Best mutual funds to invest in 2019

Our list of top mutual fund schemes that you may consider to invest in 2019.

Which are the best mutual funds to invest? Most investors have this query before they start investing in mutual funds. Curiously, it is the first question most investors ask or type on a search engine. Sadly, it is also the main reason why many investors keep on postponing their investments forever.

Even when the online search shows some results, most investors don't proceed further. They are still unsure about the dependability of the list. That is why we at ETMutualFunds.com thought about putting together a list of mutual fund schemes to help investors who are struggling with this question.

Here is ETMutualFunds.com ’s list of best or top mutual fund schemes that you may consider investing in 2019. We have included almost every important category of schemes in our recommendation list: equity schemes, hybrid schemes, and debt schemes. You can scroll down to take a look at the complete list.
However, before proceeding further, here are a few pointers you must keep in mind. One, you should always choose your mutual funds based on your financial goals, investment horizon, and risk profile.

If your goals need to be met within less than five years, you may consider investing in debt mutual fund schemes. If you are investing for long-term goals of over five years, you may consider hybrid or equity schemes. You should invest in riskier options like mid cap and small cap mutual fund schemes only if you have a longer investment horizon of seven to 10 years.

Note, it is extremely important to choose a debt mutual fund scheme that matches your investment horizon. Even while choosing equity mutual fund schemes, you should not overlook this aspect. For example, you should have a minimum investment horizon of five to seven years to invest in an equity scheme. However, if you are investing in mid cap or small cap schemes, you should have a longer investment horizon (seven to 10 years).
However, you should keep in mind that all debt or hybrid or equity mutual funds do not have the same element of risk. Some schemes are riskier than the others. For example, overnight funds and liquid mutual fund schemes are the least risky among debt mutual funds, whereas credit risk schemes can be highly risky.

Similarly, a small cap scheme is riskier than a largecap or multicap scheme.

That is why it is extremely important for investors to keep their risk appetite in mind while choosing a mutual fund scheme. Any mismatch could cause a lot of heartburn later. If you do not have the appetite for the risk associated with your investments, you may find it extremely difficult to hold on to your investments during trying times.

Here is the list of best mutual fund schemes across categories:

Equity mutual funds

Equity: Large Cap
Axis Bluechip Fund
Canara Robeco Bluechip Equity

Equity: Multi Cap
Motilal Oswal Multicap 35 Fund
Kotak Standard Multicap Fund

Equity: Mid Cap
Invesco India Midcap Fund
L&T Midcap Fund

Equity: Large and Mid Cap
Sundaram Large and Midcap Fund
Invesco India Growth Opportunities Fund

Equity: Small Cap
L&T Emerging Businesses Fund
HDFC Small Cap Fund

Equity: ELSS
Aditya Birla Sun Life Tax Relief 96
Invesco India Tax Plan

Debt mutual funds:
Debt: Corporate Bond
ICICI Prudential Corporate Bond Fund

Debt: Dynamic Bond Fund
Franklin India Dynamic Accrual Fund
Kotak Dynamic Bond Fund

Debt: Gilt
ICICI Prudential Gilt Fund
Reliance Gilt Securities

Debt: Medium Duration
Axis Strategic Bond Fund
Franklin India Income Opportunities

Debt: Short Duration

Hybrid mutual funds
Hybrid: Aggressive Hybrid
SBI Equity Hybrid Fund
Mirae Asset Hybrid Equity

Hybrid: Conservative Hybrid
ICICI Prudential Regular Savings Fund
UTI Regular Savings Fund

Hybrid: Arbitrage
Kotak Equity Arbitrage Fund
Reliance Arbitrage Fund

When equity mutual funds offer negative returns, here’s what you do

The need of the hour is to stay insulated from the panic in the market.

The domestic equity market has been volatile over for quite some time now, and there have been numerous reasons for this - trade wars, liquidity crisis, economic slowdown, global recession risk and the list goes on. Given the volatile movement in equities, portfolios of many mutual fund investors, especially those who ventured into the market recently, are in the red, reflecting negative returns.

But even in such an environment, we are witnessing a steady investing behaviour, as highlighted by monthly SIP inflows. Retail investors put Rs 8,324 crore into the mutual funds through in July 2019, clocking the highest monthly SIP inflows ever.

At the same time, a few investors have turned cautious, as they are not used to seeing their portfolios going into red.

Warren Buffet once said, “the stock market is a device for transferring money from the impatient to the patient.” Markets tend to reward those investors handsomely who show conviction and stay invested. Investors must realise this is not the first time markets are correcting. In fact, market corrections are crucial for healthy uptrends in the times ahead.

The equity market has seen much more hiccups in financial and economic markets, including but not limited to the Harshad Mehta scam, Satyam saga, Mumbai terror attacks, Kargil War and 2008 global recession, but the rebound has always been stronger.

No wonder, S&P BSE Sensex has generated around 16 per cent returns CAGR for investors since its inception 40 years back, absorbing all such financial shocks.

The need of the hour is to stay insulated from the panic in the market and continue to stay invested. If you decide to redeem your investment at currently prevailing lower valuations, you are giving away your potential returns to another investor.

The market is currently trading at relatively lower valuations compared with those seen some time back. While it is not a good feeling to see portfolio valuations trend south, investors should focus on grabbing this opportunity to increase their investment exposure at attractive valuations, instead of thinking about temporary loss in their portfolios.

Since similar investments will now help you get a more shares at lower prices, it will help average out the cost of investment and equip you with the potential of higher growth when the market rebounds.

Staying away from the market in volatile times can cause a permanent deferral of investing, as volatility comes naturally to equity investing. As such, it is always desirable to make friends with it, rather than fearing it.

Dynamic asset allocation funds can help you maintain an active asset allocation for your portfolio, suiting current valuations and market sentiment. Following the simple investing principle of “buy low, sell high”, regular profits can be booked on investments trading at higher valuations and where the money is invested in an asset class and security at relatively inexpensive valuations.

Even when you stay invested in mutual funds, valuation-based portfolio churning by fund managers can help generate better returns for investors. As such, staying dynamic with asset allocation through asset allocation funds can be a great idea to turn the volatility wave in your favour.

Opening a mutual fund SIP can be another way of eliminating emotional bias from your investing journey. Since investments continue to be made irrespective of the market direction, investors continue to move towards their financial goals effortlessly. While negative returns might not be a desirable feeling to have in your portfolio, the long-term outlook for the market continues to be positive. As such, it is just a matter of time before your portfolio turns from red into green.

These are the times when your confidence in the market gets tested. Don’t let short-term market movements deviate you from the route to achieve your financial goals.