Top Mutual Funds To invest in India in [2021] 


In India, the Stock exchange board of India has more than 5000 companies listed. In that top 30 by BSE is called Sensex and the top 50 by NSE is called nifty. 

 The top 100 companies are called large-cap, 100 – 250 are called midcap, and companies below that are called small-cap. 

 Large caps are the safest but the returns will be average whereas small caps are the riskiest where the returns can go very high or you might even incur a loss. 

 In order for it to be balanced, you can invest in the ratio of 30 : 50: 20 in large, mid (or multi), and small which is usually recommended if you’re very young and okay to take a risk. Otherwise, adjust your ratio and allocate more to a large-cap. 

 Sometimes the company shares you buy will perform very well and sometimes it performs poorly. 

In order to balance it, you’ll invest in 4 companies that are very strong with high Market capital and other 4 companies which are risky, and 2 companies that are very risky to get good returns. 

 Now you’ll also have to see if you have covered all industries such as FMCG, Finance sector, industrial sector, energy sector, etc so your portfolio becomes even safer. 

 It becomes very hard for you to do so much research with a full-time job. So the best way for you is to choose a mutual fund that will be taken care of by a manager and you’ll pay a small commission in return. 

 The fund will be split across to make sure you’ll have a good return and also you can just set up and autopay through apps like Groww and completely forget about it. 

 There are two kinds of funds –  active funds and passive funds? 

 An actively managed investment fund is a fund in which a manager or a management team makes decisions about how to invest the fund’s money. A passively managed fund, by contrast, simply follows a market index. It does not have a management team making investment decisions.

 Before we begin let’s get into some technicalities. 

These are the four important terms you need to know 

1. Expense Ratio :

 Expense ratios indicate how much the fund charges in terms of percentage annually to manage your investment portfolio. If you invest Rs. 30,000 in a fund that has an expense ratio of 1%, then it means that you need to pay Rs. 300 to the fund house/ manager to manage your money.

The lower it is, the better it is for you.  

2. AUM 

 AUM or Assets Under Management refers to the total market value of the assets that are being managed by the mutual fund.

 If it’s between 1000 to 5000 crores INR, it is said to be good. 


 CAGR is a representation of the compounded growth of your investments. It shows the fund’s average annual growth or declines over a specific period of time.

 4. NAV

 Net asset value (NAV) represents a fund’s per share market value. The money that you invest will be in terms of units. Unlike shares, you can buy unit infractions. This is one more advantage of mutual funds.  

If you want to know more, you can check out here

Now let’s look into some of the top mutual funds which you should invest in 2021  

1. Large Cap 

 For large-cap, you can invest in HDFC index Sensex Direct plan growth which has a very low ratio of 0.1 %. 

They are the number one in India in terms of total assets. 

These will have holdings in the top 30 companies of Sensex according to their percentage share. 

For example, if Reliance has 11.76% and TCS has 6.45% in Sensex and if you invest 100 Rupees, 11.76 rupees goes to Reliance and 6.45 rupees goes to TCS, and the rest of the money is distributed amongst the other companies that are present. 

2. Multi cap 

Multi-Cap includes stocks of companies with different market capitalization. It includes large-cap, mid-cap, small-cap, and even US equity sometimes. 

For multi-cap invest in Parag Parikh Flexi cap fund direct growth which has holdings in US companies such as Google, Amazon, Microsoft, etc with an expense ratio of 0.99% 

Invesco India multi-cap fund Direct growth has an expense ratio of 0.91% and has given good returns over the years. 

3. Midcap 

For mid-cap invest in axis midcap direct plan growth which has an expense ratio of 0.54%.

4.  Small cap 

For small-cap invest in Axis small-cap fund direct growth which has an expense ratio of 0.1 % 

Remember small-cap Funds become risky if they cross 5000 crores AUM since fund managers will find it hard to allocate such large funds in small-cap companies. 

5. Tax saving fund – ELSS

Mirae Asset Tax saver fund direct growth has an expense ratio of 0.25 %. It has a locking period of 3 years and your returns will be taxed at 10%. 

India is growing – therefore active funds can beat passive funds while not possible in the United States


What does this mean for you? 

Does it mean you have to invest in top mutual funds of the year every over a long period of time? 

It has so happened that the mutual fund which comes in top rank goes to as low as 75 ranks in the very next year. 

So should you invest in the top mutual funds of the particular year? 

With the study conducted by ET money, if you had invested in the top 3 performing mutual funds from 2011 to 2020, it would have only given you an annual return of 9.5 % 

So should you sell the mutual fund once it goes down? 

This is a trading mentality and even if you do, you would have got an annual return of 12. 6 % between 2011 to 2020. 

And if you had invested a fixed amount every year from 2011 to 2020 in the nifty, it would have given you an annual return of 12.9 %. 

Disclaimer: Past performance is no guarantee of future results.

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