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

Planning to invest in small cap funds? Spread your risk via SIPs

Valuations have become cheaper, but investors should have 5-7 year horizon, say wealth advisors

Wealth managers are advising investors keen on looking at battered small cap shares to start systemic investment plans (SIP) in schemes that bet on these shares. Many of the small cap stocks have tumbled 50-70 per cent since January 2018, resulting in their valuations becoming cheaper; but analysts rule out an immediate broad-base revival with earnings growth showing no signs of recovery. SIPs in small cap mutual fund schemes would help investors spread their risk over a period of time.

“The sharp drawdown in small cap funds, is a good opportunity to add small cap funds. They can accumulate with a 5-7 years horizon,” says Deepak Challani, head -- third party products at Prabhudas Lilladher

Small cap funds have disappointed investors in the recent past. In the past one year, the category has lost 18.76 per cent, as per data from Value Research. The category has gained 2.2 per cent in the last three years and risen 12.96 per cent in 10 years. The Sensex has lost 2 per cent in the last one year and gained 10.43 per cent in three years. With the S&P BSE Small Cap Index losing 39 per cent from its peak of January 2018, fund managers say there is scope to pick potential winners.

“The selling pressure provides an opportunity for bottom-up stock picking, as this reflects a correction in the valuation multiples rather than any significant reduction in earnings profile for quality companies,” said Navneet Munot, ED, SBI Mutual Fund. “For retail investors, taking exposure via the SIP route is the ideal way to approach the current scenario as it cushions them against any knee jerk reaction in the market.”

A research note by SBI Mutual showed that 83 per cent of the stocks forming part of the S&P BSE Small Cap index are now down more than 30 per cent from their peak prices in the last 18 months. The note said that whenever the small cap index corrects more than 30 per cent, it bounces back strongly and has delivered 20 per cent on a compounded basis over the next three years.

However, distributors believe given that corporate earnings are slow to come back, investors should be in no hurry to invest, and should build their portfolio slowly over a period of time.

Some financial planners said investors should wait for the economic cycle to recover before investing in small caps. “Once you see a consistent recovery through better monthly data for at least two months in segments like auto, cement and flight bookings, you could opt for investments in such funds,” says Jignesh Shah, founder capital advisors.