5 Best Mutual Funds for Long Term Investment Benefits

Mutual funds have become the most viable investment option these days due to its long term benefits and low risks involved in it. According to the market demand of the last few years, mutual funds have gained immense popularity amongst investors. Investing in long-term mutual funds will give high amounts of returns provided if you get to invest in the right mutual fund in the right proportion. Besides providing high returns and low risk factor, mutual funds also provide you with ample tax advantages.  

Mutual funds with a time horizon of 5 years or longer is considered as long term mutual fund investment. With different mutual fund types, small cap and mid-cap mutual funds tend to perform best in the long term. The larger growth potential of these companies than the large cap is the reason behind this. Besides, Equity Linked Savings Scheme (ELSS) with a lock-in period of 3 years is also regarded as the best choice for long-term investments in mutual funds. These are the choice of major investors for higher returns and tax benefits.

Let’s look at some of the most popular mutual fund types for long term investments in 2020 here.

SBI Magnum Multi-cap Fund

This mutual fund type consists of a diversified portfolio with investments in equities, debts and hybrid stocks. This category of mutual fund investment follows a bottom-up approach and the companies are chosen from various sectors. If you want to invest for a longer period of time, then SBI Magnum Multicap Fund is best as it balances out the risk and also provides good returns.

Risk Factor

Investing in SBI Magnum Multi-cap Fund, the risk factor ranges between low and moderate. The returns are higher but lesser than other funds. 

Aditya Birla Sun Life Small Cap Fund

This is the most beneficial mutual fund in the small and midcap category. Initiated in 2013, this type of mutual fund aims to accumulate capital growth by investing in small and midcap companies’ equity and equity related securities.  It is an open-ended fund and the minimum investment of this fund is Rs.1000.

Risk Factor

Aditya Birla Sun Life Small Cap Funds are generally variable as these are invested in small and mid-cap companies. However, higher returns are guaranteed investing in this type than in large-cap companies and it is considered safe for investment. Analyze your long term goals and invest in this fund for a long-term.

L & T Midcap Fund

L & T Midcap Fund is one of the largest listed investment companies that account for 15-20% of total market capitalization in India. Its main objective is to generate long-term capital with maximum returns. Investing in this type of mutual fund, you’ll have a good chance of your wealth getting multifold. It has a diversified portfolio and the investment has to be depending on your long term goal.

Risk Factor

Investing in this fund has a slightly high risk factor as it is primarily invested in equities and equity-related securities.

HDFC Small Cap Fund

HDFC Small Cap Fund is best for investors who have long-term financial goals and earn long-term capital appreciation. The main objective of this fund is to allocate assets into smaller companies with sound financial strength and reasonable growth prospects.

Risk Factor

With the predominant asset accumulation in equity securities with potential growth, the risk factor is less and you can earn consistent returns           in the future.

ICICI Prudential Blue Chip Fund

This fund is aimed at generating long-term capital appreciation and to distribute income to shareholders. Its portfolio is primarily composed of equity and equity related securities of various companies that are in the large cap space, debt securities and money market instruments.

Risk Factor

The risk and volatile factor for investing in this type of fund is low. With even minimum investment and low expense ratio, the returns are higher and safe in ICICI Prudential Blue Chip Fund.

If you wish to know more about mutual fund types and investment options, we always suggest you to consult mutual fund investors and experts through Sulekha.