Top Mutual Funds for 2023: Maximizing Returns with Managed Risk
The quest for the best mutual funds to invest in with returns as high as 18-20% can be daunting. In a market where the average return on the stock market is about 8%, achieving such high returns requires careful selection and a well-rounded investment strategy. This article will explore various mutual funds, helping you make informed investment decisions that balance returns with risk management.
Understanding Market Expectations
Targeting an average of 20% annual return is unrealistic, given the historically low average returns of around 8%. While some funds can achieve this benchmark in certain years, they are often highly volatile. Adjusting your expectations to a more realistic range can help in avoiding significant losses during market downturns.
For those seeking higher returns, small cap mutual funds can offer an attractive option. However, these are riskier, as the potential for significant gains is accompanied by the risk of significant losses.
Investment Patience and Market Corrections
Patience is a key factor in investments. After market corrections, valuations in many categories have become attractive. Our experts have identified several top-performing mutual funds that are well positioned for 2023, offering strong return potential and favorable valuations.
Axis Bluechip Fund - A Standout Large Cap Choice
AUM: Rs 4802 crore
Date of Inception: January 5, 2010
Axis Bluechip Fund has emerged as a standout performer in 2018, outperforming benchmarks despite the widespread failure of actively managed funds. During this period, the fund manager, Shreyas Devalkar, successfully picked stocks while maintaining a core focus on India's largest companies. With a 15.16% CAGR over 5 years, this fund compares favorably to the Nifty 50's 13.22%. Devalkar's expertise in a large cap mandate has provided a solid foundation for a strong 2019 portfolio.
Kotak Standard Multicap Fund - A Diverse Offering
AUM: Rs. 23881 crore
Date of Inception: September 11, 2009
Kotak Standard Multicap Fund, managed by Harsha Upadhyaya since 2012, offers a diverse portfolio. The fund has delivered impressive returns, with a 19.48% over 5 years, exceeding its benchmark's 13.95%. In 2018 and 2019, the fund managed to shield investors from volatility by shifting strongly towards large caps, with 77% of assets in this category. Adding 21 mid-cap and 1 small-cap asset, the fund provides a balanced approach suitable for cautious investors.
HDFC Small Cap Fund - Optimism in Mid and Small Caps
AUM: Rs 7660 crore
Date of Inception: April 3, 2008
HDFC Small Cap Fund has shown remarkable performance in the past year, outperforming the Nifty Small Cap Index by nearly 10 percentage points. This fund has an impressive 20.83% CAGR over 5 years, significantly outperforming the Nifty SmallCap's 16.04% in the same period. Unlike traditional portfolios dominated by financial stocks, HDFC Small Cap Fund has a substantial exposure to chemicals, engineering, and services with a combined weight of 41%. The fund's 57% exposure to small caps and 36% to mid-caps, with no cash component, shows an optimistic stance on the growth potential of mid and small-cap sectors.
Franklin India Prima Fund - A Long-Term Success Story
AUM: Rs 7116 crore
Date of Inception: December 1, 1993
Franklin India Prima Fund, celebrating 25 years of existence, has consistently demonstrated impressive returns. Investing Rs 1 lakh in this fund in 1993 would now be valued at Rs 90.70 lakh, an astounding 19.52% CAGR over 25 years. In recent years, the fund has maintained a CAGR of 18.30%, slightly exceeding its benchmark Nifty Midcap at 18.02%. Continued growth and solid returns demonstrate the fund's strong performance in both mid-cap and large-cap segments.
When choosing the best mutual funds to invest in, it's crucial to balance expectations with reality. By considering these carefully selected funds, investors can maximize returns while managing risks effectively. Happy investing!