contents

    Best Mutual Fund to invest

    Mutual funds are professionally managed funds, that pools investment from several investors and invest in securities like stocks, bonds, money market and other assets class (depends on which type of mutual funds we are buying).

    To manage (salary of funds manager and other expenses) this pools of money, mutual fund compnay charges few % of the invested amount as expenses, these are called expense ratio. The expense ratio varies from 0.x% to 2.x% depending on which type of mutual funds we are buying.

    Before I list best mutual funds to invest in 2020 as per me, let me explain what is Direct and Regular plan of mutual funds for those who are new to Mutual funds.

    Direct Mutual Fund

    Direct mutual funds are those funds that are directly offered by the Company/AMC (Assets Management Company) which offers mutual funds scheme to its customer. These funds are cheaper as company doesn't have to pay commission to its distributors, agents, brokers or advisors. We can buy these funds directly by going to company office or from their website. Now a days many discount brokers like Zerodha are also offering direct mutual funds from their website. The expense ratio of Direct mutual funds varies from 0.x% to below 2% in general.

    Regular Mutual Fund

    Regular mutual funds are those funds that are bought through distributors, agents, brokers or advisors. Generally the expense ratio of these funds are 1.x% to 2.x% that is almost 1.x% extra than Direct mutual funds. These extra % of funds are distributed to distributors, agents, brokers or advisors.

    Customer should try to buy Direct funds that saves some money in long term.

    Important: All these funds should be bought for at least 5 years time horizon.

    * All numbers displayed below are as of 04/14/2020. Source: ValueResearchOnline

    Best Large & Mid cap mutual funds in 2020

    These are funds that invest in both Large and Midcap companies. In this volatile market, these types of funds are best suited as it gives stability of Large companies along with price apprecition of mid cap companies.

    Name VR Rating Last 1 year return Expense ratio Aseets in Cr.
    Axis Growth Opportunities Fund - Direct launched in 2018 -6.42% 0.55 907
    Mirae Asset Emerging Bluechip - Direct 5 -15.72% 0.92% 7412
    Canara Robeco Emerging Equities - Direct 5 -16.38% 0.87% 4252

    Best Multi Cap Mutual funds in 2020

    These are funds that can invest Large, Mid and small cap companies. They also takes care of volatility of market by shifting their positions to Large companies and vice-versa. Very good type of mutual funds to take benefits of any kind of market in long terms.

    Name VR Rating Last 1 year return Expense ratio Aseets in Cr.
    Axis Multicap Fund - Direct launched in Nov 2017 -5.84% 0.51% 5058
    Parag Parikh Long Term Equity Fund - Direct
    (Also invests in foreign company) *
    5 -8.25% 1.15% 2448
    IIFL Focused Equity - Direct 5 -7.87% .90% 665

    * Generally these types of funds are good as they also invest in foreign companies that are not listed in India, like Google, Amazon etc.

    Best Mid cap Mutual funds in 2020

    These are funds that invest in Mid cap companies. These types of funds are not good to invest when market is at high or peak, this is because generally in bull market Mid cap companies trade at preimum price. These kinds of funds are good to invest now (when market is in bear phase as market has crashed heavily, so you can get your investment at better price).

    Name VR Rating Last 1 year return Expense ratio Aseets in Cr.
    Axis Midcap Fund - Direct launched in Nov 2017 -4.65% 0.56% 4433
    Invesco India Midcap - Direct 5 -14.30% 1.23% 648
    DSP Midcap - Direct 4 -13.17% .97% 5667

    Best Small cap Mutual funds in 2020

    These are funds that invest in Small cap companies. Like Mid cap, these types of funds are also not good to invest when market is at high or peak. Generally these kinds of funds are good to start investing in bear market to get them at better price and get better return on investment.

    Name VR Rating Last 1 year return Expense ratio Aseets in Cr.
    Axis Small Cap - Direct 4 -6.98% 0.29% 1879
    Nippon India Small Cap - Direct 5 -27.37% 1.15% 5985
    Canara Robecom Small Cap Fund - Direct 4 -24.36% .91% 291

    What should be time horizon to invest in above funds?

    For Large & Mid and Multip cap funds, the minimum investment time horizon should be 5 yeras. One can invest in these funds in any phase of market, preferably moderat or bear market.

    For Mid and Small cap funds, the minimum investment time horizon should be 5+ years. One should only start investing in these funds when market is not in bull phase, either market is moderate or has crashed recently.

    Should I invest lumpsum or SIP?

    Though the market has crashed heavily recently and it is recovering slowly however its very difficult to predict the market in next 6 months to 1 year.

    My personal opinion is that we should always invest in SIP mode, if not then spread your investment amount in 4-6 chunks and invest them in 4-6 months.

    Generally, we as retail investor jump in the market when we see crash and then realize that market is still going down and we start panicing. In these scenarios, we should not panic and take out our investment as our investment is for long term and it is almost impossible for the market to remain subdued in long term.

    Happy investing!

     

    Disclaimer: These funds are best as per my personal opinion and experiences. Please get in touch with reliable financial advisor before investing. Mutual fund investments are subject to market risks. Please read the offer document carefully before investing.

    Website disclaimer: The views, opinions, investment advices (if any) expressed by author on Sharefunda.com are their own and not that of the website or its management. Users are advised to contact certified financial advisor before making investment decisions.

    Submitted by PatientInvestor on Tuesday, April 14, 2020

    Patience doesn't cost anything but pays a lot in stock market!

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