What mutual funds are most likely to provide long-term returns?

Mutual funds, one of the most widely invested instruments for long term goals, are not as volatile as equity shares but can provide inflation-beating returns. However, it’s important to note that the returns generated by mutual funds are not guaranteed as they depend on the market’s performance. Therefore, there can be no concluding answer to the top mutual fund for the long term.

It has been observed that equity mutual funds often provide better results in the long term. That is why they are also known as long-term mutual funds. These funds invest a major portion of their corpus in the stocks of the companies. Conversely, if you want to take a risk-averse approach, you can invest in a hybrid fund that will invest your money in a combination of equity and debt instruments.

Depending on your risk appetite and investment objectives, you can even choose between large-cap equity funds, mid-cap equity funds, small-cap equity funds, or multi-cap equity funds. These mutual funds vary from each other based on the risks they carry and their potential to generate higher returns. Since large-cap funds invest in the stocks of companies with large market capitalisation, they carry the least risks. Similarly, small-cap funds invest in shares of companies with high growth potential and hence, can generate very high returns in the long term.

While choosing a mutual fund scheme for long-term investment, it is very crucial to consider other factors such as your risk appetite and investment objective. Also, look at the past performance of the fund, the fund manager’s track record, and the fund rating. Comparing the fund’s performance against the benchmark index can give you a better idea.

While investing in an equity mutual fund for the long-term, you need to remember that these funds are highly volatile, and your investments can go through several ups and downs. It is very crucial to remain invested until you achieve your investment goal.

Below is the list of some of the top mutual funds for long-term investment:

• Axis Bluechip Fund
• Quant Small Cap Fund
• Quant Infrastructure Fund
• Canara Robeco Small Cap Fund
• Edelweiss Mid Cap Fund
• Aditya Birla Sunlife Digital India Fund
• ICICI Prudential Technology Fund
• Tata Digital India Fund