Mutual funds are a popular investment tool for beginners in India. They provide a simple and affordable way to invest in a diversified portfolio of stocks, bonds, and other securities.
However, with so many mutual funds available in the market, it can be overwhelming for beginners to choose the best ones. In this article, we will look at the best mutual funds for beginners in India in 2023.
Before we delve into the list, let’s first understand what mutual funds are and how they work.
What are mutual funds?
A mutual fund is a type of investment vehicle that pools money from multiple investors and invests it in a diversified portfolio of stocks, bonds, and other securities. The portfolio is managed by a professional fund manager who makes investment decisions based on the fund’s investment objective and strategy.
How do mutual funds work?
When you invest in a mutual fund, you are essentially buying units of the fund. The value of each unit is determined by the net asset value (NAV) of the fund, which is calculated by dividing the total value of the fund’s assets by the number of units outstanding.
The NAV of the fund fluctuates based on the performance of the underlying assets. If the value of the assets goes up, the NAV goes up, and vice versa. The fund manager charges a fee for managing the fund, which is known as the expense ratio. This fee is deducted from the NAV of the fund.
Now that we have a basic understanding of mutual funds let’s look at the best mutual funds for beginners in India in 2023.
Axis Bluechip Fund
Axis Bluechip Fund is a large-cap mutual fund that invests in blue-chip companies with a proven track record of stable growth and profitability. The fund has consistently delivered high returns and has a low expense ratio of 1.77%.
The fund has a diversified portfolio of stocks, with the top holdings being companies such as HDFC Bank, ICICI Bank, and Reliance Industries. The fund has a minimum investment amount of Rs. 5,000 and is suitable for investors with a moderate risk appetite.
Mirae Asset Large Cap Fund
Mirae Asset Large Cap Fund is another large-cap mutual fund that invests in high-quality, large-cap companies. The fund has a proven track record of delivering high returns and has a low expense ratio of 1.77%.
The fund has a diversified portfolio of stocks, with the top holdings being companies such as HDFC Bank, ICICI Bank, and Infosys. The fund has a minimum investment amount of Rs. 5,000 and is suitable for investors with a moderate risk appetite.
SBI Small Cap Fund
SBI Small Cap Fund is a small-cap mutual fund that invests in small-cap companies with high growth potential. The fund has consistently delivered high returns and has a low expense ratio of 1.93%.
The fund has a diversified portfolio of stocks, with the top holdings being companies such as Carborundum Universal, Deepak Nitrite, and Indian Energy Exchange. The fund has a minimum investment amount of Rs. 5,000 and is suitable for investors with a high-risk appetite.
HDFC Hybrid Equity Fund
HDFC Hybrid Equity Fund is a hybrid mutual fund that invests in a mix of equity and debt securities. The fund has a proven track record of delivering high returns and has a low expense ratio of 1.93%.
The fund has a diversified portfolio of stocks and debt securities, with the top equity holdings being companies such as HDFC Bank, ICICI Bank, and Infosys. The fund has a minimum investment amount of Rs. 5,000 and is suitable for investors with a moderate risk appetite.
ICICI Prudential Equity and Debt Fund
ICICI Prudential Equity and Debt Fund is another hybrid mutual fund that invests in a mix of equity and debt securities. The fund has a proven track record of delivering high returns and has a low expense ratio of 1.96%.
The fund has a diversified portfolio of stocks and debt securities, with the top equity holdings being companies such as HDFC Bank, Reliance Industries, and ICICI Bank. The fund has a minimum investment amount of Rs. 1,000 and is suitable for investors with a moderate risk appetite.
Franklin India Smaller Companies Fund
Franklin India Smaller Companies Fund is a small-cap mutual fund that invests in small-cap companies with high growth potential. The fund has consistently delivered high returns and has a low expense ratio of 1.99%.
The fund has a diversified portfolio of stocks, with the top holdings being companies such as Tata Chemicals, Navin Fluorine International, and Vinati Organics. The fund has a minimum investment amount of Rs. 5,000 and is suitable for investors with a high-risk appetite.
Kotak Emerging Equity Fund
Kotak Emerging Equity Fund is a mid-cap mutual fund that invests in mid-cap companies with high growth potential. The fund has a proven track record of delivering high returns and has a low expense ratio of 1.96%.
The fund has a diversified portfolio of stocks, with the top holdings being companies such as Coromandel International, PI Industries, and Balkrishna Industries. The fund has a minimum investment amount of Rs. 5,000 and is suitable for investors with a high-risk appetite.
Aditya Birla Sun Life Tax Relief 96 Fund
Aditya Birla Sun Life Tax Relief 96 Fund is an equity-linked savings scheme (ELSS) that invests in a diversified portfolio of stocks with a focus on tax-saving. The fund has a proven track record of delivering high returns and has a low expense ratio of 1.89%.
The fund has a diversified portfolio of stocks, with the top holdings being companies such as HDFC Bank, ICICI Bank, and Infosys. The fund has a lock-in period of three years and is suitable for investors who want to save taxes while investing in the equity market.
Conclusion
Choosing the right mutual fund can be a daunting task for beginners in India. However, by considering factors such as the fund’s investment objective, past performance, and expense ratio, investors can make informed decisions about which mutual funds to invest in.
The above-mentioned mutual funds are some of the best mutual funds for beginners in India in 2023. These funds have a proven track record of delivering high returns and have a low expense ratio, making them ideal for beginners who want to start investing in the stock market.
It’s important to note that investing in mutual funds involves risk, and investors should carefully consider their investment objectives, risk appetite, and financial goals before investing. Investors should also consult with a financial advisor before making any investment decisions.