Mutual Funds, in a nutshell
A mutual fund is created by an Asset Management Company pooling institutional and retail investors’ investments into equities, stocks, bonds, etc.
Investors in turn get units of the fund based on the value of their investment.
NAV:
NAV or net asset value is the market price of the fund. Like how shares have a share price, mutual funds have a NAV.
The Best Mutual Funds For 2022 – How to Pick One?
Three factors – investor’s objectives, understanding of the risk, and scope of investment play a significant role in determining the funds to be picked.
- Purpose of the Investment: Each plan is distinct from the others, serving a particular goal that must align with the investor’s objectives, strategy, and ability to absorb risk. Hence all the relevant information about the scheme, its asset allocation, purpose, and strategy should be read.
- Fund Manager’s Performance: An investor should watch the fund’s performance during market peaks as well as lows. A steady return during market downturns demonstrates competent fund management.
- Charges or the Expense Ratio: The annual charge for managing an investor’s funds. A fund with a lower expense ratio should be picked in comparison to funds in the same portfolio.
- Track record of the fund: An investor must review the track of a fund before finalising.
We are able to list out 5 best rated Mutual Funds for your review *:
- Axis Blue-Chip Fund (Growth)
Type: Equity Large Cap
NAV as on Oct 14: ₹ 43.23
5 Year Combined Annual Growth Rate (CAGR): 12%
- Mirae Asset Emerging Blue-Chip Fund (Growth)
Type: Equity Large & Mid Cap
NAV as on Oct 14: ₹ 93.434
5 Year Combined Annual Growth Rate (CAGR):13.7%
- Nippon India Small Cap Fund (Growth)
Type: Equity Small Cap
NAV as on Oct 14: ₹ 91.0502
5 Year Combined Annual Growth Rate (CAGR): 17.3%
- SBI Focused Equity Fund (Growth)
Type: Equity Focused
NAV as on Oct 14: ₹ 228.9906
5 Year Combined Annual Growth Rate (CAGR): 13.3%
- SBI Small Cap Fund (Growth)
Type: Equity Small Cap
NAV as on Oct 14: ₹ 114.2839
5 Year Combined Annual Growth Rate (CAGR): 17.3%
Finally, some benefits of Mutual Funds to help you
- Mutual funds can be redeemed whenever needed enabling flexible investment and withdrawal terms.
- A diversified portfolio lowers risk for investors and minimises any fluctuation.
- An experienced fund manager will ensure investors make a profit.
- Mutual funds are available through varied channels under AMCs and fund houses’ supervision.
- Better returns in comparison to other investment plans such as fixed deposits, PPF, NSC, etc.
- Investments in ELSS funds help in tax reduction.
- Beginning with as little as Rs 500, an investor can proceed based on his/her income and expenses.