Mutual fund investments are broadly divided into debt and equity funds. While debt funds are schemes where your money is invested in securities and debentures, equity funds invest money in stocks. There are a number of equity mutual fund options in the market, but some are better than others are. Therefore, you need to select the best-performing equity funds for the maximum returns on investment.
However, you should know more about equity funds before investing.
What is equity funds?
Equity funds are a form of mutual funds investment, where a majority of the money is invested into stocks and equities of various companies. Since the stock prices are volatile, equity funds investments are riskier than debt funds, but offer considerably greater returns from the investment in question.
Equity funds can be sector funds or diverse funds. However, what is sector funds? Sector funds are those equity funds where the investment is limited to just one sector, such as banking. However, equity funds may also invest in diverse fields.
Who should invest in equity mutual funds?
Equity mutual funds investment is not suitable for everyone. Since the money is invested in stocks and equities, you need to have an appetite for risk. The market will be volatile for such investment schemes, but the greater returns are well worth the risk. Furthermore, investors looking for long-term gains are best suited for equity mutual funds investment. For shorter terms or better tax saving opportunities, you should try investing in ELSS schemes.
Top 5 Equity mutual funds of India in 2018
Before choosing an equity fund, you need to determine the qualitative and quantitative aspects of each scheme. Apart from this, keep risk appetite, financial goals, and investment horizon in mind while investing money in equity funds. While you can invest for 3 years, the best returns are reserved for people who invest in mutual funds for 5 or more years.
Here is a ranking of the best equity mutual funds in India for the past 5 years.
- HDFC Small Cap Fund
In the last 3 years, the scheme offered a return percentage of 21.52 percent, while investors received a return of 24.31 percent in the last 5 years.
- HDFC Mid Cap Opportunities Fund
People, who invested in this scheme 3 years ago, got a return of 14.84 percent on the capital. The 5-year return was 26 percent.
- DSP BlackRock Midcap Fund
The past 3-year term resulted in 16.77 percent return on the principal sum. However, upon investing for a 5-year term, the scheme resulted in a return percentage of 25.68 percent.
- Birla SL Equity Fund
For an investment tenure of three years, investors earned a return of 13.7 percent on the capital sum. The same scheme netted a 21.78 percent return to investors in the last five years.
- ICICI Prudential Value Discovery
A 7.38 percent rate of return for investment was earned in the last three years. In case of a 5-year term, the investment resulted in 21.25 percent returns on the capital.
While the above-mentioned list features only a few names, it is essential that you consider all aspects of a scheme and not simply the rate of return on investment and the fund’s performance in the past few years.
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