Best Mutual Funds To Invest in India 2023

Investing in mutual funds has become an increasingly popular choice among Indian investors, thanks to the potential for higher returns and diversification. With 2023 upon us, it’s time to explore the top mutual funds in India that can help you build a strong investment portfolio. In this comprehensive guide, we will discuss the best mutual funds to invest in, their performance, and why they deserve a place in your investment strategy.

1. Large Cap Mutual Funds:

Large-cap mutual funds primarily invest in companies with a significant market capitalization, ensuring stability and consistent returns. These funds are ideal for investors with a low-risk appetite who are looking for long-term capital appreciation.

A. HDFC Top 100 Fund

• Performance: 15% CAGR over the last five years
• Top Holdings: Reliance Industries, HDFC Bank, Infosys
• Why invest: Consistent performance and strong portfolio of large-cap stocks

B. ICICI Prudential Bluechip Fund

• Performance: 14% CAGR over the last five years
• Top Holdings: HDFC Bank, Infosys, Reliance Industries
• Why invest: Strong track record and a well-diversified portfolio

2. Mid Cap Mutual Funds:

Mid-cap mutual funds invest in companies with medium-sized market capitalization. They offer higher growth potential than large-cap funds while maintaining a moderate level of risk.

A. DSP Midcap Fund

• Performance: 18% CAGR over the last five years
• Top Holdings: IPCA Laboratories, Balkrishna Industries, Atul Ltd.
• Why invest: Consistent performance, exposure to high-growth sectors, and experienced fund management

B. Axis Midcap Fund

• Performance: 20% CAGR over the last five years
• Top Holdings: Avenue Supermarts, Crompton Greaves, PI Industries
• Why invest: Strong track record, well-diversified portfolio, and investment in quality mid-cap stocks

3. Small Cap Mutual Funds:

Small-cap mutual funds invest in companies with smaller market capitalization. They have the potential for higher returns but carry a higher level of risk.

A. SBI Small Cap Fund

• Performance: 22% CAGR over the last five years
• Top Holdings: Elgi Equipments, Navin Fluorine, V-Guard Industries
• Why invest: High growth potential and a strong portfolio of quality small-cap stocks

B. Kotak Small Cap Fund

• Performance: 19% CAGR over the last five years
• Top Holdings: Supreme Industries, Sheela Foam, Garware Technical Fibres
• Why invest: Consistent performance, investment in high-growth sectors, and a well-diversified portfolio

4. Debt Mutual Funds

Debt mutual funds invest in fixed-income securities like government bonds and corporate bonds. They are ideal for investors looking for a steady income and lower risk.

A. IDFC Corporate Bond Fund

• Performance: 8% CAGR over the last five years
• Top Holdings: Government bonds and high-quality corporate bonds
• Why invest: Stable returns, high credit quality, and strong fund management

B. ICICI Prudential All Seasons Bond Fund

• Performance: 7.5% CAGR over the last five years
• Top Holdings: Government bonds and high-quality corporate bonds
• Why invest: Diversified portfolio, low risk, and consistent performance

5. ELSS Mutual Funds

Equity-linked saving schemes (ELSS) are tax-saving mutual funds that allow investors to save on taxes under Section 80C of the Income Tax Act. These funds have a lock-in period of 3 years and invest primarily in equities.

A. Mirae Asset Tax Saver Fund

• Performance: 21% CAGR over the last five years
• Top Holdings: HDFC Bank, Reliance Industries, Infosys
• Why invest: Impressive performance, tax benefits, and a well-diversified portfolio

B. Axis Long Term Equity Fund

• Performance: 18% CAGR over the last five years
• Top Holdings: Bajaj Finance, TCS, Kotak Mahindra Bank
• Why invest: Consistent performance, tax savings, and exposure to high-growth sectors

6. Hybrid Mutual Funds

Hybrid mutual funds invest in a mix of equity and debt instruments, providing a balance between risk and returns. They are ideal for investors looking for diversification and moderate returns.

A. SBI Equity Hybrid Fund

• Performance: 13% CAGR over the last five years
• Top Holdings: HDFC Bank, Infosys, Reliance Industries
• Why invest: Balanced exposure to equity and debt, consistent returns, and strong fund management

B. ICICI Prudential Equity & Debt Fund

• Performance: 12% CAGR over the last five years
• Top Holdings: ICICI Bank, SBI, Bharti Airtel
• Why invest: Diversified portfolio, risk management, and steady performance

7. Sectoral Mutual Funds:

Sectoral mutual funds focus on specific sectors of the economy, allowing investors to capitalize on the growth potential of these industries. These funds may carry higher risk due to their concentrated nature but can offer higher returns if the chosen sector performs well.

A. Nippon India Pharma Fund

• Performance: 16% CAGR over the last five years
• Top Holdings: Sun Pharmaceuticals, Dr. Reddy’s Laboratories, Cipla
• Why invest: Exposure to the high-growth pharmaceutical sector and strong fund management

B. ICICI Prudential Technology Fund

• Performance: 25% CAGR over the last five years
• Top Holdings: Infosys, TCS, HCL Technologies
• Why invest: Investment in the rapidly growing technology sector and impressive performance

8. Index Mutual Funds

Index mutual funds replicate the performance of a specific stock market index, such as the Nifty 50 or the Sensex. These funds offer a passive investment strategy, providing returns that closely mirror the performance of the underlying index.

A. UTI Nifty Index Fund

• Performance: 14% CAGR over the last five years
• Top Holdings: HDFC Bank, Reliance Industries, Infosys
• Why invest: Low-cost exposure to the top 50 Indian companies and passive investment strategy

B. SBI Sensex Index Fund

• Performance: 13% CAGR over the last five years
• Top Holdings: Reliance Industries, HDFC Bank, Infosys
• Why invest: Diversification across top 30 companies in the Sensex and a passive approach

9. International Mutual Funds

International mutual funds invest in foreign markets, providing Indian investors with global diversification and the potential to capitalize on growth opportunities across the world.

A. Franklin India Feeder – Franklin U.S. Opportunities Fund

• Performance: 22% CAGR over the last five years
• Top Holdings: Amazon, Microsoft, Apple
• Why invest: Exposure to high-growth US companies and strong fund management

B. Edelweiss Greater China Equity Offshore Fund

• Performance: 20% CAGR over the last five years
• Top Holdings: Tencent Holdings, Alibaba Group, Taiwan Semiconductor
• Why invest: Diversification into the high-growth Chinese market and a well-diversified portfolio

10. SIP Investment Plans:

Systematic Investment Plans (SIPs) are a popular way to invest in mutual funds, allowing investors to invest a fixed amount at regular intervals, making it an ideal choice for those with a disciplined and long-term investment approach.

A. Mirae Asset Emerging Bluechip Fund (SIP)

• Performance: 23% CAGR over the last five years
• Top Holdings: HDFC Bank, Reliance Industries, Infosys
• Why invest: Strong performance, disciplined investment, and a well-diversified portfolio

B. Parag Parikh Long Term Equity Fund (SIP)

• Performance: 18% CAGR over the last five years
• Top Holdings: Alphabet, Amazon, HDFC Bank
• Why invest: Consistent returns, investment in Indian and global equities, and a long-term investment approach

With various mutual fund categories to choose from, understanding your investment goals and risk appetite is crucial in making the right choice. This guide provides you with a comprehensive list of the best mutual funds to invest in India in 2023, allowing you to make informed decisions and grow your investment portfolio.

11.Thematic Mutual Funds

Thematic mutual funds invest in stocks of companies that follow a specific theme or trend, such as infrastructure, consumption, or environment. They can offer potentially high returns if the chosen theme performs well but may carry higher risks due to their focused nature.

A. Aditya Birla Sun Life Digital India Fund

• Performance: 24% CAGR over the last five years
• Top Holdings: Infosys, TCS, HCL Technologies
• Why invest: Capitalizes on the growing digitalization trend in India and a well-constructed portfolio

B. SBI Magnum Global Fund

• Performance: 20% CAGR over the last five years
• Top Holdings: Balkrishna Industries, Pidilite Industries, Divi’s Laboratories
• Why invest: Investment in companies benefiting from global growth trends and strong fund management

12. Liquid Funds

Liquid funds are a type of debt mutual fund that invests in short-term money market instruments like treasury bills and commercial papers. They offer high liquidity, low risk, and moderate returns, making them suitable for parking surplus cash for short periods.

A. Axis Liquid Fund

• Performance: 6% CAGR over the last five years
• Top Holdings: High-quality money market instruments
• Why invest: Low risk, high liquidity, and consistent returns

B. Nippon India Liquid Fund

• Performance: 6% CAGR over the last five years
• Top Holdings: High-quality money market instruments
• Why invest: High liquidity, low risk, and steady performance

13. Quantitative Mutual Funds

Quantitative mutual funds utilize algorithms and data-driven models to make investment decisions. These funds rely on quantitative analysis, reducing human biases and providing investors with a systematic approach to investing.

A. DSP Quant Fund

• Performance: 15% CAGR since inception
• Top Holdings: HDFC Bank, Infosys, Reliance Industries
• Why invest: Data-driven investment strategy, reduced human biases, and a well-diversified portfolio

B. Quant Small Cap Fund

• Performance: 19% CAGR over the last five years
• Top Holdings: APL Apollo Tubes, KEI Industries, Elgi Equipments
• Why invest: Investment in high-growth small-cap stocks, systematic investment approach, and strong performance

14. Gold Mutual Funds

Gold mutual funds invest in gold and gold-related instruments, providing investors with exposure to the precious metal without the need to physically hold it. These funds can act as a hedge against inflation and economic uncertainties.

A. SBI Gold Fund

• Performance: 10% CAGR over the last five years
• Top Holdings: Physical gold and gold-related instruments
• Why invest: Hedge against inflation, diversification, and a store of value

B. Kotak Gold Fund

• Performance: 11% CAGR over the last five years
• Top Holdings: Physical gold and gold-related instruments
• Why invest: Diversification, protection against economic uncertainties, and consistent returns

In conclusion, the vast array of mutual fund options available in the Indian market caters to diverse investment needs and risk profiles. Whether you are a first-time investor or an experienced one, it is essential to research and analyze different mutual funds before making an investment decision. This comprehensive guide on the best mutual funds to invest in India in 2023 can serve as a solid foundation for building a robust and well-diversified portfolio.