Top Rated Mutual Funds That Every Beginner Should Consider

If you’re just getting started with mutual fund investments, the sheer range of options may make the shortlisting process seem overwhelming!

As a new investor, it’s natural to feel confused with so many choices. For beginners, the first goal is to build a strong foundation with the right mix of stability and growth through disciplined investment. That’s why a list of carefully selected mutual fund matters, helping you build your portfolio before the returns start showing up.

In this blog, we have curated a list of five funds across different categories. Depending on your risk tolerance and expectations for returns, you can choose one or more of these funds.

Best mutual funds that beginners must consider

Beginners can create an SIP or invest a lump sum amount in these top rated mutual funds. 

1. DSP Nifty 50 Equal Weight Index Fund

This fund invests in the top companies under the Nifty 50, allocating an equal proportion to each stock instead of investing a higher amount in larger companies. As a beginner, you’ll gain a balanced exposure to all the constituents of the index. It’s a disciplined approach to invest in large-cap stocks without concentrating on a few large companies.

• AUM: INR 2,471.39 crore
• NAV: INR 25.0718
• Expense ratio: 0.41%
• 1-Year return: 2.70%
• 3-Year return: 16.68%
• 5-Year return: 14.63%

2. ICICI Prudential Large and Mid Cap Fund

If you’re slightly more aggressive with your approach to investment, consider including this fund in your portfolio. The ICICI Prudential Large and Mid Cap Fund helps investors balance stability and growth potential. 

While the large-cap stocks in its underlying portfolio bring consistency, the mid-cap companies help your portfolio grow. 

• AUM: INR 28,505.90 crore
• NAV: INR 1,058.0500
• Expense ratio: 0.77%
• 1-Year return: 1.84%
• 3-Year return: 20.01%
• 5-Year return: 19.36%

3. Quant ELSS Tax Saver Fund

Beginners who want to save on taxes while gaining equity exposure may invest in the Quant ELSS Tax Saver Fund. It helps you diversify your portfolio across different sectors and market caps. 

While you build long-term wealth, you can also qualify for tax deductions of up to INR 1.5 lakh under Section 80C of the Income Tax Act. However, this fund comes with a lock-in period of 3 years.

• AUM: INR 12,079.80 crore
• NAV: INR 385.1851
• Expense ratio: 0.75%
• 1-Year return: 2.87%
• 3-Year return: 17.03%
• 5-Year return: 18.57%

4. Mahindra Manulife Focused Fund

If you’re interested in building a concentrated portfolio across sectors, the Mahindra Manulife Focused Fund can be a suitable choice. It invests in a limited number of high-conviction stocks.

However, this fund involves a higher risk, so you may invest in it only after considering your risk appetite. In the long term, the focused fund offers a growth potential.

• AUM: INR 2,238.45 crore
• NAV: INR 27.6200
• Expense ratio: 0.57%
• 1-Year return: 0.88%
• 3-Year return: 19.27%
• 5-Year return: 18.21%

5. Aditya Birla Sun Life Medium Term Plan

As a beginner, you may be conservative with your approach to investments and want to go for debt mutual funds. The Aditya Birla Sun Life Medium Term Plan invests in fixed-income instruments. 

It generates stable returns while avoiding the volatility of equity markets. If you want to balance your equity portfolio with predictable returns, this fund can be a viable option.

• AUM: INR 3,085.17 crore
• NAV: INR 46.0816
• Expense ratio: 0.81%
• 1-Year return: 9.88%
• 3-Year return: 10.48%
• 5-Year return: 12.61%

Conclusion

Often, beginners start investing in funds based on recommendations from friends or just on the basis of past performance. However, it’s important to build a sound base for your portfolio, which can eventually generate long-term returns and fuel growth.

In this blog, we have shortlisted five funds with different levels of risk and reward potential. Based on your risk tolerance and investment philosophy, you may create an SIP or invest a lump sum amount in these funds.

Related: How Life Insurance Can Protect a Family’s Lifestyle After Loss?

Disclaimer: The information provided in this article is solely the author’s opinion and not investment advice – it is provided for educational purposes only. By using this, you agree that the information does not constitute any investment or financial instructions. Do conduct your own research and reach out to financial advisors before making any investment decisions.