Mutual funds have become a popular investment choice for individuals looking to grow their wealth and achieve their financial goals. In 2021, the mutual fund market has seen some exceptional performers. Here are the top five mutual funds of 2021 that you should consider investing in.
Mirae Asset Large Cap Fund:
Mirae Asset Large Cap Fund is one of the best-performing mutual funds in the large-cap category. It has given returns of over 50% in the past year, making it an attractive investment option. The fund invests in the top 100 companies in India, and its portfolio is well-diversified, making it a stable investment choice.
Axis Bluechip Fund:
Axis Bluechip Fund is another top-performing mutual fund in the large-cap category. It has given returns of over 45% in the past year and has consistently outperformed its benchmark index. The fund invests in blue-chip companies with a strong track record, making it a relatively safe investment option.
SBI Small Cap Fund:
SBI Small Cap Fund is one of the top-performing mutual funds in the small-cap category. It has given returns of over 100% in the past year, making it an attractive investment option for those looking for high returns. The fund invests in small-cap companies with high growth potential, making it a high-risk, high-reward investment.
ICICI Prudential Technology Fund:
ICICI Prudential Technology Fund is one of the best-performing mutual funds in the technology sector. It has given returns of over 75% in the past year, making it an attractive investment option for those looking to invest in the technology sector. The fund invests in companies that are leaders in the technology sector, making it a stable investment choice.
HDFC Balanced Advantage Fund:
HDFC Balanced Advantage Fund is one of the top-performing mutual funds in the balanced advantage category. It has given returns of over 40% in the past year, making it an attractive investment option for those looking for stable returns. The fund invests in a mix of equity and debt instruments, making it a relatively safe investment option.
Mutual funds are an excellent investment choice for individuals who want to grow their wealth over the long term. They allow investors to pool their money with other investors and invest in a diverse range of stocks, bonds, and other assets.
When choosing a mutual fund, it is important to consider several factors such as the fund’s past performance, its expense ratio, the fund manager’s experience, and the fund’s investment objective. The top-performing mutual funds of 2021 mentioned above have delivered strong returns, but it is important to remember that past performance does not guarantee future results.
Investors should also consider their own risk tolerance and investment goals when choosing a mutual fund. For example, if an investor has a low risk tolerance and wants to invest for the long term, a large-cap or balanced advantage fund may be a better option. On the other hand, if an investor is willing to take on higher risk for the potential of higher returns, a small-cap or technology fund may be more suitable.
It is important to note that mutual fund investments are subject to market risks and investors may lose money if the market does not perform well. Therefore, it is crucial to have a diversified portfolio that includes a mix of different types of mutual funds.
Another important factor to consider when investing in mutual funds is the expense ratio. The expense ratio is the fee that the fund charges to cover its operating expenses, such as administrative costs, management fees, and other expenses. The expense ratio is expressed as a percentage of the fund’s assets under management (AUM).
It is important to note that lower expense ratios do not necessarily mean better returns. However, higher expense ratios can eat into an investor’s returns over time. Therefore, it is important to consider the expense ratio when comparing mutual funds with similar investment objectives.
Another key factor to consider is the fund manager’s experience and track record. Experienced fund managers with a strong track record of delivering consistent returns are often better equipped to manage market fluctuations and make informed investment decisions.
Lastly, investors should also consider the fund’s investment objective when choosing a mutual fund. Some funds may have a growth-oriented investment objective, while others may have a value-oriented objective. Some funds may also invest in a specific sector or region, while others may be more broadly diversified.
Conclusion
When choosing a mutual fund, investors should consider various factors such as past performance, expense ratio, the fund manager’s experience, and the investment objective. Mutual funds can be an excellent investment choice for individuals looking to grow their wealth over the long term, but it is important to do thorough research and consult a financial advisor if necessary.
Other Related Blogs: Section 144B Income Tax Act
Frequently Asked Questions (FAQs)
Q.What is a mutual fund?
A mutual fund is a type of investment vehicle that pools money from multiple investors and uses it to invest in a diversified portfolio of stocks, bonds, or other assets. The fund is managed by a professional portfolio manager who makes investment decisions on behalf of the investors.
Q.How do mutual funds work?
Mutual funds work by pooling money from multiple investors and investing it in a diversified portfolio of stocks, bonds, or other assets. The fund manager makes investment decisions based on the fund’s investment objective and tries to generate returns for the investors.
Q.What are the benefits of investing in mutual funds?
The benefits of investing in mutual funds include diversification, professional management, convenience, liquidity, and potential for higher returns.
Q.What are the risks of investing in mutual funds?
The risks of investing in mutual funds include market risk, credit risk, interest rate risk, inflation risk, and liquidity risk.
Q.How do I choose a mutual fund?
When choosing a mutual fund, investors should consider factors such as the fund’s investment objective, past performance, expense ratio, fund manager’s experience, and risk level.
Q.What is the difference between a mutual fund and an ETF?
While mutual funds and ETFs are both investment vehicles that offer exposure to a diversified portfolio of assets, they differ in terms of how they are traded and priced. Mutual funds are priced at the end of the trading day, while ETFs are traded like stocks throughout the trading day.
Q.Can I lose money in a mutual fund?
Yes, mutual fund investments are subject to market risk and investors may lose money if the market does not perform well. However, a diversified portfolio of mutual funds can help mitigate risk and reduce the impact of market fluctuations.
Q.How do I invest in a mutual fund?
Investors can invest in mutual funds through a brokerage account, mutual fund company, or financial advisor. They can buy or sell mutual fund shares based on the fund’s net asset value (NAV).
