Mutual funds are good investment products for people who are not risk-averse. Today we can check out the top 10 best performing mutual funds in India for SIP in 2016-17.
Remember that I did not just take past performance into consideration to rank the top 10 best mutual funds.
I also listed them based on how they can perform and how safe the investment will be. Only time will tell if my assessment is right.
These funds I expect to be in the top mutual fund performers though some other funds may/may not beat them. But that is impossible to tell now and can only be known in hindsight.
You can invest capital in mutual funds to save tax or get tax concessions and also to grow wealth.
These funds must not destroy capital in the long run but at same time must provide you high inflation beating returns in the long run(5 years or more).
For someone who is warming up to the investment game, choosing the right mutual funds can be a tricky proposition.
Many factors affect these products including fund house rules, fund managers, stock market fluctuations, and portfolio allocation. A fund that performed well in the past may or may not not continue to provide good returns in the future.
Top 10 best performing mutual funds to invest in India
So without delay here are top 10 best performing mutual funds (regular plans) you can consider to invest in 2016-2017. I have evaluated the funds on various parameters such as:
- Fund Manager
- Asset Under Management (AUM)–total capital invested though not important factor
- Returns over 1 yr, 3yr and 5 yr compared to Benchmark and peers in fund category
- Expense ratios and risk analysis
- Holdings in the portfolio
- Balanced funds and ELSS mutual funds have not been considered. Only Diversified Equity Funds considered.
- No segregation made on large, mid, small cap funds. All were considered equal.
- No CRISIL MF ranking factor as it is not very important factor in my opinion.
Risk Analysis is also an important factor when choosing the best mutual funds. In this list we have funds that take low risk and some funds take higher risk and investors should invest according to risk appetite.
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Some background on important ratios (calculated on 3-yr returns):
- Beta Ratio – less than 1, then fund has lower risk compared to Benchmark index. If benchmark index shows 100%, then fund will drop grow less than 100% and vice versa for drop in returns. In other words, Beta compares the volatility of mutual fund to its benchmark.
- Sharpe Ratio – greater the value of this ratio, more attractive is the risk-adjusted return. It gives how much risk has been taken to generate the return. It is excess return above risk-free return.
- Sortino Ratio – useful for analyzing high-volatile stocks (assets). A bigger ratio indicates low probability of huge loss.
- Standard Deviation(SD) – SD gives the volatility of returns over pre-determined period. In other words how consistent has the returns been.
- Expense Ratio – It is the total expense of mutual fund as percentage of average net assets. As AUM increases usually Expense ratio decreases.
|Avg. Expense Ratio||AUM (Rs. Cr)||Annualized Returns|
|1 Yr||3 Yr||5 Yr|
|ICICI Pru Focused Bluechip||Large||2.16||8884||-7.4||16.1||11.3|
|Birla Sunlife Frontline Equity||Large||2.26||9434||-5.5||18.1||12.6|
|Franklin India Prima Plus||Multi||2.28||6045||-2.86||22.9||15.00|
|UTI MNC Fund||Multi||2.60||1683||-3.73||28.49||21.14|
|PPFAS Long Term Value||Multi||2.63||588||1.45||N.A||N.A|
|Mirae Asset Emerging Bluechip||Mid/Small||2.55||1138||0.78||32.86||23.50|
|Can Robeco Emerging Equities||Mid/Small||2.82||804||-2.59||33.23||21.68|
|HDFC Mid Cap Opportunities||Mid/Small||2.22||9193||-2.42||28.22||20.11|
|IDFC Premier Equity||Multi||2.25||5410||-7.72||23.26||17.57|
|Kotak Select Focus Fund||Large||2.21||3717||-3.63||21.77||14.44|
*Figures as per 29 February 2016
** * Net Asset Value (NAV) as on 23/3/2016
1. ICICI Prudential Focused Bluechip
The fund was created in 2008, and the investment portfolio is handled by asset managers Manish Goswami and Atul Patel since 2012.
Funds are currently invested mostly large cap companies. These are chosen from the top 200 companies that are listed on NSE.
The mutual fund is consistently performing well and has provided 11.3% annualized returns in the last five years. It hasn’t performed as well as expected in the last 12 months compared to its peers. But large cap oriented fund is good for conservative investors. Also the churn or turnover is less.
The equity fund holdings has high quality long term stocks and may well deliver better returns in the coming years. Banking and technology sector figure prominently in the fund’s asset holding. You can check more about fund here
Companies like HDFC Bank, ICICI Bank, Axis Bank, Infosys, ITC, HCL, Reliance Industries, Larsen & Toubro, Indusind Bank and Bajaj Finserv form the top 10 fund assets.
|NAV (52 weeks)||27.34|
2. Birla Sunlife Frontline Equity
Created in 2002, the objective of this equity fund is long-term capital growth through large cap companies. Asset manager, Mahesh Patil has been handling investment portfolio from 2006. Almost 85% of funds remain invested in large cap companies. Check here for more details on the fund.
The mutual fund has been performing well, especially during falling markets, and has provided 12.6% annualized returns in the last five years. It has consistently beaten the benchmark index (S&P BSE 200) and category.
|S&P BSE 200
The fund holding includes superior stocks and will continue to deliver good returns in the coming years. Although financial sector accounts for largest assets, the fund manager has made oil & gas and energy sector his current focus areas for asset allocation.
Companies like HDFC Bank, ICICI Bank, Sun Pharmaceutical, Infosys, ITC, HCL, Reliance Industries, Larsen & Toubro, Indusind Bank and National Thermal Power Corp form the top 10 fund assets.
|NAV (52 weeks)||23.49|
3. Franklin India Prima Plus Fund
The fund was created in 1994 to provide capital growth and dividend from mixed portfolio of equity, debt, and money market instruments. The investment portfolio is handled by asset managers Anand Radhakrishnan and R Janakiraman since 2013. Funds are currently invested in various companies in different sectors with small to medium capital.
The mutual fund is consistently performing well and has provided 15% annualized returns in the last five years. It hasn’t performed as well as expected in the last 12 months but fared better than peers and is still a better performing fund.
The equity fund holdings include quality stocks and will well deliver good returns in the coming years. Finance, Automobile and tech sector figure prominently in asset holding. More fund details here.
Companies like HDFC Bank, ICICI Bank, Axis Bank, Infosys, Kotak Mahindra Bank, Dr. Reddy’s Laboratories, Yes Bank, Larsen & Toubro, Indusind Bank and Bharti Airtel form the top 10 fund assets.
|NAV (52 weeks)||429.19|
4. UTI MNC Fund
The fund was created in 1998 to invest funds in equity of multinational companies. Asset manager Swati Kulkarni is handling investment portfolio since 2004. Funds are currently invested in multinational companies in diverse sectors.
The mutual fund is consistently performing well and has provided 21.14% annualized returns in the last five years.Has provided phenomenal returns and is expected to do good. However some funds in this list may outperform this fund as holdings are already fairly or overvalued now.
The equity fund holdings include established brand stocks and can deliver good returns in the coming years. FMCG, Engineering and Automobile sectors figure prominently among fund assets.
Companies like Hindustan Unilever, Bosch, Ambuja Cements, United Spirits, Maruti Suzuki India, Britannia Industries, Cummins India, Sanofi India, Eicher Motors, Mphasis form the top 10 fund assets.
|NAV (52 weeks)||144.07|
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5. PPFAS Long Term Value Fund
The fund created in 2013 seeks long-term capital growth through investments in equity and related instruments. Investment portfolio is handled by asset managers Rajeev Thakkar from 2013 and Raj Mehta.
The mutual fund has performed decently and has provided 19.84% annualized returns in the last two years. It performed much better than other top mutual funds in the last 12 months. It is a recent fund and many may say where is 5 year track record?
But PPFAS is an established and trust-able fund house rooted in value investing. THis is the only fund included which is less than 3 years.
The equity fund holdings include good stocks and may well deliver better returns in the coming years. Financial, tech and service sectors figure prominently in asset holding pattern.
Companies like HDFC Bank, ICICI Bank, Axis Bank, Maharashtra Scooters, ICRA, United Parcel Services, Persistent Systems, Zydus Wellness, Mahindra Holidays & Resorts India and Alphabet Inc form the top 10 fund assets. More details from PPFAS.
This fund also invests in Overseas companies like Google, IBM, Nestle etc., and provides international diversification.
|NAV (52 weeks)||16.60|
6. Mirae Asset Emerging Bluechip Fund
The fund was created in 2011 for achieving capital appreciation by investing in Indian equities and equity related company securities. Asset managers Gopal Agrawal and Neelesh Surana handle portfolio from 2010.
Funds are invested in those companies with 100 crore or more in market cap, but which are not in top 100 stocks list (by capitalisation).
The mutual fund has performed well in the past and has provided 23.60% annualized returns in the last five years. Great fund for people seeking higher returns and willing to take more risk.
|Nifty Midcap 100 Index (Benchmark)||Category
The equity fund holding include good stocks and is likely to deliver high returns in the coming years. More assets are allocated to financial, services and healthcare sectors.
Companies like Hindustan Petroleum Corpn, Torrent Pharmaceuticals, Federal Bank, Sundaram Finance, CEAT, Indusind Bank, Voltas, Kotak Mahindra Bank, Exide Industries and Natco Pharma form the top 10 fund assets.
|NAV (52 weeks)||56.13|
7. Can Robeco Emerging Equities
This high performing mutual fund was created in 2005 and invests in mid cap stocks that are ranked from 151 to 500 (in terms of market capitalisation). Investment portfolio is handled by asset managers Ravi Gopalakrishnan and Krishna Sanghvi from 2012.
The mutual fund is consistently performing well and has provided 21.68% annualized returns in the last five years. Predominant investments are in midcap companies only as fund name suggests.
The equity fund holdings include decent stocks and may well deliver strong returns in the coming years. Construction, Finance and engineering are prominent investment sectors.
Companies like Indian Oil Corpn, Indusind Bank, Divi’s Laboratories, Ashoka Buildcon, Tata Communication, Ramco Cements, Navin Fluorine International, FAG Bearings India, Atul and Praj Industries form the top 10 fund assets.
|NAV (52 weeks)||27.34|
8. HDFC Mid Cap Opportunities
The fund created in 2007 aims at optimizing capital growth by investing in equity and related securities of medium and small cap companies. Asset managers Chirag Setalvad and Rakesh Vyas have been handling funds .
The mutual fund has consistently performed well even in bear markets, and has provided 20.11% annualized fund returns in the last five years. Its performance was lower than benchmark index in the last 12 months, but better than peers and is one of best mid cap funds.
|Nifty Midcap 100 Index (Benchmark)||Category
The equity fund holdings include quality stocks and can be expected to deliver good returns in the coming years. Financial and engineering sectors account for a greater percentage of asset holding.
Companies like Hindustan Petroleum Corpn, Torrent Pharmaceuticals, Bajaj Finance, Divi’s Laboratories, Aurobindo Pharma, Axis Bank, Cholamandalam Investment & Finance, Voltas, Jagran Prakashan and Carborundum Universal form the top 10 fund assets. You can check HDFC mutual fund website here
|NAV (52 weeks)||35.83|
9. IDFC Premier Equity
The fund created in 2005 invests in equity and related instruments of small and mid cap companies. Asset managers Meenakshi Dawar (from 2011), Aniruddha Naha (from 2015) and Punam Sharma (from 2015) handle investments. This was once flagship fund of Kenneth Andrade who has now moved away from this top performing mutual fund.
Funds are currently invested in small and mid cap companies with reasonable valuation. This is one of first funds that invested in PAge Industries, Blue Dart etc under Andrade. Keep an eye out if performance continues under new manager else switch out after a year or two.
The mutual fund has performed well in the past and has provided 17.57% annualized returns in the last five years. It hasn’t performed as well in the last 12 months compared to peers many might argue but remember it performed brilliantly compared benchmark stocks.
|S&P BSE 500 (Benchmark)||Category
The equity fund holdings include decent stocks and may well deliver better returns in the coming years. Finance, Service and engineering sectors figure prominently in asset holding.
Companies like Vardhman Textiles, SKS Microfinance, Blue Dart Express, Ashok Leyland, VA Tech Wabag , FAG Bearings India, Maruti Suzuki India, Page Industries, Gujarat State Petronet and Asian Paints form the top 10 fund assets.
|NAV (52 weeks)||68.01|
10. Kotak Select Focus Fund
The fund was created in 2009 to provide capital appreciation with varied of equity and equity related instruments in select sectors. Asset manager Harsha Upadhyaya has been handling portfolio since 2012.
The mutual fund has consistently performed well and has provided 14.44% annualized returns in the last five years. Its performance wasn’t best in the last 12 months, but better than benchmark stocks and category peers. Predominantly large cap fund.
The equity fund holdings include quality stocks and may deliver good returns in the coming years. Finance and construction sectors figure prominently in asset holding. Check for more fund details.
Companies like HDFC Bank, ICICI Bank, Axis Bank, Infosys, Maruti Suzuki India, Shree Cement, Reliance Industries, Larsen & Toubro, Indusind Bank, Ultratech Cement and Ramco Cements form the top 10 fund assets.
|NAV (52 weeks)||21.96|
Top performing mutual funds to invest based on risk appetite
Now that we have seen the top 10 best performing equity mutual funds to invest in India, it is time to classify them by risk appetite.
Please note that this listing has been done based on my opinion and current fund performance, risk only.
You’re free to ignore this section if you like. I’m sure many readers will ask doubt which mutual funds they must choose and that is why I have tried to answer in advance for your benefit.
You should be able to classify yourself as either aggressive, moderate or conservative investor.
Investors with actual or possible good inheritance may choose to be aggressive. There is no one size fits all.
Please note that it is my opinion that one must own minimum one ELSS or balanced fund to make use of tax saving, debt exposure. So choose 2 funds from 3 listed in each category.
Top 3 best funds to invest for aggressive investors
Aggressive investors are the one who can stomach high volatility and risk capital. Their approach will be aimed at high returns even if taking higher risks. Ideal Investors in this category would be under age of 35, have used up most tax saving option and with insurance, emergency funds.
If you’re saving in mutual funds less than 5 years don’t consider this option. Out-performance both on upside and downside is likely. Note that this strategy invests mainly in Small-Mid cap funds.
- Canara Robeco Emerging Equities
- Mirae Asset Emerging Bluechip
- HDFC Midcap Opportunities
Top 3 best funds to invest for moderate investors
Moderate investors are the one who can stomach medium volatility but also look for steady returns. Their approach will be aimed at high returns than conservative investors but also bit steady returns that outperforms inflation.
Moderate investors are those who ideally would be between 30-45 years. About to fulfill responsibilities in 5-10 years period like child marriage, college tuition and plan for retirement that is close to 20 years.
- Franklin India Prima
- Kotak Select Focus Fund or Birla Sunlife Frontlife Equity
- ICICI Pru Focused Bluechip Equity
Top 3 best funds to invest for conservative investors
Conservative investors are the one who want safety of principal. They can’t afford to lose major capital even in short run and prefer lower returns for lesser volatility. However they seek to beat inflation.
Conservative investors are those who ideally would be above 45 years. Their primary goal would be save for medical expenses and plan for retirement that would start in 5-15 years.
- PPFAS Long Term Value Fund
- ICICI Pru Focused Blue Chip Fund
- Kotak Select Focus Fund or UTI MNC Fund
Again, at sake of repeating – these selection may not suit everybody as I have tried only to classify the approach that fits majority .Each individual must assess him/her risk appetite, goals properly before investing.
Read my article on Top 5 best liquid funds
How to build top mutual funds portfolio
Investing in stocks is not for someone who is risk-averse. So choose what type of investor you’re. Stock markets have their up and downturns and are quite unpredictable.
This makes it difficult for the average individual to keep a constant track of various markets and company stocks and that is why I suggest mutual funds. If you don’t have knowledge or experience, you could end up with losses or even loss in capital when dealing directly in stocks.
Even if you’ve dabbled in stocks earlier, why start from scratch when there are mutual fund companies that have done the groundwork? Their asset portfolios are managed by professionals and follow standard regulations.
- Identify your financial goals
It is important to identify you important financial goal/s before you build your portfolio. What is the purpose?
Do you want larger retirement fund, income to meet children’s education or marriage expenses, or money to buy a house?
Once you have a good idea of investment purpose, corpus needed, and the timeline, check financial websites for information. You will be able to plan for different scenarios and also account for inflationary effects on long-term funds.
2) Find your appetite for risk
Find out how much risk you’re willing to take while factoring in your age. If you’re young and have just begun you career, opt for a larger share of equity funds in your portfolio.
You can’t afford to take risks when you nearing retirement or above 60. In this case, limit your equity exposure. Don’t get greedy and be too aggressive. Or be too conservative and miss out potential returns. Strike a balance in mutual funds portfolio.
3) Select top 5 best mutual fund house
If you’re new to the world of mutual funds, go with an established fund house. Choose a company that is known its financial services and consistently performing funds in different categories.
When in doubt, choose mutual funds that have provided good returns over a five year period.Shortlist top 5 fund houses.
4) Understand fund objective
Now that you’ve shortlisted funds based on above criteria, you should understand the investment goal for which each fund has been created. Some funds will only invest in top 100 companies. Others invest in stock of companies with large to medium capital.
Some will hold more stock assets from particular sectors. Funds also have a market benchmark index they follow like NSE50 or BSE200. As these decisions are long-term, make sure fund objective is broad and investment is diverse and aligns with your investment objective.
5) Shortlist top 5 best performing mutual fund schemes
For your list of top 3 or top 5 candidates, base your decision on past performance of mutual funds. Look for consistency in performance over a 3, 5 or 10 year period and their current fund manager record.
Check whether chosen fund performs better than both peers in its category and benchmark index. Has your fund weathered volatile and bearish markets? Invest in 2-3 schemes.Why? Look for FAQ section below.
To choose between two similar schemes, consider fund charges, risk-rewards and fund manager’s overall performance. Then invest in these top funds suitable to you.
6) Keep track of investment and fund performance
Investing is one part of the job. To maximize wealth generation, monitor your investments and perform periodic updates. Avoid the temptation to make changes within first 6-12 months. You have to incur extra charges every time you change funds.
As long as you’re getting expected returns or similar category returns, don’t change funds or add new ones over for short-term performance. Consider replacing a fund, only if, it is trailing in performance and providing lower returns for more than a year or ideal two year unde rperformance.
7) Focus on asset allocation
After you’ve analysed fund objectives, fund performance and made your decision, it is time to focus on your actual asset allocation. Ideally it should be done before investing but also after investing at regular intervals.
Don’t put all your eggs in one basket – stocks or mutual funds for longer duration even if you’re heavy risk taker. Diversify your investment and include other growth assets including real estate, gold, liquid funds and bank deposits as per your needs.
FAQs – investing in good performing mutual funds
- Should I invest in Direct Plan or Regular Plan of mutual fund
This is a very common question and I’m planning to write a post onto itself. But that is for later.
One should consider Direct Plan as much as possible. Why should you pare returns when investing online in mutual funds is so easy. Regular Plans pay commissions to distributors and this reflects in fund performance and NAV returns. As on 31st March 2016,
PPFAS Regular Plan – NAV is Rs 16.768
PPFAS Direct Plan – NAV is Rs 17.005
These can create significant difference in absolute terms over long periods. So prefer Direct Fund as much possible. read why mutual fund expense ratio is important here.
2. Can I invest in mutual funds for 2 years
No. mutual funds are good long term investments. Not suitable if time horizon is less than 5 years. Minimum is 3 years but there is not much performance guarantee even if it is the best fund with lesser time horizon.
3. Will my money double in 3 years? Can you guarantee 15% return .Tell me the best fund for that
No dear friend. As if making money was that easy. The least you can expect is inflation beating return. Whatever comes more than that from mutual fund is extra. Nobody can guarantee returns in mutual fund.
4. Are mutual funds returns taxable? Are they safe?
As of now, equity mutual fund returns long term are not taxable. Mutual funds in India are regulated by AMFI and is safe in regulations. But returns are not guaranteed in equity mutual funds. However, over 5 years or more most equity mutual funds can be considered safe. Also check SEB’s mutual fund FAQ here.
5. Should I invest as SIP or lumpsum in mutual funds
Well, that depends on status of market and future look. For an individual investor though, it is better to invest in SIP(Systematic Investment Plan) and stay the course. Lumpsum can be made if you’re sure markets are expected to outperform in future. For this , you must follow the equity markets. Better do an SIP with discipline.
6.Should I choose Dividend or Growth option Plan for my mutual fund
Again, depends on the investor. if you’re old or in need of regular payments choose dividend option. Else better to stick with Growth option if there is no need to withdraw money.
By choosing Growth option , you prevent Dividend Distribution Tax and the returns are re-invested for final better returns. All my ELSS funds are Direct-Growth option.
7. Is it better to invest in funds with lower NAV ie., Rs 10 NAV better than Rs 250 NAV?
It is a common myth. Fund NAV does not matter be it Rs 10 or 1000. NAV is only reflection of fund value/units. All that matters is compounded returns from the time you invest. So don’t consider NAV value much.
8. Why can’t I invest in stocks directly than investing in mutual funds
Yes, you can. Provided you know what you’re doing. if a person can manage his own stocks then mutual funds are not required. Many are not qualified though. If you know the medicine why not buy yourself instead of going to Doctor?
9. How many different mutual funds should I invest in
More funds does not mean more diversification. Each fund themselves have 30-50 stocks. Carefully chosen , one can achieve all diversification in 2-3 funds. I would not advocate having more than 2 diversified funds. You can add in a balanced fund, ELSS fund and maximum is 4 funds.
10. Should I change the fund when fund manager exits
Top performing funds do so for very long times with several fund managers. Very few managers have long track record with same fund. Prashanth Jain of HDFC Equity, Rajeev THakkar from PPLTV fund have had long tenures. Monitor the fund performance after the change and if there is two years of continuous underperformance to benchmark, then consider shifting.
Latest performance of funds can be checked here.
Investing requires practice, patience and tracking the investments. Better take good professional help if you can’t devote time to learn and keep track. Choose and invest in good performing mutual funds.
Disclaimer: Above opinion is personal and should not be considered as substitute for professional advice. I’m not SEBI registered analyst. Past performance is no indicator for future performance. Though every effort was taken to have accurate data there may be some errors. We do not receive any commission or payment for recommending these funds and done solely for educationg the investor. Do your own analysis.
Have you invested in any of these mutual funds? Are you happy with your investment choice? Is there a fund that you felt deserved spot on this Top 10 best performing mutual funds to invest in India list? Let us know with your comments or ask if any doubts.