Top Performing Mutual Funds in India
As we go through the constant financial landscape, it became crucial to identify Top Performing Mutual Funds in India that not only give higher returns but can only be beneficial in the longer term. However, several Mutual funds have shown significantly impressive results in terms of profit. In this blog, we have highlighted a few mutual funds of 2024 and have predicted for 2025 as well to make sure that your journey toward financial freedom goes smoothly.
Equity Funds: Aditya Birla Sun Life PSU Equity Fund: This fund has delivered strong returns, especially in the PSU equity space, with a focus on large-cap stocks in public sector companies, yielding about 48.5% annually over the past three years.
Infrastructure Fund: With a focus on infrastructure, this fund has seen a return of around 43.77%, and includes major holdings in companies like NTPC, which reflects its stability in sectors tied to infrastructure.
Mid and Small-Cap Funds:-
Large Cap Fund: This large-cap fund has recorded a five-year rolling return of around 17.35%, performing well against its benchmark, NIFTY 100 – TRI. The fund is managed with a mix of top-down sector allocation and bottom-up stock selection
Mid-Cap Fund: Known for high returns and agile sector rotation, this mid-cap fund has a five-year rolling return of around 27.9%, significantly above its benchmark (NIFTY Midcap 150 – TRI)
Debt Funds: Aditya Birla Sun Life Medium Term Plan: A debt fund delivering about 12.99% annualized returns, ideal for moderate-risk investors seeking stability with periodic gains.
Credit Risk Fund: With around 11.54% returns, this fund focuses on short- to medium-term debt securities, offering a slightly higher yield than traditional fixed-income instruments.
Hybrid Funds: Quant Multi Asset Fund: This hybrid fund, which invests across asset classes, has shown an annual return of 30.72%. It allows investors to diversify their holdings with a blend of equities, debt, and other assets.
Choosing the Right Fund
For those looking to invest in mutual funds, consider factors like the investment horizon, risk tolerance, and sector preferences. Equity funds generally suit long-term goals, while hybrid funds offer balanced exposure, and debt funds cater to low-risk profiles. Each fund’s performance history, expense ratio, and manager track record are critical for making an informed choice.
These options offer strong past performance, though it’s always best to evaluate them based on your financial objectives and consult with a financial advisor for a tailored approach.
Here, predicting the best Mutual Funds based on the previous year’s (2024) data, these data are truly based on the performance. Hence, we cannot rely just on this, so it is preferable to do your own research and then invest.
1. Equity Funds (Large-Cap and Sector-Specific): Large-cap funds often hold steady in volatile markets due to investments in well-established companies. Sectors like IT, financial services, and infrastructure are more likely to perform well due to India’s growing focus on digitalization and development projects. Funds like HDFC Balanced Advantage and ICICI Prudential Equity & Debt, which mix equity with debt, could offer balanced growth and risk management.
2. Hybrid and Multi-Asset Funds: Hybrid funds, such as balanced or multi-asset funds, spread investments across equities, debt, and sometimes gold or real estate, offering more stability in uncertain markets. Funds like Quant Multi Asset Fund, which has provided consistent returns with diversified asset allocation, are considered resilient options for investors looking to balance risk and return.
3. Debt Funds for Conservative Investors: For those focused on safer returns, medium-term debt funds like Aditya Birla Sun Life Medium Term Plan and UTI Credit Risk Fund could be favorable choices. They have shown stable returns even when the equity market fluctuates, making them attractive to investors seeking lower risk.
ESG and Thematic Funds: Environmental, Social, and Governance (ESG) funds are gaining popularity as companies focus more on sustainable practices. Thematic funds that align with government priorities, such as renewable energy or green technology, might perform well as more investors align their portfolios with sustainable growth.
Selecting mutual funds requires aligning them with your risk tolerance, investment horizon, and financial goals. Investors can use this as a guideline and look into fund performance trends, expense ratios, and portfolio compositions as 2025 unfolds. While investing with the intend of maximum return, one should keep in mind several factors like trends and predictions for better outcomes.
Sectoral Growth and Emerging Industries
Technology and Digitalization. Technology, for instance, artificial intelligence, cloud computing, and cybersecurity, is likely to continue developing. Industrial funds invested in technology companies or sectors that apply technological development (such as fintech, and e-commerce) can also be fruitful.
Infrastructure and Real Estate:- Countries like India will see a rise in infrastructure development and therefore, funds that are focused on construction, engineering, and such related industries will stand to benefit. Infrastructure expansion will offer low returns over a longer period but with increased volatility in the markets over time.
Economic Recovery and Interest Rates
Interest Rate Volatility. With higher interest rates, investments in debt funds become appealing due to favorable returns; however, low interest rates may cause the demand for equity funds to rise. It is important to pay attention to the policies of the central banks concerning interest rates to forecast which types of funds have the potential for funds.
Global Economic Recovery: Economic recovery after the contagion and the influence of geopolitical dynamics will affect the performance of a market. Target those funds that have a wide range of diversification or fund a region/country with commendable economic growth.
Balanced and Hybrid Funds: Hybrid Funds for Risk Management: Funds that combine equity and debt (like balanced advantage or aggressive hybrid funds) provide a buffer against market fluctuations. These funds allow dynamic asset allocation based on market conditions for investors looking to balance growth and risk.
SIP (Systematic Investment Plan) vs. Lump Sum Investments:-
Systematic Investment Plans (SIPs): SIPs remain a strong choice for those seeking steady returns while managing risk, especially in volatile markets. In SIPs, the cost-averaging approach allows investors to buy more units when prices are low, potentially leading to better long-term gains than lump-sum investments.
Monitoring and Rebalancing: Regularly reviewing your portfolio and rebalancing as needed helps you capture gains and adjust to market changes, ensuring that investments remain aligned with financial goals.