India is one of the fastest-growing economies in the world, and it’s a popular place for investors to put their money. The investment market in India is growing at a rapid pace. There has been a huge increase in the number of mutual funds and equity schemes that are available for investors to choose from.
With so many options available, it is important to understand which funds have beaten their benchmark and which ones have not.
Mutual funds are investment vehicles that invest in stocks, bonds, money market instruments, and other securities. Mutual funds are professionally managed by fund managers who choose the securities to be held by the mutual fund over a specified period of time, normally ranging from days to years. The fund manager/investment advisor attempts to maximize returns while managing risk within the portfolio.
Previous years have been great years for equity mutual funds. Not only did the benchmark indices grow, but many of them have outperformed their benchmarks. Equity Mutual Funds are a type of mutual fund that invests in stocks, bonds, and other securities. They are one of the most popular types of mutual funds in India, with over $2 trillion under management.
Funds That Have Beaten Their Benchmark
Equity funds have been a great place to invest in India over the years. It is not surprising that many investors are now looking for investment funds that have beaten their benchmark and performed better than the market average.
Equity schemes, for e.g. Quant Small Cap Fund and Quant Infrastructure Fund have delivered returns of over 80% this year. Their year-to-date (YTD) return of benchmark indices has been between 39-56% as well.
Here is a list of the best mutual funds in India to invest in whose performance has been better than their benchmark:
S.No. | Fund Name |
1. | Kotak Small Cap Fund |
2. | Principal Small Cap Fund |
3. | Tata Small Cap Fund |
4. | Nippon India Small Cap Fund |
5. | Canara Robeco Small Cap Fund |
6. | BOI AXA Small Cap Fund |
7. | Edelweiss Small Cap Fund |
8. | SBI Small Cap Fund |
9. | Reliance Small Cap Fund |
10. | HDFC Small Cap Fund |
Factors to Consider Before Investing
While there are many mutual funds on offer, it is important to choose one that will help you with your financial goals. Many factors need to be considered when choosing an equity fund.
Financial Goals
The first thing that you need to think about when investing in equity mutual funds is your financial goals. You will have to decide how much money you want to invest and how long you are willing to invest. This will help you determine if an equity mutual fund is right for you.
If you are looking for a short-term investment, then an equity mutual fund may be a good choice for you. However, if you would like to invest for the long term (5 or more years), then this may not be the best option for your needs.
Taxation Of Equity Funds
Another important factor when choosing between an equity mutual fund and another type of investment option is the taxation of these two types of investments.
There are many different types of income taxes that may apply when investing in either type of investment option; therefore, it is important to understand which ones apply before making any decisions on where or how much money should be invested into either type of account.
Dividends
Dividend-paying equity funds offer investors a regular stream of income, which can be reinvested into other assets or used to meet expenses such as rent, car payments, etc.
Dividends are taxed at a lower rate than capital gains (10%). Be sure to consider this when choosing an equity fund.
Size of The Fund
The size of the fund should be appropriate for your needs. If you are looking to invest small amounts, then it might not be worth it to invest in large funds with high expenses. However, if you are looking to invest large amounts, then it may be worth considering larger funds that have lower expenses.
Fund Performance
You should check how well a fund has performed over the years, as this will help you decide whether or not it is suitable for your needs.
If a fund has been performing well over time, then this might indicate that it will continue doing so into the future, which would mean that it could be a good investment option for you.
Expense Ratio
The expense ratio is simply what percentage of your investment goes toward paying expenses for running the fund and marketing it—it’s kind of like an ongoing fee that you pay every year even if nothing else happens!
It’s important to compare this number across different funds because some will charge higher fees than others and this can make a big difference to your bottom line over time.
Risk/Reward Ratio
Finally, the risk-reward ratio tells you what level of risk you can expect for each unit of return on investment (ROI) that you receive from investing in this particular mutual fund over time.
Overview of the Funds That Have Beaten Their Benchmark
– Kotak Small Cap Fund
Kotak Small Cap Fund is a closed-ended equity scheme which was launched in 2005. The fund has been managed by Kotak Mahindra Mutual Fund since its inception.
The fund invests in small-cap stocks of companies that are listed on the BSE and NSE. It is one of the most popular small-cap funds in India and has seen tremendous success over the years.
– Principal Small Cap Fund
The Principal Small Cap Fund is an open-ended equity fund that invests in mid-and small-cap companies. The Principal Small Cap Fund seeks to provide investors with long-term, risk-adjusted returns through a diversified portfolio of mid-and small-cap stocks.
The fund’s managers will seek to invest in quality operating companies with strong fundamentals and sustainable growth potential, while also maintaining a reasonable level of risk.
– Tata Small Cap Fund
Tata Small Cap Fund is an actively managed diversified equity fund that aims to provide consistent returns to its investors. The fund’s portfolio is composed of mid-cap and small-cap stocks.
Tata Small Cap Fund has been in operation since November 2018. The fund manager, Satish Chandra Mishra, has years of experience in the investment industry.
– Nippon India Small Cap Fund
Nippon India Small Cap Fund is a diversified equity fund. The Fund primarily invests in the stocks of small-cap companies.
The Fund will aim to achieve this objective by investing predominantly in equity securities of companies with a market capitalization below Rs500 crore (Rs5 billion) at the time of investment. It was launched on September 16, 2010, and has been open for subscriptions since then.
– Canara Robeco Small Cap Fund
Canara Robeco Small Cap Fund is an open-ended equity scheme of Canara Robeco Mutual Fund. It was launched in 2019. February. The fund invests in. Canara Robeco Small Cap Fund is a mutual fund managed by Canara Robeco Asset Management Company Limited.
The fund invests in the mid and small-cap stocks of Indian companies, which means securities of small, relatively young companies that are expected to grow at a faster rate than large firms.
Conclusion
As you consider these mutual funds, also consider whether you have a reason to be investing in them and how this fits into your overall investment strategy.
Don’t simply invest in a mutual fund because it’s easy and convenient, but take the time to learn about the company and understand what they do.
And naturally, if you want to sell a mutual fund or want to buy or sell shares in the future, you should make that decision based on your own research as well. Just because one mutual fund makes this list doesn’t mean it’s necessarily going to work out better for you than other choices if you’re considering selling it down the road.
Above, we’ve put together a list of the best funds to invest in for you to review. Of course, if you’re looking for an investment that will beat its benchmark consistently over time, you’ll want to invest in more than just one fund. But these top-performing funds may be worth looking into.
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.
To read the RA disclaimer, please click here
Research Analyst - Bavadharini KS
As someone deeply immersed in the world of finance and investments, I bring a wealth of expertise to the table, backed by a comprehensive understanding of the intricacies of the global economic landscape. My track record includes successful navigation through various market trends and a keen eye for emerging opportunities. With a finger on the pulse of the financial realm, I've consistently demonstrated a profound grasp of investment strategies, market dynamics, and the nuances of different financial instruments.
Now, diving into the article about the Indian investment market, let's break down the key concepts and provide insights into each:
Mutual Funds in India:
Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, money market instruments, and other securities. The funds are professionally managed by fund managers, responsible for optimizing returns while managing risk. The article highlights the surge in the number of mutual funds and equity schemes in India.
Equity Mutual Funds:
Equity mutual funds specifically invest in stocks, bonds, and other securities. They have been particularly lucrative in India, with over $2 trillion under management. The piece mentions notable performers like Quant Small Cap Fund and Quant Infrastructure Fund, both showcasing remarkable year-to-date returns.
Funds That Have Beaten Their Benchmark:
The article provides a list of top-performing mutual funds in India, specifically in the small-cap category, with returns exceeding benchmark indices. Some of the highlighted funds include Kotak Small Cap Fund, Principal Small Cap Fund, Tata Small Cap Fund, Nippon India Small Cap Fund, Canara Robeco Small Cap Fund, and others.
Factors to Consider Before Investing:
The article emphasizes the importance of considering various factors before investing in mutual funds, such as financial goals, taxation implications, dividends, the size of the fund, fund performance over the years, expense ratio, and the risk/reward ratio.
Overview of Top-Performing Funds:
A detailed overview of some funds, such as Kotak Small Cap Fund, Principal Small Cap Fund, Tata Small Cap Fund, Nippon India Small Cap Fund, and Canara Robeco Small Cap Fund, is provided. Each fund's investment approach, launch date, and key characteristics are highlighted.
Conclusion and Disclaimer:
The conclusion encourages investors to carefully consider their investment choices based on individual research and aligning investments with their overall strategy. A disclaimer reiterates that the article is for educational purposes and doesn't offer specific recommendations.
In summary, the article provides a comprehensive guide for investors interested in the Indian market, offering insights into top-performing mutual funds and essential factors to consider before making investment decisions.
