Role of the top performing mutual funds in the share market


Mutual funds provide professional investment management as well as the potential for diversification. They also provide three ways to earn money: dividend payments, bonus payments, and bonus payments. A fund’s income may come from stock dividends or bond interest.

In this article, the top performing mutual funds are the topic of discussion. 

Scheme Name                           Expense Ratio 5YReturn(Annual)

Parag Parikh Flexi Cap Fund           0.78%           17.93% p.a.

Axis Midcap Fund                             0.54%          17.88% p.a.

Motilal Oswal Midcap Fund                   0.83%         16.85% p.a.

Canara Robeco Equity Tax Saver Fund   0.6%           16.56% p.a.

Investing in a mutual fund is a simple way to diversify your investments across a wide range of securities and asset classes; including equity, debt, and gold, which helps spread risk and keeps all of your eggs in one basket.

The most significant advantage of investing in mutual funds is that they are managed by qualified and professional experts who are supported by a dedicated investment research team that analyses company performance and prospects and selects appropriate investments.

Now let us understand why is it important to invest in the best performing mutual funds.  

Risk Diversification:

One of the most significant advantages of mutual funds is risk diversification. Every stock faces three kinds of risk: company risk, sector risk, and market risk. 

Diversified unsystematic risks:

Company risk and sector risk are examples of unsystematic risk, whereas market risk is an example of systematic risk. 

Invest in the stocks systematically:

Mutual funds assist investors in diversifying unsystematic risks by investing in a diverse portfolio of stocks from various industries. Individual stocks are subject to both unsystematic and systematic risks, whereas mutual funds are only subject to systematic or market risk.

Smaller capital outlay:

Another advantage of mutual funds is that you can begin investing in them with small amounts of money. To build a diversified portfolio of stocks, investors will need to invest a significant amount of money. 

Create beneficial ownership:

Mutual funds, on the other hand, work on the basis of money pooling, so mutual fund investors can benefit from beneficial ownership of a diversified portfolio of stocks with a much smaller capital outlay. Investors can purchase units of a diversified equity mutual fund for as little as Rs 5,000/- or even less for ELSS schemes.

Investment expertise: Investing in stocks and bonds necessitates a high level of knowledge and experience. Financial markets, industry sectors, individual companies, and research expertise are all required. 

Pick the best stock instruments:

Mutual funds have the significant advantage of being managed by professional fund managers who have the necessary qualifications, expertise, and experience in selecting the best stocks or other instruments to achieve the best risk adjusted returns. The fund managers are assisted by the AMCs’ research team.

Economies of scale in transaction costs:

Another benefit of mutual funds is lower transaction costs due to economies of scale. Because mutual funds buy and sell securities in large volumes, transaction costs per unit are much lower than those incurred by retail investors when they buy or sell shares through stock brokers.

Various other products:

Mutual funds provide a wide range of products to investors based on their risk tolerance and investment goals. Aside from equity funds, there are hybrid funds, debt funds, liquid funds, and tax savings schemes, among others, to meet a variety of investment needs. The benefits of investing in mutual funds include the ability to invest in the appropriate product based on your specific needs and risk tolerance.

Disciplined investing: Mutual funds encourage investors to invest over time, which is necessary for wealth creation. Furthermore, mutual fund systematic investment plans, or SIPs, encourage investors to remain disciplined in order to meet their various financial goals. Many investors fail to accumulate a substantial investment portfolio because they are unable to invest with discipline.

SIPs in mutual funds: SIPs assist investors in maintaining a disciplined approach to investing. SIPs also help investors remove emotions from the investment process. As investors are often overly enthusiastic in bull markets but nervous in bear markets. It is a well-known fact that investments made during bear markets help investors earn high long-term returns.

A variety of investment goals: One of the benefits of mutual fund investing is that you can achieve a variety of investment goals, such as capital appreciation and income. 

One of the best performing mutual funds allow in making significant changes. Thus investing in mutual funds is one of the biggest abilities to maintain discipline through the use of SIPs. 

Equity mutual funds can help you build wealth through capital appreciation, whereas debt mutual fund can help you generate income. Hybrid mutual funds can assist you with capital appreciation as well as wealth creation.

Why is it important to publish the Net Asset value? 

Another advantage of mutual funds for retail and HNI investors is transparency. Mutual fund schemes publish their Net Asset Values (NAVs) at the end of each business day. So investors are always aware of the market value of their mutual fund units. 

Mutual funds publish Monthly Fund Factsheets on a monthly basis, in which the portfolio holdings (securities in a scheme’s portfolio along with weights) for each mutual fund scheme are disclosed. 

On a monthly basis, investors can see where the fund managers have invested. Monthly fund factsheets contain useful information such as returns compared to the scheme benchmark, risk ratios, and so on, in addition to portfolio holdings.

Redeem significant investment from mutual funds 

The traditional method of investing is with a lump sum. In lump sum investing, you invest the entire amount all at once. From the day the lump sum is invest until it is redeem, the entire amount earns returns. Tactical lump sum investments also allow for the capture of significant market corrections. 

Final Words 

The power of compounding is greatest in lump sum investments over long periods of time. For short-term investments, lump sum investments are also preferred in order to maximize returns. This is one of the most significant advantages of mutual funds in India. Overnight, Liquid, Ultra-short Duration, Low Duration, and Money Market funds are typically invested in lump sums.


Please enter your comment!
Please enter your name here

Share post:



More like this

What is Spicyrranny? A Comprehensive Guide to the Culinary Revolution

Introduction Sometimes evolving the world of edible delights, a new...

Read One Punch Man Manga

Is it likely that you truly love energizing movement,...

The Inter Milan vs FC Porto Timeline: A Journey in Football

Welcome football lovers and eager fans to this undeniably...

Amazons GPT44X: Redefining Conversational AI

Envision having a discussion with an artificial intelligence that...