Investing in mutual funds has been one of the most popular investment options in India. Mutual funds offer an easy and convenient way to invest in the stock market and other assets without requiring a lot of financial knowledge or expertise. However, with so many options available, it can be challenging to choose the right mutual fund to invest in. In this blog, we’ll discuss some high-return mutual funds in India in 2021.
Introduction to mutual funds
Before we dive into the high-return mutual funds in India, let’s first understand what mutual funds are. A mutual fund is a type of investment vehicle that pools money from multiple investors and invests that money in a variety of assets such as stocks, bonds, and commodities. The returns earned from these investments are then distributed among the investors in proportion to their investment.
Why invest in mutual funds?
Investing in mutual funds has several advantages. Here are a few reasons why investing in mutual funds can be a good option for you:
- Professional management: Mutual funds are managed by professional fund managers who have years of experience in the financial market. They make informed investment decisions based on market trends, research, and analysis.
- Diversification: Investing in mutual funds allows you to diversify your portfolio. Mutual funds invest in a variety of assets, reducing your risk exposure and providing better returns.
- Low cost: Mutual funds have lower costs compared to other investment options like stocks or bonds. This makes them an affordable option for investors.
High-return mutual funds in India 2021
Now that you understand the benefits of investing in mutual funds, let’s take a look at some high-return mutual funds in India in 2021.
- Axis Bluechip Fund: Axis Bluechip Fund is a large-cap fund that invests in blue-chip companies with a proven track record. It has generated a return of 31.72% in the last year.
- Mirae Asset Emerging Bluechip Fund: Mirae Asset Emerging Bluechip Fund is a mid-cap fund that invests in emerging companies with high growth potential. It has generated a return of 49.66% in the last year.
- SBI Small Cap Fund: SBI Small Cap Fund is a small-cap fund that invests in companies with a market capitalization of less than Rs. 500 crore. It has generated a return of 92.73% in the last year.
- Kotak Emerging Equity Fund: Kotak Emerging Equity Fund is a mid-cap fund that invests in companies with a market capitalization of less than Rs. 10,000 crore. It has generated a return of 52.21% in the last year.
- HDFC Mid-Cap Opportunities Fund: HDFC Mid-Cap Opportunities Fund is a mid-cap fund that invests in companies with a market capitalization between Rs. 500 crore to Rs. 10,000 crore. It has generated a return of 53.63% in the last year.
Factors to consider before investing in mutual funds
While high returns are a key factor in choosing a mutual fund, there are several other factors you should consider before investing:
Risk tolerance: It is essential to understand your risk tolerance and choose a mutual fund that aligns with your investment goals and risk tolerance.
Fund manager: The fund manager’s experience, track record, and investment philosophy play a crucial role in the fund’s performance. It is important to research the fund manager’s credentials before investing in a mutual fund.
Expense ratio: Mutual funds charge a fee for managing your investment. The expense ratio is the annual fee charged by the mutual fund, expressed as a percentage of your investment. A lower expense ratio can have a significant impact on your investment returns over the long term.
Fund performance: It is important to look at the mutual fund’s past performance to get an idea of its potential returns. However, past performance is not a guarantee of future returns.
Investment objective: Each mutual fund has a specific investment objective, such as investing in large-cap stocks, mid-cap stocks, or debt securities. It is important to choose a mutual fund that aligns with your investment objective.
Conclusion
Mutual funds are an excellent investment option for investors looking to diversify their portfolio and earn higher returns. However, it is important to do your research and consider various factors before investing in a mutual fund. High-return mutual funds in India in 2021, such as Axis Bluechip Fund, Mirae Asset Emerging Bluechip Fund, SBI Small Cap Fund, Kotak Emerging Equity Fund, and HDFC Mid-Cap Opportunities Fund, have performed well in the past year. But, it is always advisable to consult a financial advisor before making any investment decisions.
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Frequently Asked Questions (FAQs)
What is a mutual fund?
A mutual fund is an investment vehicle that pools money from multiple investors and invests that money in a variety of assets such as stocks, bonds, and commodities. The returns earned from these investments are then distributed among the investors in proportion to their investment.
What are the benefits of investing in mutual funds?
Investing in mutual funds has several advantages, including professional management, diversification, lower costs, and potential for higher returns.
How do I choose the right mutual fund to invest in?
Before investing in a mutual fund, you should consider factors such as your investment goals, risk tolerance, fund manager’s experience, expense ratio, and past performance.
What is the minimum investment required to invest in a mutual fund?
The minimum investment required to invest in a mutual fund varies by fund and can range from as low as Rs. 500 to as high as Rs. 5,000.
How do mutual funds generate returns?
Mutual funds generate returns through capital gains (when the fund’s assets increase in value) and dividends (when the companies in the fund pay out dividends).
What is the difference between a growth and value mutual fund?
A growth mutual fund invests in companies that have high growth potential, while a value mutual fund invests in companies that are undervalued by the market.
What is an expense ratio?
An expense ratio is the annual fee charged by a mutual fund for managing your investment. It is expressed as a percentage of your investment.
Can I invest in mutual funds online?
Yes, most mutual fund companies offer online investment options through their websites or mobile apps.
Are mutual funds safe investments?
Mutual funds are subject to market risks and are not entirely safe investments. However, investing in mutual funds can provide diversification, which can reduce risk exposure.
Can I withdraw my investment in a mutual fund at any time?
Yes, you can withdraw your investment in a mutual fund at any time. However, some mutual funds may have a minimum holding period or an exit load (a fee charged for early withdrawals).
