Top Mutual Fund Portfolio to Invest Online in 2024
In the pursuit of financial growth, the inclination to invest often leads individuals to explore various money-making avenues. While many may start with a few fundamental equity or debt mutual fund schemes through Systematic Investment Plans (SIPs), experienced investors usually realize that managing an extensive array of mutual fund holdings can present challenges. Thus, this is where investing in the best mutual fund portfolio comes into play. Let’s understand how.
What is a Mutual Fund Portfolio?
Each of us works diligently to earn money, cutting corners and saving for the future. However, the spectre of inflation can erode our hard-earned savings. This is where investments come into play. The best mutual fund portfolio is a diversified collection of investment assets, such as stocks, bonds, and other securities, managed by fund managers on behalf of investors. By pooling resources, individuals can access a well-managed and diversified portfolio, reducing risk and potentially maximizing returns.
List of Equity & Debt Funds
Now, you can explore a range of equity funds offering exposure to various sectors and market caps, allowing for a tailored approach to your investment goals. Let’s have a look at the best mutual fund portfolio for the long term below.
Equity Funds
Here are the equity top 10 mutual fund schemes:
| Scheme Name | SEBI Categorisation | Riskometer |
|---|---|---|
| HDFC Large and Mid Cap Fund | Large & Mid Cap Fund | Very High |
| SBI Large & Midcap Fund | Large & Mid Cap Fund | Very High |
| ICICI Prudential Bluechip Fund | Large Cap Fund | Very High |
| HDFC Flexi Cap Fund | Flexi Cap Fund | Very High |
| Nippon India Multi Cap Fund | Multi Cap Fund | Very High |
| Bandhan Sterling Value Fund | Value Fund | Very High |
| SBI Contra Fund | Contra Fund | Very High |
| Tata Small Cap Fund | Small Cap Fund | Very High |
| HSBC Small Cap Fund | Small Cap Fund | Very High |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data on the equity mutual funds in India in the list is from 24th January 2024. However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!
Debt Funds
Here are the 10 top debt funds for your portfolios in 2024:
| Scheme Name | SEBI Categorisation | Riskometer |
|---|---|---|
| Aditya Birla Sun Life Corporate Bond Fund | Corporate Bond Fund | Moderate |
| ICICI Prudential Corporate Bond Fund | Corporate Bond Fund | Low to Moderate |
| HDFC Corporate Bond Fund | Corporate Bond Fund | Moderate |
| DSP Strategic Bond Fund | Dynamic Bond Fund | Moderate |
| ICICI Prudential Savings Fund | Low Duration Fund | Moderate |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data on the debt mutual funds in India in the list is from 24th January 2024. However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!
A Brief Overview of Funds
Here is brief overview of the funds listed above, these overviews can help investors determine which are the best mutual funds to invest in their portfolios. It is important to note that these are not mutual fund recommendations but just for educational purposes:
Equity Fund
HDFC Large and Mid Cap Fund
Aiming for a balance between large and mid-cap stocks, this fund by HDFC offers diversification across market segments for potential growth. It is one of the top performing mutual funds in India on our list!
SBI Large & Midcap Fund
SBI’s fund strategically blends large and mid-cap stocks, providing investors with exposure to companies of varying market capitalizations for a well-rounded investment approach. It is also one of the best performing equity mutual funds on our list!
ICICI Prudential Bluechip Fund
Known for investing in large-cap stocks, this fund by ICICI Prudential focuses on blue-chip companies with a history of stable performance. It is also one of the best mutual fund schemes on our list!
HDFC Flexi Cap Fund
Offering flexibility in market cap allocation, HDFC’s Flexi Cap Fund adapts to market conditions, aiming to optimize returns by investing in a mix of large, mid, and small-cap stocks. It is one of the best value funds on our list of best mutual funds in India for your portfolio!
Nippon India Multi Cap Fund
With the flexibility to invest across market caps, this fund by Nippon India provides diversification, capturing opportunities in different segments of the equity market. It is one of the best funds in equity for your long term mutual fund portfolio on our list.
Bandhan Sterling Value Fund
Focused on value investing, Bandhan Sterling Value Fund seeks to identify undervalued stocks, aiming for long-term capital appreciation by investing in fundamentally sound companies.
SBI Contra Fund
SBI’s Contra Fund follows a contrarian investment strategy, aiming to identify undervalued stocks that may be temporarily out of favor, potentially offering value and growth opportunities.
Tata Small Cap Fund
Specializing in small-cap stocks, Tata Small Cap Fund aims to tap into the growth potential of smaller companies, providing investors with exposure to dynamic and emerging businesses.
HSBC Small Cap Fund
Focused on the small-cap segment, HSBC Small Cap Fund aims to capitalize on the growth prospects of smaller companies, contributing to potential long-term capital appreciation for investors.
Debt Funds
Aditya Birla Sun Life Corporate Bond Fund
This debt fund focuses on corporate bonds and can offer stability and income potential for investors seeking a reliable fixed-income option.
ICICI Prudential Corporate Bond Fund
With a strategic emphasis on corporate bonds, this fund may provide steady returns while managing risk within the debt market.
HDFC Corporate Bond Fund
Catering to corporate bond investments, this fund usually focuses on providing a stable and consistent income stream, ideal for risk-averse investors.
DSP Strategic Bond Fund
Positioned as a dynamic bond fund, DSP Strategic Bond Fund potentially aims to optimize returns by actively managing a diverse portfolio of fixed-income securities.
ICICI Prudential Savings Fund
This fund is designed for investors seeking a balance between safety and returns, primarily investing in debt instruments can provide stability and liquidity.
What Categories Can Qualify as Core Funds?
Okay, the first question to find is which category of funds should qualify as core funds – equity, debt, or hybrid?
In our perspective, a core fund should possess two key attributes:
- Ability to generate substantial returns
- Providing stability to your portfolio, and minimal restrictions on its investment approach.
Let’s consider the equity fund category. However, it’s essential to note that debt funds or hybrid funds can also serve as core funds, a debt fund may be suitable for a retiree’s portfolio, and a hybrid fund is fitting for those seeking automatic asset allocation.
Therefore, here is a list of equity fund categories that can be qualified or not.
| Category | Qualified/Disqualified | Reason |
|---|---|---|
| Large-cap | Qualified | Large-cap exposure of at least 80%; no restrictions on the investment philosophy |
| Mid-cap | Disqualified | Large-cap exposure is less than 50% |
| Large & mid-cap | Qualified | Average large-cap exposure over the last 3 years is more than 50%; no restrictions |
| Small-cap | Disqualified | Large-cap exposure is less than 50% |
| Flexi-cap | Qualified | Average large-cap exposure over the last 3 years is more than 50%; no restrictions |
| Multi-cap | Disqualified | Average large-cap exposure over the last 2 years is less than 50% |
| ELSS | Qualified | Average large-cap exposure over the last 3 years is more than 50%; no restrictions |
| Dividend yield | Disqualified | Must invest only as per the dividend theme |
| Value | Disqualified | Must invest only as per the value or contrarian theme |
| Focused | Qualified | Average large-cap exposure over the last 3 years is more than 50%; no restrictions |
| Sectoral/thematic | Disqualified | Must invest only in a particular sector or theme |
Let us now figure out how to create mutual fund portfolios in a step by step manner:
Steps to Build the Best Mutual Fund Portfolio
Creating the best mutual fund portfolio can be a straightforward and effective method for diversifying your investments and fostering long-term growth. Consider the following steps when building a good mutual fund portfolio:
Step 1: Define Your Objectives
The initial stride in constructing a top mutual fund portfolio involves clearly defining the objectives for which you are creating the portfolio. Establishing specific goals is crucial, as all subsequent decisions will be grounded in them. Identifying goals also aids in determining the associated time horizon, influencing the level of risk one can undertake
Step-2: Choose Investment Avenues
Once goals and their respective time horizons are identified, the next step involves selecting appropriate investment avenues for each objective. For instance, for short- to medium-term goals (one to three years), opting for short- to medium-duration debt funds may be suitable.
| Index | Minimum Years for Positive Returns |
| NIFTY 50 TRI | 4 years |
| NIFTY Midcap 150 TRI | 4 years |
| NIFTY Smallcap 250 TRI | 6 years |
Step-3: Research the Various Mutual Funds
The subsequent phase in building the best mutual fund portfolio entails thorough research on various overlapping mutual funds after setting investment objectives and asset allocation plans. Emphasizing long-term performance over short-term fluctuations can be vital in this evaluation process. Consideration of the fund’s expense ratio, an annual charge covering operational expenses, is another critical factor.
Step-4: Selection of Suitable Mutual Funds
Following the research on different mutual funds, the next step is to choose funds that align best with your investment objectives and asset allocation strategy to figure out which MF is best for your portfolio. Constructing a diversified portfolio of mutual funds with investments spanning various asset classes, including equities, bonds, and cash, is a method for choosing mutual funds. One may opt for investments in a money market fund, bond fund, large-cap stock fund, or small-cap fund.
This diversification across asset types can potentially reduce the risks of the best mutual fund portfolio and enhance long-term returns.
Step-5: Monitoring Your Portfolio
After finalising your ideal mutual fund portfolio, regular asset monitoring becomes crucial on the best mutual fund websites. This involves tracking the portfolio’s performance and staying informed about any changes in the fund’s investment philosophy or holdings.
Step 6: Embracing Discipline
Maintaining discipline is essential when investing in mutual funds. Building the best mutual fund portfolio for SIP allows predetermined intervals for investing in mutual funds (e.g., monthly or quarterly), which is one way to uphold discipline and manage mutual fund portfolios.
Core and Satellite Strategy
The Core and Satellite investment strategy is a diversified approach where investors allocate the majority of their portfolio to a stable “core” of low-risk, long-term assets. This core typically consists of broad-market index funds or exchange-traded funds (ETFs) that can provide potential returns over time.
In addition to the core, investors can allocate a portion of their mutual fund diversified portfolio to higher-risk, higher-reward investments known as “satellites.” These satellite investments may include individual stocks, sector-specific funds, or actively managed funds. The satellite holdings allow investors to take advantage of specific opportunities or trends in the market.
Let’s have a look at the differences between Core and Satellite.
| Core | Satellite |
| Forms 70-90% of the portfolio. | Constitutes 10-30% of the portfolio |
| Prioritizes stability, with low to medium-risk investments, often in large-cap best mutual fund stocks or index funds. | Emphasizes diversity and high return potential, including higher-risk investments like mid-cap or small-cap stocks. |
| Addresses long-term financial goals. | Can be used for short-term financial objectives. |
Who Can Invest in the Best MF Portfolio?
Anyone with the intent and financial capacity to invest can consider building the best mutual fund portfolio. Mutual funds are accessible to a broad range of investors, from beginners to seasoned individuals. If you are a young investor with a long time horizon, you may be able to tolerate more risk and invest in a portfolio with a higher allocation to stocks. However, if you are an older investor with a shorter time horizon, you may want to choose a portfolio with a lower allocation to stocks and more bonds.
Investors can choose from various types of mutual funds, including equity, debt, and hybrid funds, based on their preferences and objectives.
How Many Funds Should a Mutual Fund Portfolio Have?
The ideal number of mutual funds for building the best mutual fund portfolio depends on various factors, including your investment goals, risk tolerance, and time horizon. However, a general rule of thumb suggests having between 6 to 10 funds across different asset classes to achieve adequate diversification.
Too few funds can limit diversification and expose your portfolio to excessive risk from a single fund or asset class. Conversely, too many funds can make it challenging to track and manage effectively.
Remember, these specific numbers of funds may vary depending on your circumstances. It’s always advisable to consult and/or a financial advisor before investing.
Benefits of Building the Best Mutual Fund Portfolio
Building a well-diversified and the best mutual fund portfolio offers several advantages that can significantly impact your long-term financial goals. Here are some of the key benefits of constructing a sound mutual fund portfolio:
Diversification and Risk Mitigation
Through portfolio diversification, you can spread your investments across a range of asset classes, such as equity, debt, and gold. By diversifying, you can minimize the impact of market fluctuations on your portfolio’s value.
Professional Management and Expertise
Mutual funds are managed by experienced investment professionals who possess in-depth knowledge of the financial markets and the ability to select and analyze individual securities. This expertise helps ensure that your investments are managed effectively and strategically.
Accessibility and Affordability
Mutual funds offer investors the opportunity to participate in a variety of investment strategies with relatively low minimum investment amounts. This makes them accessible to a wide range of individuals, regardless of their financial background.
Convenience and Ease of Management
Mutual funds simplify the investment process by handling the complexities of stock selection, portfolio rebalancing, and dividend reinvestment. This may allow investors to focus on their long-term financial goals without spending excessive time managing their investments.
Potential for Higher Returns
Diversified top mutual fund portfolios have the potential to generate higher returns over the long term compared to individual stock investments. This is due to the diversification effect, which potentially reduces the overall risk and allows for exposure to potentially higher-growth opportunities.
Regular Income Generation
Many mutual funds distribute dividends to their investors, providing a regular stream of income. This can be particularly beneficial for investors nearing retirement or those seeking additional cash flow.
Long-Term Wealth Creation
Mutual funds are well-suited for long-term investment goals, such as retirement planning or children’s education. By investing consistently over time, you can take advantage of the power of compounding and potentially achieve significant wealth accumulation.
Tax Advantages
Mutual funds offer certain tax benefits, such as the ability to defer capital gains taxes until shares are sold. This can help investors maximize their overall returns.
Taxation on Mutual Funds as per the Union Budget for 2024-25
The taxation on capital gains from your mutual fund investments is based on their holding periods and asset allocation. A few revisions were made to the tax rates, depending on their types, in the Union Budget 2024-25. It may be important to learn about these revisions when considering mutual fund portfolios. These changes include:
Equity Mutual Funds
- Short-Term Capital Gains (STCG): The gains from equity mutual funds held for less than 12 months are now taxed at 20%. This is an increase from the previous tax rate of 15%.
- Long-Term Capital Gains (LTCG): For equity mutual funds held for over a period of over 12 months, gains are classified as long-term capital gains. The new budget introduces these key changes to the LTCG:
- Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
- Tax Rate: The gains exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
Indexation was a method that allowed investors to adjust the purchase price of assets for inflation. This adjustment reduced taxable profits when selling assets like property or gold. Previously, these long-term capital gains were taxed at 20%. The new rule imposes a flat 12.5% tax on all long-term capital gains but eliminates any indexation benefits.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
Debt Mutual Funds
- Short-Term Capital Gains (STCG): If you sell your debt fund units within a period of 36 months, the gains are classified as short-term capital gains. The STCG will be taxed according to your income tax slab rate.
- Long-Term Capital Gains (LTCG): For debt funds held for a period over 36 months, the gains are classified as long-term capital gains. The new budget outlines a few changes on the LTCG for debt funds, including:
- Tax Rate: A flat 12.5% tax rate applies to these gains.
- No Indexation Benefit: The previous benefit of adjusting the purchase price for inflation is removed. Now, the entire gain after three years is taxable at 12.5%.
- Change in Holding Period for Specified Mutual Funds: Previously, debt mutual funds with a holding period of over 36 months were taxed based on the investor’s tax slab, classified as Long-Term Capital Gains (LTCG). Now, for specified mutual funds where over 65% of the investment is in debt, the holding period for taxation has been reduced to over 24 months. These funds will still be taxed according to the investor’s tax slab as either LTCG or STCG.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 36 months | Taxed according to your income tax slab | Taxed according to your income tax slab |
| Long-Term Capital Gains (LTCG) | More than 36 months | 10% | 12.50% |
Hybrid Mutual Funds
Short-Term Capital Gains (STCG)
The tax on short-term capital gains depends on the fund’s asset allocation when it comes to hybrid mutual funds. Here is a breakdown of STCG tax rates according to their asset allocation in hybrid funds:
- Equity-Oriented Hybrid Funds (more than 65% in equity): The gains from units sold within 12 months are taxed at 20%.
- Debt-Oriented Hybrid Funds (less than 65% in equity): The gains from units sold within three years are taxed according to your income tax slab.
Long-Term Capital Gains (LTCG)
The capital gains tax on hybrid mutual funds that extend the specified period (12 or 36 months) is known as the long-term capital gain tax. The tax treatment under this condition is as follows:
- Equity-Oriented Hybrid Funds: The gains from units held for over a period of 12 months are taxed at 12.5%. The gains up to Rs. 1.25 lakh are tax-free.
- Debt-Oriented Hybrid Funds: The gains from units held for over a period of 36 months are taxed at 12.5% without indexation benefits. This means the entire gain is taxed at this rate, without adjustment for inflation.
| Type of Hybrid Fund | Short-Term Capital Gains (STCG) | Long-Term Capital Gains (LTCG) | Indexation Benefit |
| Equity-Oriented Hybrid Funds | 20% for holdings less than 1 year | 12.5% for holdings over 1 year, with gains up to Rs. 1.25 lakh tax-free | Not available |
| Debt-Oriented Hybrid Funds | Taxed as per income tax slab for holdings less than 3 years | 12.5% for holdings over 3 years | Not available |
Note: Mutual fund schemes where neither the equity nor debt orientation exceeds 65% will now be classified as long-term investments after 24 months. The previous holding period for these funds was 36 months. These will be taxed at the revised LTCG tax rate of 12.5%.
Are there any Risks Associated with the Top Mutual Fund Portfolio?
Like any investment, a best mutual fund portfolio may carry inherent risks. Market fluctuations can impact the value of the portfolio, and there’s no guarantee of consistent returns. Economic uncertainties, geopolitical events, and changes in interest rates may affect the performance of the funds. Additionally, specific risks might be associated with the types of assets held in the portfolio, such as equity market volatility, credit risk in bond funds, or sector-specific risks.
Investors should carefully assess their risk tolerance and conduct thorough research before considering any mutual fund investment.
Things to Consider Before Building the Best MF Portfolio 2024
Several need to be considered before building the best mutual fund portfolio 2024. Here we have listed out some of them.
Investing Objectives
The financial goals that you plan to achieve through your investment portfolio are referred to as investment goals. Determining your investment objectives is crucial before constructing the best mutual fund portfolio. Your goals, whether short-term or long-term, can influence the choice of funds. High-return, high-risk options might align with long-term goals, while conservative choices could be suitable for short-term objectives.
Risk Tolerance
Assessing your risk tolerance is a pivotal factor. Different mutual funds in the best mutual fund portfolio can carry varying levels of risk, and understanding your comfort with market fluctuations is essential. Aggressive funds may offer good returns but come with heightened volatility, which may or may not align with your risk appetite.
Diversification
Diversifying your diversified mutual fund portfolio examples across different asset classes can be a risk management strategy in the best mutual fund portfolio. It may involve allocating investments among stocks, bonds, and other instruments to spread risk. However, diversification might not guarantee against losses, and the effectiveness of this strategy can vary based on market conditions.
Fund Performance
Evaluating the historical performance of mutual funds is a common practice. Past performance can provide insights, but it doesn’t guarantee future results by investing in the best mutual fund portfolio. A fund that performed well in the past can face challenges or changes in the future, making it important to consider other factors beyond historical returns.
Fund Expenses
Examining fund expenses is crucial as it can impact your overall returns. High expense ratios might reduce the returns you receive. While low expenses are generally favourable, it’s important to weigh them against the fund’s performance and other factors. Additionally, hidden fees or transaction costs may also influence the overall cost of investing in the best mutual fund portfolio.
To Wrap It Up…
To conclude, building the best mutual fund portfolio is like curating a playlist for your financial journey. It’s about finding the right mix of stability and growth that syncs with your unique goals and rhythm. Remember, the key is choosing the top performers and aligning your investments with what matters most to you. As always, please do your own research and/or consult a financial advisor before investing.
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Frequently Asked Questions (FAQs) on Best Mutual Fund Portfolio
The ideal investment duration for staying invested in the best MF portfolio depends on your goals and risk tolerance, but generally, a long-term approach is recommended, typically 5-10 years or more.
Returns vary depending on the specific funds chosen and market conditions. However, historical data suggests that well-diversified equity mutual fund portfolios can generate average annual returns of 10-12%. However, it’s important to do your own research and/or consult a financial advisor before investing.
The best time to build a good mutual fund portfolio largely depends on your risk appetite and investment objective. However, investors should comprehend both the growth potential and challenges confronted by agricultural companies.
Lock-in periods vary depending on the type of mutual fund. Equity Linked Savings Schemes (ELSS) have a mandatory lock-in period of three years, while other funds typically don’t have lock-in periods. Therefore, investors can take a loan against ELSS mutual funds after the completion of 3 years.
However, review the terms and conditions of each mutual fund within your portfolio to understand any specific lock-in periods associated with particular fund categories.
