Equity mutual funds that have beaten their benchmark index are those whose returns have exceeded the performance of the benchmark index against which they are evaluated. Thus, compared to the market as a whole or a particular index they seek to track, these funds have produced greater returns for their investors. Continue reading to discover the best mutual funds to invest in from various equity categories in 2024.
ICICI Prudential Large & Mid Cap Fund
The ICICI Prudential Large and Mid Cap Fund is a mutual fund investment scheme that invests in both large-cap and mid-cap stocks. Through a portfolio primarily invested in equity and equity-related securities of large-cap and mid-cap companies, it seeks to generate long-term capital appreciation. The mutual fund has delivered steady growth over its 26-year history, currently holding assets under management of over Rs 13,383 crores and has a Net Asset Value (NAV) of 867.77 as of May 31, 2024 for investors in the regular growth plan.
Bandhan Small Cap Fund
Bandhan Small Cap Fund is one of the equity mutual funds that has generated a substantial return in the last year. It has annualised returns of 72.65% as of July 31, 2024. Because they invest in companies from many industries, small-cap mutual funds can assist in portfolio diversification for investors. Compared to mid-cap and large-cap companies, small-cap companies are also more likely to scale their operations and experience greater growth.
Kotak Multicap Fund
In the multi-cap space, Kotak Multicap Fund delivered a one-year CAGR of 51.90% as of August 8, 2024. Multi-cap funds are a type of equity mutual fund that invest in stocks across different market capitalizations, including large-cap, mid-cap, and small-cap. This diverse approach allows fund managers to adapt to changing market conditions and allocate assets strategically. Multi-cap funds are required to hold at least 75% of their assets in equity and equity-related instruments, with at least 25% of those assets allocated to each of the three market capitalizations
Why should you invest in equity funds?
Equity mutual funds provide an excellent avenue for long-term wealth creation by investing in shares of companies across market capitalisations. Compared to other asset classes like gold, real estate, and fixed deposits, equity has delivered inflation-beating returns over extended periods.
With professional fund management, equity funds enable diversification across sectors, companies, and market caps, reducing overall portfolio risk. Investors can choose from categories like large-cap, mid-cap, small-cap, and sectoral or thematic funds aligned to their risk appetite and return expectations.
Equity funds harness the growth potential of shares over long durations, with the ability to withstand interim volatility. For young investors with a high risk tolerance and long investment horizons, equity funds are ideal for the meeting corpus required for life goals. The power of compounding works wonders when you start a Systematic Investment Plan (SIP) early and remain invested. With equity outperforming other assets historically, it deserves a significant allocation in every investor’s portfolio.
Conclusion
Investors should evaluate factors like historical performance, portfolio composition, expense ratios, and fund management pedigree when selecting the right equity fund aligned with their risk appetite and goals. Maintaining a diversified equity portfolio with a mix of large-cap, multi-cap and mid/small-cap funds can optimise returns while minimising volatility.
Investing through SIPs with a long-term horizon allows compounding to magnify gains. The top equity funds highlighted in this article have consistently rewarded investors through strong stock selection and have the potential to outperform their benchmarks in 2024 as well. For growth-focused investors, allocating a sizable portion to equities through mutual funds could pave the path towards financial freedom.
