Best Mutual Funds to Invest in India in 2019

ICICI Pru Bluechip is the best performer (by a margin) on almost all the parameters. Still it finds itself ranked 5th. The main reason is that the fund manager has changed recently.

Mr. Manish Gunwani, who was managing this fund quit and the fund is under a new manager. The stellar performance of this fund was all attributable to Mr. Gunwani.

We do not completely filter it out from our list because the near-term performance continues to be strong despite the change. So, we would still wait for this fund to deliver for some more time before we can place our bets on it.

Finally, Reliance Large Cap edges past Aditya Birla Frontline Equity for 3 main reasons:

1. Far better near-term rank of 21.5% vs 56.4%
2. A much more comfortable AUM of ₹ 11.7K cr as against ₹ 21.2K cr and
3. The most important reason being that Mr. Gunwani (mentioned above) has joined Reliance AMC as the CIO. Manager of the best large cap fund for past 13 years becoming CIO makes us extremely confident about Reliance Large Cap fund.

It is important to note that the multi cap category itself has shrunk in size after SEBI’s re-categorization of schemes. Under the new categories, a lot of erstwhile multi cap funds have now moved to Value and Focused categories.

In our rankings, we treat these as 3 separate categories as this is how it will be going forward. The funds have now a changed mandate. Hence its pertinent to find out the best funds in each category rather than merge them into one single category.

Mirae Asset India Equity Fund is by far the best multi cap fund on all counts. Undisputed number 1 in our ranking.

Had this been mid cap or small cap category, we would have to rethink Kotak Standard Multi Cap Fund owing to its bloated asset size of ₹ 21,719 cr. We however keep it in our list because the performance record is way better than the next 2 funds on the list.

L&T Midcap Fund as the top fund is a surprise entry here. In terms of pure historical performance, the fund is actually worse than the other 2 in the list. However, there’s a big subjective factor that tips the scale in its favor.

L&T Mid Cap has been in existence since Aug 2004. However, the current fund manager Mr. SN Lahiri took over the fund only in June 2013. Mr. Lahiri comes with a great track record of managing in the small and mid cap space while at DSP Blackrock.

Therefore, we decided to look at the performance of this fund from Jun 2013. Interestingly, since June 2013, this fund has a percentile rank of 9.6% and has been in top-25 percentile a staggering 89% of times. No other mid cap fund comes close to this performance. And that’s why we keep it as our top pick in the mid cap category.

HDFC Mid-Cap Opportunities Fund, despite being the top performer by a margin, is placed second simply because of its bloated AUM (₹ 21,085 cr). Something that is a cause of concern in the mid cap category.

In terms of pure performance, Reliance Small Cap Fund is the clear winner. But it is last in the list because the fund manager changed and the fund is now being managed by a new manager since Jan 2017.

The stellar performance of this fund was all attributable to the previous fund manager Mr. Sunil Singhania. Again, just like ICICI Pru Bluechip (in large cap category), the fund doesn’t get completely filtered out because of its strong near-term performance. But, we would still wait for this fund to deliver for some more time before we can rank it further up.

This makes SBI Small Cap Fund the clear winner in this space.

L&T Emerging Business Fund finds itself in the second rank despite just few years of performance track recrod. This is because the fund is being managed by Mr. SN Lahiri and is the best performing fund since its launch in 2014.

For HDFC Small Cap Fund, the story is similar to L&T Mid Cap Fund – a new fund manager turning around the fortune of the fund.

Mr. Chirag Setalvad, who has had phenomenal success with HDFC Mid Cap Opportunities fund, took over this fund in June 2014. Since then, this fund has consistently been in the top-3.

This is a tricky category. Large-and-Mid Cap was a new category introduced by SEBI in 2018. Post this re-categorization, 21 schemes were reclassified as large-and-mid cap. Of these, 13 schemes were earlier multi cap, 5 were mid cap and 3 were large cap schemes.

Owing to this diversity, comparison of performance becomes tricky.

Not surprisingly, all the funds in top 3 were previously mid cap funds. During good times, mid cap funds will outperform large and multi cap funds most of the times. Barring the crash of 2008 (which was not seen by Mirae Emerging Bluechip and Principal Emerging Bluechip), we have pretty much seen good times.

Notwithstanding the distortion in this category, a Mirae Asset Emerging Bluechip deserves a special mention. If you merge all categories and consider entire universe of equity mutual funds, this fund will still top the list!

This is also a new category introduced by SEBI in 2018. These funds are primarily multi cap funds but with a focused approach.

As the name suggests, these funds tend to focus on a relatively small number of stocks. SEBI has mandated focused mutual funds to have no more than 30 stocks.

SBI Focused Equity Fund edges past Franklin India Focused Equity Fund despite poorer long-term percentile rank primarily because:

1. Top-of-the line near term performance. In fact, this has been the best fund for past 2 years.
2. Much stronger risk protection as indicated by lower Downside deviation.
3. More comfortable AUM size allowing more flexibility to run a focused strategy