Mutual Funds
Mutual Funds: A Comprehensive Guide
Deciphering fund types and performance with an animated breakdown.
Types of Funds
Equity Funds
These funds primarily invest in stocks. Their returns are tied to the performance of the companies they hold.
Contra Funds 📉
A fund that invests in stocks that are currently underperforming or out of favor with the market, with the expectation that they'll eventually bounce back.
Dividend Yield Funds 💰
These funds focus on companies that have a history of paying out high dividends. The goal is to generate regular income for investors, along with some capital appreciation.
ELSS 🔒
An ELSS is a type of mutual fund that primarily invests in equity, with the added benefit of tax deductions under Section 80C. It has a mandatory 3-year lock-in period.
Flexi Cap Funds 🤸
These funds can invest across different market capitalizations (large-cap, mid-cap, and small-cap) without any restrictions on the allocation.
Focused Funds 🎯
As the name suggests, these funds invest in a concentrated portfolio of a limited number of stocks, typically around 20-30.
Fund Performance Analysis
Key Performance Trends
- Higher Risk, Higher Returns: Small Cap, Mid Cap, and Sectoral/Thematic funds have delivered the highest long-term returns.
- Debt Fund Stability: Debt funds like Liquid and Corporate Bond funds show very low volatility and consistent, albeit lower, returns.
Top Performers by 5-Year Return
| Fund Category | Top Performer | 5-Year Return |
|---|---|---|
| Small Cap | Bandhan Small Cap Fund | 35% |
| Mid Cap | Edelweiss Mid Cap Fund | 33% |
| ELSS | Sundaram Long Term Micro Cap Tax Advantage Fund | 33% |
| Sectoral/Thematic | Franklin India Opportunities Fund | 30% |
| Large & Mid Cap | HDFC Large and Mid Cap Fund | 28% |
| Value Fund | ICICI Prudential Value Fund | 28% |
| Focused Fund | ICICI Prudential Focused Equity Fund | 26% |