Top MF Categories for the Best Returns
  • Provide great growth in long-term investments.
  • Should give annual returns of more than 12%.
  • Show stability during market volatility.
  • Should invest in top-notch securities. 
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Aug 13, 2018 6 min read

Best Mutual Fund Categories for Wealth Creation

Go through the blog to know about the top mutual fund categories that you can opt for wealth creation.

Which Are the Best Categories for Wealth Creation?

  • Large-Cap Mutual Funds
  • Small-Cap Mutual Funds
  • Multi-Cap Mutual Funds
  • ELSS Mutual Funds
  • Aggressive Hybrid Mutual Funds

How Are They Different from Each Other?

All the above mutual fund categories follow a different approach and style of investment. Let’s have a look at the facts that make these categories unique.

  • Large-Cap Mutual Funds: This category includes schemes that invest a major portion of their total investment in securities of large-cap equities, which are stocks that rank in top 100, as per the market capitalization.
  • Small-Cap Mutual Funds: The schemes in this category invest a large portion of their investment in stocks of equities with small market capitalization. These are generally companies that are either a start-up or are in their developing phase.
  • Multi-Cap Mutual Funds: These are the schemes that distribute their investments in equities from different market capitalization, and can change the allocation according to the behavior of the stock market.
  • ELSS Mutual Funds: These are tax saving schemes that invest more than 90% of their total investment in equity securities, and in addition to that provide investors with the tax benefits (U/s 80C) on investments up to Rs 1.5lakhs.
  • Aggressive Hybrid Mutual Funds: These are hybrid schemes that invest in a mix of equity and debt instruments. The allocation in equities can range from 65-80%, while the investment in debt instruments can range from 20-35%, depending on the behavior of the capital market.

Which Category Is for You?

  • Large-Cap Mutual Funds: These are the meant for investors who are looking for an investment tenure of 10-15 years, and have moderate risk appetite. The returns given by large-cap funds are stable and not get easily affected by equity market volatility.
  • Small-Cap Mutual Funds: These are best-suited to investors who are looking for moderate-term investments (5-7 years). The risk associated with small-cap funds is very high, but so are the returns provided by them.
  • Multi-Cap Mutual Funds: These funds too, are the best for investors who are looking for an investment period of 5-7 years. The risk associated with these multi-cap schemes are less than small-cap as well as large-cap, and the reason behind that is the diversity in the portfolio.
  • ELSS Mutual Funds: Equity-Linked Savings Schemes are ideal for investors who are looking for options that can provide them high returns, as well as can help them in saving on taxes. Due to major investment in equity instruments, the risk associated with them is high, and there is a lock-in period of 3 years, which means after making an investment, you cannot redeem before three years.
  • Aggressive Hybrid Mutual Funds: This is the least risky category in this list and is great for an investment period of 5-10 years. The assets are diversified among equity and debt instruments, so the returns provided by these are moderate, but the stability these balanced schemes show during market volatility is remarkable.

What Should You Avoid While Investing?

The most common mistake that mutual fund investors make while investing is that instead of diversifying their investments across various schemes, they put all their money into a single fund. By doing so, not only they restrict the growth of their wealth, but also increase the chances of losing their investments.
The right way to make mutual fund investments is to create a portfolio that contains schemes from various categories, and then dividing your total investment among them after analyzing the total risk associated.

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Top Funds from Each Category

The experts at MySIPonline has picked some top schemes from the above categories, by analyzing various parameters such as portfolio allocation, risk measures, past performance, etc. You can get details of the below-mentioned schemes by clicking on them.

Large-Cap Funds:

Scheme Name3 YEARS(%)5 YEARS (%)10 YEARS (%)
Reliance Large Cap Fund (G) 10.37 21.77 13.12
SBI Bluechip Fund (G) 9.96 20.69 13.19
Axis Bluechip Fund (G) 12.44 18.79 -
Aditya Birla Sun Life Frontline Equity Fund (G) 13.30 0.93 0.31
Returns (As on Aug 09, 2018 )

Small-Cap Funds:

Scheme Name3 YEARS(%)5 YEARS (%)10 YEARS (%)
L&T Emerging Businesses Fund (G) 20.30 - -
Reliance Small Cap Fund (G) 17.18 38.09 -
Aditya Birla Sun Life Small Cap Fund (G) 14.85 28.71 16.92
Returns (As on Aug 09, 2018 )

Multi-Cap Funds:

Scheme Name3 YEARS(%)5 YEARS (%)10 YEARS (%)
Aditya Birla Sun Life Equity Advantage Fund (G) 11.70 25.36 13.66
SBI Magnum Multi-Cap Fund (G) 12.38 24.09 12.51
Kotak Standard Multicap Fund (G) 12.71 23.46 -
Returns (As on Aug 09, 2018 )

ELSS Funds:

Scheme Name3 YEARS(%)5 YEARS (%)10 YEARS (%)
Reliance Tax Saver (ELSS) Fund (G) 6.41 24.03 15.77
Aditya Birla Sun Life Tax Relief 96 Fund (G) 12.34 24.81 14.22
L&T Tax Advantage Fund (G) 12.61 21.29 15.07
Returns (As on Aug 09, 2018 )

Aggressive Hybrid Funds:

Scheme Name3 YEARS(%)5 YEARS (%)10 YEARS (%)
Reliance Equity Hybrid Fund (G) 10.51 19.98 15.22
Aditya Birla Sun Life Tax Relief 96 Fund (G) 9.67 19.68 -
SBI Equity Hybrid Fund (G) 9.99 19.10 13.00
Returns (As on Aug 09, 2018 )

So, with this, we end our discussion for today. We hope that you find this information helpful, the next time you choose mutual funds schemes for wealth creation. If you have any query about mutual fund investments, then you can either drop it in the comment section or can connect with our experts via call or email.

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