Top 15 Best Mutual Funds to invest in 2020 & beyond | Top Performing Equity Funds

Dec 23, 2019 Other by PR0b!z$Adv!S0R#

In India mutual fund industry’s asset under management (AUM) has been growing at a rapid pace. The total AUM has reached around Rs 25.50 lakh crore in August 2019.

The asset under management of Debt, Equity and Hybrid schemes at the end of August 2019 stood at Rs 13.22 lakh crore, Rs 7.16 lakh crore and Rs 3.38 lakh crore, respectively. We have thousands of Mutual Fund Schemes that are currently available in the market. It is a highly challenging task for any advisor / investor to select best mutual fund schemes out of these thousands of schemes.

There is no doubt that Mutual Funds are one of the best investment options for long term wealth creation. However, if you pick wrong MF schemes that do not match your investment objective(s) and time-frame then it could spell disaster for you. Even if you pick right fund as per your investment strategy, it may not perform as per your expectations due to plethora of factors which are not in your control.

Another reason could be, your fund manager’s investment strategy may not click and results in not-so-great performance (or) your fund manager may change.

The Fund manager’s ability to generate EXTRA returns over and above the Fund’s benchmark has been put to test after recent SEBI’s re-categorization rules.

This has resulted in sudden in-flux of investments to Index based funds (Passive funds).

For example : The AUM of index funds has gone from Rs 5971.84 crore in August 2019 to Rs 6571.96 crore in September, and to Rs 7622.61 crore in October 2019.

Given this scenario, it’s highly challenging and tricky to pick the best & top mutual fund schemes to invest in 2020 & beyond.

In this post, let us analyze – Which are the Top rated Equity SIP Mutual Funds to invest for long term in 2020-2021? Best Equity Funds for 2020…

Top 15 Best Mutual Funds to invest in 2020-21 | Best SIP Equity Funds

Below are the best Equity Mutual Funds to invest in India for 2020 & beyond…

UTI Nifty Index Fund (Large-cap)
Axis Bluechip Fund (Large-cap)
ICICI Prudential Bluechip Fund (Large-cap)
Kotak Standard Multi-cap Fund (Diversified)
Aditya Birla Sun Life Equity Fund (Diversified)
SBI Magnum Multi cap Fund (Diversified)
Axis Mid-cap Fund (Mid-cap)
Franklin India Prima Fund (Mid-cap)
Franklin Smaller Companies Fund (Small-cap)
Axis Long Term Equity Fund (ELSS – Tax Saving)
Invesco India Tax Plan (ELSS – Tax Saving)
Aditya Birla Sun Life Tax Relief ’96 Fund (ELSS – Tax Saving)
HDFC Hybrid Equity Fund
ICICI Pru Equity & Debt Fund
SBI Equity Hybrid Fund

Some Important Points to ponder about Mutual Fund Investments :

Identify your Goals: Majority of us identify the products first and then try to shortlist best investment avenues. An investor has to first identify his/her financial goals and then try to short-list best available options. This is applicable for mutual fund investments also.
Set you Asset Allocation :Asset allocation is an exercise to invest across various avenues such as time-deposits, bonds, equities, gold etc., Set your allocation based on your investment objective, time-horizon and risk tolerance. For example : If your investment horizon is say 10+ years, objective is to wealth accumulation, you can consider an asset allocation of Equity to Debt as 60:40. Besides investing in Equity oriented products, it is equally important to invest in debt-oriented products (like PPF, EPF, VPF, Debt Funds etc.,) as well.
Is it good to invest in multiple Schemes from same Fund category?– Kindly do not invest in too many funds especially within the same fund category. Over-diversification is not beneficial and may lead to high portfolio overlap.
Consistency is the key parameter: A ‘good mutual fund scheme’ is the one that consistently manages to outperform its category returns and also it’s Benchmark’s. It is prudent to be with the consistent performers for long-term goals instead of churning your portfolio based on Star ratings or recent performances of the funds.
- If you observe, the recent stellar performances have come from equity funds managed by the fund houses like Axis, Kotak, Mirae, L&T…The funds managed by HDFC, Franklin & Birla have taken a back seat. But, do not churn your portfolio based on recent performances alone. Look for consistency of returns and then take decision!
I am 60 years old, can I invest in Equity Funds?– Invest in Equity funds based on your future goals & financial resources and not based on your current age. For example – If you are a retiree(say 65 years) and have regular income which is more than your monthly living expenses, you can surely invest a portion of your surplus income in hybrid or equity oriented mutual funds.
Importance of Portfolio Performance – If one of the schemes in your MF portfolio is not performing well, do not immediately churn your portfolio. Also, do not churn your portfolio very often based on fund star ratings. The negative consequences of regularly churning the portfolio are undeniable. Do track that scheme’s performance for sometime (say 1 or 2 years)before deciding to drop it from your portfolio. Sometimes, it is prudent to analyze the overall portfolio performance than to get too worried about individual fund’s performance. Also, have realistic return expectation from your investments.
Shall I invest in Focused/Value oriented MF Schemes? – If you have created a core portfolio with say a Large cap fund / Index Fund, mid-cap fund (or index based funds)& Hybrid fund, you may invest a portion of your investible surplus in focused, value oriented, Funds of funds or Theme based funds. Ex : Parag Parikh Long Term Value Fund, Franklin India Focused Equity Fund, Axis Focused 25 Fund etc.,
Shall I pick Index Funds?– If you are not comfortable investing in actively managed Funds, you can consider investing in Index based Funds. Ex : UTI Nifty 50 Fund (Large-cap), UTI Next Nifty 50 Index Fund (Large + Midcap) etc., It makes sense, to add one Hybrid Equity Fund to your Index based portfolio, to manage the volatility.
Do I need to invest in Multi-cap Funds? – If you have a large-cap fund and a mid-cap oriented fund, I believe that its OK not to have a separate multi-cap fund in your portfolio. You can consider adding a Hybrid Fund to your portfolio. In case, one of your investment objectives is ‘tax-saving’ then can consider investing in an ELSS Fund (this can be treated as a multi-cap style fund, example – Birla Tax Relief Fund).
SIP or Lump sum? – Systematic Investment Plan (SIP)inculcates financial discipline. However, it is not a fair comparison to equate SIPs with investing in a lump sum. Both have their own pros and cons. It is better to have SIPs in place and at the same time, you can make additional investments (lump sum)when you believe that markets are down.
Suggest you not to remain invested in equity oriented funds till the goal target year. You may consider redeeming MF units by starting SWP (Systematic Withdrawal Plan)may be 2 to 3 years before the goal year. You can re-invest this amount in safe investment avenues. You may also re-balance your portfolio based on your Asset-allocation strategy (Equity : Debt allocation).
DIY / Advisor – If you are a DIY investor, pick Growth and Direct plans. In case, you are not comfortable investing in Mutual funds on your own or do not have the required time, do engage with afee-only Financial planner.