Exploring the Different Categories on Mutual Funds to Invest In
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60 Minutes
Introduction
Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. They exist to provide individuals with a convenient and professionally managed way to invest in financial markets. Many different types of mutual funds are available to provide investment options that fit the investment preferences of a large audience. This makes mutual funds one of the most versatile and flexible financial instruments. Let us better understand all the different types of mutual funds so that you can make investment decisions that are suited to your goals.
Types of Mutual Funds in the Market
Following are the various different types of mutual funds largely available in the Indian market:
1. Large Cap Funds
Large cap funds invest in companies with a large market capitalization. These companies are typically well-established and are considered relatively stable compared to smaller companies. Large cap funds aim for steady growth and are often suitable for conservative investors looking for stability in their portfolio.
| Fund Name | 3-Year Returns | 5-Year Returns | 10-Year Returns | AUM (in crores) |
|---|---|---|---|---|
|
HDFC Top 100 Fund
|
20.7%
|
18.7%
|
14.6%
|
25,775
|
|
UTI Mastershare Unit
|
19.8%
|
18.3%
|
13.9%
|
11,507
|
|
ICICI Prudential Bluechip Fund
|
23.4%
|
22.0%
|
17.3%
|
40,286
|
|
SBI Bluechip Fund
|
18.9%
|
17.1%
|
13.3%
|
27,898
|
|
Aditya Birla Sun Life Frontline Equity Fund
|
20.1%
|
18.2%
|
14.1%
|
19,563
|
|
Tata Large Cap Fund
|
19.4%
|
17.5%
|
13.7%
|
22,806
|
|
Axis Large Cap Fund
|
20.9%
|
18.9%
|
14.8%
|
18,427
|
2. Mid Cap Funds
Mid cap funds invest in companies with a medium market capitalization. These companies have more growth potential than large cap companies but come with a higher level of risk. Mid cap funds are suitable for investors with a moderate risk appetite who are looking for a balance between stability and growth.
| Fund Name | 3-Year Returns | 5-Year Returns | 10-Year Returns | AUM (in crores) |
|---|---|---|---|---|
|
Motilal Oswal Midcap Fund
|
24.60%
|
20.10%
|
15.50%
|
13,689
|
|
HDFC Mid-Cap Opportunities Fund
|
35.20%
|
24.40%
|
17.20%
|
7,872
|
|
Nippon India Growth Fund
|
20.50%
|
17.90%
|
14.20%
|
12,634
|
|
SBI Magnum Midcap Fund
|
23.30%
|
19.40%
|
15.20%
|
9,484
|
|
Mahindra Manulife Mid Cap Fund
|
22.50%
|
18.80%
|
14.90%
|
6,962
|
|
Edelweiss Mid Cap Fund
|
24.80%
|
20.90%
|
16.30%
|
6,277
|
|
Kotak Emerging Equity Fund
|
25.90%
|
21.80%
|
16.80%
|
5,872
|
|
Tata Midcap Growth Fund
|
21.90%
|
18.80%
|
14.90%
|
7,791
|
3. Small Cap Funds
Small cap funds invest in companies with a small market capitalization. These companies have the highest growth potential among the three categories but also carry the highest risk. Small cap funds are suitable for investors who are willing to take on a higher level of risk in exchange for the possibility of substantial returns.
| Fund Name | 3-Year Returns | 5-Year Returns | 10-Year Returns | AUM (in crores) |
|---|---|---|---|---|
|
HDFC Small Cap Fund
|
39.75%
|
18.98%
|
12.26%
|
22,496
|
|
Franklin India Smaller Companies Fund
|
32.25%
|
16.03%
|
9.74%
|
10,678
|
|
Nippon India Small Cap Fund
|
31.13%
|
15.17%
|
9.27%
|
9,998
|
|
Tata Small Cap Fund
|
33.50%
|
16.79%
|
10.24%
|
9,366
|
|
HSBC Small Cap Fund
|
31.19%
|
15.24%
|
9.41%
|
6,981
|
|
Sundaram Small Cap Fund
|
30.61%
|
14.87%
|
9.15%
|
7,594
|
|
Axis Small Cap Fund
|
30.59%
|
14.84%
|
9.11%
|
6,787
|
4. Flexi Cap or Multi Cap Funds
>Flexi cap funds, also known as multi cap funds, have the flexibility to invest across different market capitalizations based on market conditions. Fund managers can allocate assets to large, mid, or small cap stocks depending on their analysis of market trends. Flexi cap funds offer a balanced approach by leveraging opportunities across the spectrum of company sizes.
| Fund Name | 3-Year Returns | 5-Year Returns | 10-Year Returns | AUM (in crores) |
|---|---|---|---|---|
|
HDFC Flexi Cap Fund
|
21.28%
|
18.85%
|
15.62%
|
14,656
|
|
SBI Flexi Cap Fund
|
21.25%
|
18.79%
|
15.61%
|
14,114
|
|
Canara Robeco Flexi Cap Fund
|
20.98%
|
18.52%
|
15.40%
|
9,401
|
|
UTI Flexi Cap Fund
|
21.11%
|
18.65%
|
15.52%
|
14,999
|
|
Aditya Birla Sun Life Flexi Cap Fund
|
20.69%
|
18.28%
|
15.23%
|
8,737
|
|
Kotak Flexi Cap Fund
|
21.65%
|
19.14%
|
15.79%
|
9,869
|
|
Motilal Oswal Flexi Cap Fund
|
21.13%
|
18.67%
|
15.53%
|
11,053
|
5. Debt Funds
Debt funds invest in fixed-income securities like government and corporate bonds. These funds are considered less risky compared to equity funds and are suitable for investors who prioritise capital preservation and generate regular income.
| Fund Name | 3-Year Returns | 5-Year Returns | 10-Year Returns | AUM (in crores) |
|---|---|---|---|---|
|
SBI Ultra Short Term Fund
|
5.26%
|
5.63%
|
6.33%
|
2,41,093
|
|
Aditya Birla Sun Life Money Market Fund
|
5.18%
|
5.55%
|
6.25%
|
2,94,952
|
|
HDFC Liquid Fund
|
5.24%
|
5.61%
|
6.31%
|
2,30,847
|
|
ICICI Prudential Liquid Fund
|
5.17%
|
5.54%
|
6.24%
|
1,62,812
|
|
Kotak Liquid Fund
|
5.21%
|
5.58%
|
6.28%
|
1,48,825
|
6. Hybrid Funds
Hybrid funds, also known as balanced funds, invest in a mix of both equities and fixed-income instruments. They offer a diversified portfolio within a single fund and are suitable for investors seeking a balanced approach between risk and returns.
| Fund Name | 3-Year Returns | 5-Year Returns | 10-Year Returns | AUM (in crores) |
|---|---|---|---|---|
|
HDFC Balanced Advantage Fund
|
15.04%
|
13.21%
|
11.02%
|
1,26,157
|
|
Mahindra Manulife Aggressive Hybrid Fund
|
23.06%
|
19.82%
|
15.78%
|
85,225
|
|
Kotak Equity Hybrid Fund
|
22.53%
|
19.39%
|
15.52%
|
90,939
|
|
Edelweiss Aggressive Hybrid Fund
|
22.41%
|
19.27%
|
15.45%
|
69,110
|
|
Aditya Birla Sun Life Dynamic Equity Fund
|
21.42%
|
18.43%
|
14.78%
|
92,392
|
|
ICICI Prudential Balanced Advantage Fund
|
19.39%
|
16.81%
|
13.66%
|
1,59,542
|
|
Birla Sun Life Focused Equity Fund
|
22.10%
|
18.99%
|
15.25%
|
72,542
|
|
Tata Balanced Fund
|
21.07%
|
17.99%
|
14.34%
|
95,391
|
How to Choose the Right Mutual Fund?
Choosing the right mutual fund requires careful analysis and consideration of various factors:
- Investment Goals: Clearly define your investment goals. Are you looking for capital appreciation, regular income, or a combination of both? Your goals will help determine the type of mutual fund that aligns with your objectives.
- Risk Tolerance: Assess your risk tolerance. Different categories of mutual funds carry varying levels of risk. Consider your comfort level with market fluctuations and potential losses.>
- Performance History: Evaluate the historical performance of the mutual fund over different market cycles. Look for consistent performance and how the fund has performed compared to its benchmark index.
- Expense Ratio: The expense ratio is the annual fee charged by the fund to cover operating expenses. Lower expense ratios can have a positive impact on your returns over time.
- Fund Manager Expertise: Research the fund manager’s track record and experience. An experienced and skilled fund manager can play a crucial role in the fund’s success.
- Portfolio Holdings: Review the fund’s portfolio holdings to understand the types of securities it invests in. Ensure that the portfolio aligns with your investment goals and risk tolerance.
- Exit Load and Taxes: Consider any exit loads (fees for withdrawing early) associated with the fund. Additionally, understand the tax implications of investing in mutual funds.
Conclusion
Mutual funds offer a versatile landscape for investors, spanning diverse categories that suit various goals and risk levels. From stability to growth and balance, each category has unique attributes. Evaluating your objectives, risk tolerance, performance history, costs, and management expertise is key. As you delve into large, mid, small, flexi cap, debt, and hybrid funds, harness this knowledge to guide your investment choices. Mutual funds are more than figures; they’re pathways to aligning aspirations with market potential. Armed with this insight, confidently embark on your investment journey and work toward your financial aspirations.
Loan in
60 Minutes
Introduction
Types of Mutual Funds in the Market
How to Choose the Right Mutual Fund?
Conclusion
