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Best Equity Mutual Funds to invest in 2021

Associated Risk

Ideally you need around 6 to 10 equity funds in your portfolio to ensure sufficient diversification in equities. You can invest in Large Cap, Large & Mid Cap, Flexi Cap, Mid Cap & Small Cap and you are on the right path when it comes to investing in Equity Funds. At present there are more than 400 equity funds and selecting the right ones can sometimes be challenging. When it comes to selecting the right fund, performance cannot be the only yardstick; it is important to look at other aspects of funds as well along with it. If you look at last one year, even the worst performing fund has generated 28% return which is way higher than the average historical equity returns of 15% p.a.

Equity Funds offers you the opportunity to invest in companies as per their market capitalization, sectors, industries, themes, geography, etc. Each of these funds carry different return potential and risk as shown in graph.

Presenting the list of Equity Diversified Funds that you can consider investing at present. We have tried to covered most prominent categories of diversified funds. Thematic and Sectoral funds carry high risk in our view, hence we are not included these categories. These equity funds are based on multiple qualitative and quantitative parameters across different market cycles as per our research process.

Equity Funds to invest in 2021

Large Cap Funds

Large Cap Funds invest in well-established and big companies also known as Bluechip stocks. The aim is to generate steady capital appreciation with less volatility.

Funds 1 Year Return 3 Year Return 5 Year Return
Mirae Asset Large Cap Fund 54.93% 14.27% 15.86%
Canara Robeco Bluechip Equity Fund 51.83% 17.67% 16.64%
Axis Bluechip Fund 46.79% 15.99% 16.26%

Index Funds

Index Funds replicate the benchmark and invest in the same companies as per its benchmark and also follows the same weightage.

Funds 1 Year Return 3 Year Return 5 Year Return
UTI Nifty Index Fund 56.64% 14.49% 14.77%
HDFC Index Fund Nifty 50 56.27% 14.22% 14.56%

Large & Mid Cap Funds

Large & Mid Cap Funds invest in bluechip and aggressive medium-sized companies. Potential to generate higher return with additional risk of mid cap.

Funds 1 Year Return 3 Year Return 5 Year Return
Mirae Asset Emerging Bluechip Fund 73.16% 20.70% 21.37%
Canara Robeco Emerging Equities Fund 62.52% 14.94% 18.15%
Kotak Equity Opportunities Fund 57.47% 15.39% 16.01%

Flexi Cap

Flexi Cap invest across large, mid & small sized companies. Covers the overall potential of stock markets due to the flexibility to invest depending on opportunities.

Funds 1 Year Return 3 Year Return 5 Year Return
Parag Parikh Flexi Cap Fund 60.56% 20.75% 19.31%
UTI Flexi Cap Fund 68.94% 18.13% 17.04%
SBI Focused Equity Fund 51.99% 15.02% 16.25%

Mid Cap Fund

Mid Cap Fund invest in medium-sized companies that have the potential to grow faster. Good for investors with a high-risk taking ability because of volatility during tough market conditions

Funds 1 Year Return 3 Year Return 5 Year Return
Axis Mid Cap Fund 59.53% 19.44% 19.17%
Kotak Emerging Equity Fund 82.45% 16.98% 17.63%
DSP Mid Cap Fund 61.25% 15.26% 17.05%

Tax Saver Funds (ELSS)

Tax Saver Funds invest across large, mid & small sized companies and help you save tax under section 80C. These funds have a lock-in period of 3 years.

Funds 1 Year Return 3 Year Return 5 Year Return
Mirae Tax Saver Fund 71.71% 19.45% 21.13%
Axis Long Term Equity Fund 51.92% 14.66% 16.00%
Invesco India Tax Plan 56.63% 13.98% 15.52%

We recommend limiting the allocation in a fund to around 15% of your overall investment, which means that you need to diversify your investment across at least 8 of these funds. Ideally, you should diversify across different fund houses to avoid the risk of investing too much in any fund house.

Investment Strategy in present market conditions

You can hold on with your existing long term equity fund investment and for those wishing to add more can look at 50% - 60% of fresh investment at present and rest can be done at regular intervals in three to six months taking advantage of near-term volatility.

To know more about which funds are right for you get in touch with us!

All Returns shown above are annualized return as on 8 June 2021. All fund tables are sorted in descending order based on the 5 years return.