What are the Best Mutual Funds to Invest in India?

Investing your hard-earned money is a crucial decision that requires careful consideration and research. When it comes to investing, there is one instrument that everyone always recommends- no matter the investment amount or goal- mutual funds. Accordingly, let us discuss the best mutual funds to invest in this year so that you can achieve your maximum investment potential.

Mutual funds are extremely popular in the arena of investments because they offer a diversified and professionally managed approach, making them an attractive option for both new and experienced investors. But why exactly are mutual funds one of the best investment mutual funds and why should you consider investing in them?

Why Invest in Mutual Funds?

Mutual funds offer a plethora of heavy-weight benefits that make them a worthwhile investment. Here are some of the most compelling reasons why investing in mutual funds is always a good idea:

  1. Diversification: Mutual funds pool money from multiple investors to invest in a diversified portfolio of assets, such as stocks, bonds, and other securities. This diversification helps spread risk across different investments, reducing the impact of poor performance by any single asset on your overall portfolio.
  2. Professional Management: Experienced fund managers handle the day-to-day investment decisions for mutual funds. Their expertise and research-driven strategies can potentially lead to better investment choices, especially for individuals who may not have the time or knowledge to manage their investments actively.
  3. Accessibility: Mutual funds offer a relatively low barrier to entry, allowing investors to start with a modest amount of money. This accessibility makes them an attractive option for individuals looking to begin investing without a substantial upfront investment.
  4. Liquidity: Most mutual funds are highly liquid, meaning you can buy or sell your fund units on any business day. This flexibility provides you with the ability to access your invested money relatively quickly compared to other investment options like real estate or certain fixed-term deposits.
  5. Variety of Investment Options: Mutual funds come in a wide range of categories, including equity funds, debt funds, hybrid funds, sector-specific funds, and more. This variety allows you to choose funds that align with your investment goals, risk tolerance, and time horizon.
  6. Automatic Reinvestment: Many mutual funds offer the option of automatic reinvestment of dividends and capital gains. This means any earnings generated by the fund are automatically reinvested to purchase additional units, helping to compound your returns over time.
  7. Regulation and Transparency: Mutual funds are regulated by market authorities and are required to disclose their portfolios regularly. This transparency provides investors with insights into the holdings and performance of the fund, allowing for informed decision-making.
  8. Cost-Efficiency: Mutual funds benefit from economies of scale. The costs associated with purchasing and managing a diversified portfolio are spread across all investors in the fund, reducing the overall cost to individual investors. However, it’s important to consider the fund’s expense ratio when evaluating costs.
  9. Flexibility: Mutual funds offer flexibility to investors by providing options for different investment goals, risk profiles, and investment durations. You can choose funds that suit your specific financial objectives and adapt your portfolio as your circumstances change.
  10. Tax Benefits: Some mutual funds, such as equity-linked savings schemes (ELSS), offer tax benefits under certain sections of the tax code. Additionally, capital gains tax is applied only when you sell your mutual fund units, allowing for potential tax-efficient strategies.
  11. Automatic Portfolio Rebalancing: Fund managers regularly review and adjust the fund’s holdings to maintain the desired asset allocation. This ensures that the portfolio remains in line with the fund’s investment objectives, saving you the effort of manual rebalancing.

Best Mutual Funds for Investment in India

Now, coming to the point, what are some of the best mutual fund plans to invest in India? Here’s a list of some of the best performing mutual funds in India, along with their respective expected returns.

Fund Name Fund Category 1-year Return 3-year Return 5-year Return
Mirae Asset Large Cap Fund
Large Cap
Aditya Birla Sun Life Frontline Equity Fund
Large Cap
Nippon India Bluechip Fund
Large Cap
SBI Magnum Midcap Fund
Mid Cap
Parag Parikh Long-Term Equity Fund
Flexi Cap
Quant Small Cap Fund Direct Plan-Growth
Small Cap
Kotak Mahindra Small Cap Fund Direct- Growth
Small Cap
SBI Magnum Gilt Fund Direct-Growth
Debt Fund

Remember, you can always mix-and-match your investment according to your risk appetite, preferences, and investment goals. For instance, if you want steady long-term growth, then the debt funds and large-cap funds are yours for your taking. However, if you want to venture into riskier, more rewarding territories, then you should try investing in small- and mid-cap funds.

Are Mutual Funds Better than Other Investments?

Sure, mutual funds are an evergreen avenue of investment. But so are gold and real estate and other investment options. What advantages do mutual funds offer over other assets?

Aspect Mutual Funds Stocks Fixed Deposits Gold Real Estate
Offers instant diversification
Individual stock investments
Limited diversification
Diversification through gold-related assets
Limited diversification
Professional Management
Managed by experienced professionals
Self-directed or professional management
No active management
Managed by experts
Self-management or property management
High liquidity, easy to buy and sell
High liquidity, but market-dependent
Lower liquidity, fixed terms
Higher liquidity through gold funds
Lower liquidity, time-consuming transactions
Varies by fund type (low to high risk options)
High risk due to individual stocks
Low risk due to fixed rates
Price volatility and market risk
Market fluctuations and location risk
Potential for varied returns based on fund type
Potentially high returns over the long term
Relatively lower returns
Historical store of value, potential gains
Potential for rental income, property value
Risk and returns vary by fund category
Market volatility can impact stability
Capital protection, stable returns
Considered a hedge against uncertainties
Offers stable returns, potential rental income
Tax Implications
Taxation based on fund type and holding period
Taxation on gains and dividends
Interest income taxed
Capital gains tax on profits
Capital gains tax, rental income taxed
Easily accessible with various investment sums
Requires market knowledge and research
Easily accessible with low entry amounts
Can be accessed through gold funds
Involves significant upfront investment
No physical ownership of underlying assets
Direct ownership of company shares
No physical asset ownership
Tangible ownership through gold holdings
Tangible asset ownership
Additional Considerations
Offers diversification, varying risk levels
Requires research and market monitoring
Predictable returns, lower risk
Historical store of value, hedge against inflation
Requires ongoing maintenance and management

Note that when it comes to investment, diversification is the name of the game. Within and outside of mutual funds, you should always diversify your investments to ensure balanced growth without any major and unnecessary losses


In conclusion, the best mutual fund for you depends on your financial goals, risk tolerance, and investment preferences. By understanding the different categories of mutual funds, conducting thorough research, and considering your own financial situation, you can make informed decisions that align with your objectives. Remember that all investments carry risks, so diversification and a long-term perspective remain key to successful investing.

Amit Arora


I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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