Top 4 Types of Mutual Funds to Invest in Now | Motilal Oswal
Top 4 Types of Mutual Funds to Invest in Now | Motilal Oswal

Top 4 Types of Mutual Funds to Invest in Now

If you wish to invest in the stock market but do not have the time to research individual stocks, mutual funds offer the ability to purchase a stake in a larger investment pool, wherein the fund managers do the research and investing for you.  Mutual funds investment are a good option for those looking to passively invest, or if you are looking to diversify your portfolio. From open-ended funds, equity growth funds, to index funds and liquid funds, different types of mutual funds offer varying investment opportunities.

In this article, let’s take a look at the 4 of the top mutual funds to invest in right now.

1. Multicap Funds:
Generally, mutual funds offer investors sector-wise investments. Different types of mutual funds might choose to invest in bluechip stocks exclusively, for instance, offering its investors possibly reduced risk. For those who are willing to take some risk, multi cap funds are one of the top mutual funds that allow fund managers to invest in a range of companies, from small, mid and large-cap corporations, based on wherever they think the best opportunity lies. Multicap funds can be one of the best mutual funds to invest in for those looking to get increased risk-adjusted returns.

2. Equity Linked Saving Schemes:
Section 80C of the IT act allows for tax benefits up to 1.5 lakhs on ELSS mutual funds. ELSS mutual funds can be one of the top mutual funds right now for a number of reasons. For starters, if you are looking to invest your salary, chances are you fall under a given tax bracket. ELSS mutual funds allow you the opportunity to invest, whilst also reducing your net taxable income. Secondly, ELSS mutual funds command a 3-year lock-in period, which can enforce in you the discipline to focus on long-term investments, by picking the best mutual funds to invest in.

3. Focused Equity Funds:
As the name suggests, focused equity mutual funds are one of the top mutual funds that invest a majority of their fund in equity-related securities. If you are looking to prioritize long term growth but also have a relatively high-risk appetite, then among the different types of mutual funds, focused equity funds can be one of the best mutual funds to invest in. There exist a number of focused equity funds that invest in small, mid and large-cap companies. Generally, small-cap mutual funds are considered to have high risk, due to the underlying instruments. Large-cap based mutual funds could focus more on long term growth, due to the stability of the underlying instrument.

4. Fixed-Income Mutual Funds:
Fixed-income mutual funds are one of the different types of mutual funds, focusing most of their investment pool in debt instruments that offer high security such as debentures, governments bonds, government securities etc. These mutual funds can be one of the best mutual funds to invest in if you have a relatively low-risk appetite, or are looking to reduce risk in your portfolio introduced from more aggressive investments.

Conclusion

Different types of mutual funds are a good addition to the portfolio in order to diversify your investments. Based on the time you have to dedicate to investing, your budget, and your risk appetite, there are a number of top mutual funds to choose from. One can invest in a combination of the aforementioned types of mutual funds to diversify and balance out their portfolio in order to achieve various investment goals. Having said that, it is advisable to take the help of a financial advisor in order to pick instruments that fit your specific financial goals.

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