7 Best Mutual Funds for 2024 - Top Performing Mutual Funds in India

What are equity mutual funds?

Equity mutual funds are schemes that invest predominantly in equities i.e. shares of companies. These schemes invest money pooled from multiple investors in different stocks across diverse sectors/industries with an aim to generate capital appreciation and enable wealth creation. Equity mutual funds have the potential to generate high returns over the long term.

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What is the outlook for the Indian equity market in 2024?

The Indian equity market has displayed stellar performance over the last few years supported by the resilient growth of the Indian economy, robust corporate earnings, and rising participation by retail investors.

However, concerns regarding expensive valuations persist, particularly in the mid-cap and small-cap segments. In the near term, the equity market may witness sharp volatility due to the following factors:

• The upcoming general elections in India poses a risk of an unstable government coming to power

• Oil prices may rise sharply due to geopolitical tensions in various parts of the world

• Any potential delay in rate cuts by the US Federal Reserve

• Climate risk and its potential impact on food inflation

• FPI inflows may moderate due to expensive valuations

So, while investors may continue to invest in equities with a long-term view, it is essential to exercise caution near market highs. Adopting a prudent asset allocation strategy can help investors benefit from the long-term growth potential of equities at a reasonable level of risk.

Why consider only the best mutual funds in 2024?

There are hundreds of equity mutual fund schemes spread across various sub-categories currently available for investment. Notably, as an individual investor, you only need a maximum of 7-10 schemes in your portfolio to earn optimal returns. However, it is important to note that not all equity mutual funds are worthy of your investment; many schemes fail to beat benchmark returns even over long-term time frames.

[Read: Here is Why Holding Too Many Similar Mutual Funds Can Drag Your Portfolio Returns]

With global uncertainties looming large, it is best to focus attention only on the best mutual fund schemes across different sub-categories that have the potential to do well during both the upside and downside market phases.

Which are the best mutual funds for 2024?

Let us finally take a look at the 7 best equity mutual funds for 2024, selected based on 7-year rolling returns.

Best mutual fund for 2024 - Large Cap Fund category - ICICI Pru Bluechip Fund

As per the SEBI categorisation, Large Cap Mutual Funds invest a minimum of 80% of their corpus in equity (stocks) and equity-related instruments of large-cap companies, defined as the top 100 companies in terms of market capitalisation. The advantage of investing in large-cap companies is that they are well-established, with reliable brand equity, competitive advantage, strong balance sheet, and economic moat.

Due to their huge cash reserves and high product demand, large-cap companies can manage economic downturns much better than mid and small-cap companies. For this very reason, Large Cap Funds should ideally form a predominant part of every investor's portfolio.

One of the best Large Cap Mutual Funds for 2024 is ICICI Pru Bluechip Fund.

Launched in May 2008, ICICI Prudential Bluechip Fund has created a successful track record of generating stable returns over the long run. ICICI Prudential Bluechip Fund is currently the largest scheme in the Large Cap Fund category having an AUM of Rs 53,505 crore as of March 31, 2024. The fund focuses on investing in stocks from the universe of the top 100 companies listed on the NSE in which the fund manager has high conviction.

In the last 5 years, ICICI Prudential Bluechip Fund has generated returns at a CAGR of 15.9% on a rolling return basis. The fund focuses on identifying high-growth potential stocks available at reasonable valuations. With this strategy, ICICI Prudential Bluechip Fund has displayed its ability to limit the downside risk for its investors during uncertain and highly volatile market conditions, while it has also rewarded them with above-average returns during market rallies. The fund typically follows a buy-and-hold strategy and aims to hold a well-diversified portfolio without any sector bias.

Click here to read PersonalFN's analysis on the features and performance of ICICI Pru Bluechip Fund.

Best mutual fund for 2024 - Flexi Cap Fund category - Parag Parikh Flexi Cap Fund

Flexi Cap Mutual Funds are mandated to invest a minimum of 65% of their assets in equity and equity-related instruments with dynamic asset allocation across large-cap, mid-cap, and small-cap stocks. Due to the flexible investment mandate to invest in equities across market capitalisations, Flexi Cap Funds are less risky than pure mid and small-cap funds. Nevertheless, Flexi Cap Funds tend to outperform pure Large Cap Funds.

One of the best Flexi Cap Funds for 2024 is Parag Parikh Flexi Cap Fund.

Launched in May 2013, Parag Parikh Flexi Cap Fund is a value-oriented scheme in the Flexi Cap Fund category. It aims to invest in quality stocks across market caps and sectors available at reasonable or attractive valuations. The fund also holds some exposure to the stocks of around 15% in offshore companies such as Microsoft Corporation, Alphabet Inc., Amazon, Meta, and Suzuki Motor Corp to offer geographical diversification.

In the last 5 years, the value of the fund has appreciated at a CAGR of around 21.4%. Known for its cautious investment approach Parag Parikh Flexi Cap Fund has been able to efficiently limit the downside risk during depressed market conditions. Moreover, the fund has stood among the category toppers during various bull phases. The fund management gives a high preference to safety over returns and does not compromise on the risk aspects to generate higher returns.

Click here to read PersonalFN's analysis on the features and performance of Parag Parikh Flexi Cap Fund.

Best mutual fund for 2024 - Large & Mid Cap Fund category - Mirae Asset Large & Mid Cap Fund

The SEBI has defined Large & Midcap Mutual Funds as equity-oriented mutual funds that are mandated to invest a minimum of 35% of their corpus in equity and equity-related instruments of large-cap and mid-cap companies listed as the top 250 companies in terms of market capitalisation. Large-cap and mid-cap mutual funds offer investors the best of both worlds, i.e., stability from large-cap stocks and high growth from mid-cap stocks.

One of the best Large & Mid-cap Funds for 2024 is Mirae Asset Large & Mid Cap Fund.

Mirae Asset Emerging Bluechip Fund is the most popular Large & Midcap Fund that is known for its prudent investment strategy. The fund has built a commendable long-term performance record without taking undue risks and rewarded its investors reasonably. Incepted in July 2010, Mirae Asset Emerging Bluechip Fund was initially categorised under the Mid Cap Fund category. It was later recategorised as a Large & Midcap Fund in 2018 to comply with SEBI's norms.

The fund managers look for long-term investment opportunities in stocks of high-quality businesses that are available at reasonable prices and follow a 'buy-and-hold' investment strategy until its full potential is derived. Even though the fund has trailed the benchmark and some of its prominent peers in the last couple of years, its long-term returns are encouraging. Backed by an experienced fund manager Mr Neelesh Surana who prefers to focus on quality stocks, the fund has the potential to continue to perform well.

(Note: Owing to its large corpus, Mirae Asset Large & Mid Cap Fund has stopped accepting lump sum investment, while investments via SIP have been capped at Rs 25,000 per month per PAN.)

Click here to read PersonalFN's analysis on the features and performance of Mirae Asset Large & Mid Cap Fund.

Best mutual fund for 2024 - Mid Cap Fund category - Quant Mid Cap Fund

Mid Cap Mutual Funds have the mandate to invest a minimum of 65% of their assets in equity and equity-related instruments of mid-cap companies, ranked from 101st to 250th in terms of market capitalisation.

Since these stocks belong to relatively smaller/niche companies, they are less resilient during market downturns. However, they have the potential to generate superior returns in a bull market phase as the stocks of the underlying companies are yet to enter their growth spurt. This is why we would recommend investing in these only if you have a high risk appetite and an investment horizon of at least 5-7 years.

One of the best Mid Cap Funds for 2024 is Quant Mid Cap Fund.

Launched in February 2001, Quant Midcap Fund is an actively managed small-sized scheme in the Mid-cap Fund category that follows aggressive investment strategies. Despite being relatively small in size, Quant Midcap Fund has registered extraordinary performance in recent years and rewarded its investors with strong gains. Quant Midcap Fund is now a top-performing Mid Cap Mutual Fund with commendable returns across time frames. More importantly, Quant Midcap Fund stands out in the category in terms of risk-adjusted returns.

Quant Midcap Fund constantly looks for opportunities across stocks and sectors which has resulted in significant alpha for its investors. Notably, the fund has recorded a higher churn rate of over 90 to 330% in the last one year. Despite its aggressive approach, Quant Midcap Fund has proved its ability to limit downside risk during depressed market conditions even though it has underperformed during bull phases in the past. This highlights the fund's ability to reward investors with noteworthy gains over the long run.

Click here to read PersonalFN's analysis on the features and performance of Quant Mid Cap Fund.

Best mutual fund for 2024 - Small Cap Fund category - Nippon India Small Cap Fund

Compared to the other categories, this is by far the riskiest one on our list of best equity mutual funds for 2024. Small Cap Funds are equity-oriented mutual funds mandated to invest at least 65% of their assets in equity and equity-related instruments of small-cap companies. Small-cap stocks are defined as companies ranking beyond 250 in terms of full market capitalisation.

Though small caps have high return potential, there are various risks associated with them. At times, if there is a constraint on resources, they may face risk to survival in case of economic downturn. These factors make Small Cap Funds suitable only for investors with very high risk appetite and an investment horizon of at least 7-10 years.

One of the best Small Cap Funds for 2024 is Nippon India Small Cap Fund.

Having a corpus of Rs 45,749 crore, Nippon India Small Cap Fund is the largest scheme in the Small Cap Fund category. Since its launch in September 2010, Nippon India Small Cap Fund has done well across market phases and built an impressive track record of superior performance. The fund currently stands among the top quartile performers in the category across time frames.

The fund holds a large portfolio of over 150 stocks. Moreover, it limits the exposure in individual stocks to well under 5% in order to reduce the high downside risk associated with small-sized companies. Its focus on fundamentally sound stocks available at a reasonable margin of safety has helped it minimise the downside risk during bearish market phases. Meanwhile, the focus on fundamentally sound stocks having high potential stocks and holding them with a long-term view has enabled it to do well during upside markets.

(Note: Owing to the large corpus, Nippon India Small Cap Fund has stopped accepting fresh lump sum investment w.e.f. from July 07, 2023. This restriction will also apply in the case of switch-in transactions. Moreover, fresh registrations through SIP or STP will continue with a limit of Rs 5 lakh per day per PAN).

Click here to read PersonalFN's analysis on the features and performance of Nippon India Small Cap Fund.

Best mutual fund for 2024 - Value Fund category - Bandhan Sterling Value Fund

Value investing is a time-tested strategy that involves identifying/finding stocks that are trading below their intrinsic value.

A Value Fund is mandated to invest a minimum of 65% of its assets in value stocks across market capitalisation. While value funds tend to underperform during momentum-based market rallies led by growth stocks, time and again, it has been proven that value stocks are the best bet during market downturns. But remember, patience and a long-term investment horizon are necessary when investing in value funds.

One of the best Value Funds for 2024 is Bandhan Sterling Value Fund.

Launched in March 2008, Bandhan Sterling Value Fund (erstwhile IDFC Sterling Value Fund) focuses on seeking value opportunities by investing predominantly in emerging businesses. The fund seeks opportunities in emerging businesses and those that are leaders/challengers in their respective fields.

Due to its higher exposure to stocks in the mid and small-cap segment Bandhan Sterling Value Fund is susceptible to higher volatility. However, its significant exposure to large caps and focus on picking undervalued stocks can offer better protection against downside risk, thereby generating decent risk-adjusted returns over the long term.

With significant exposure across the market cap range, Bandhan Sterling Value Fund has displayed extraordinary performance in the recent broad-based market rally. Moreover, the fund has managed to compensate investors for the level of risk taken by generating superior risk-adjusted returns.

Best mutual fund for 2024 - ELSS category - Quant ELSS Tax Saver Fund

ELSS, also known as Tax-saving Mutual Funds, are diversified equity funds that come with the dual advantage of wealth-building potential and tax-saving benefits. As per SEBI's categorisation norms for mutual funds, ELSS are open-ended schemes with a statutory lock-in of 3 years and tax benefits. ELSS invests a minimum of 80% of its assets in equity & equity-related instruments.

Investment in ELSS is eligible for a deduction under Section 80C of the Income Tax Act up to Rs 1.5 lakh in a financial year.

One of the best ELSS for 2024 is Quant ELSS Tax Saver Fund.

Quant ELSS Tax Saver Fund is an actively managed ELSS that has gained traction by registering stellar performance in the last few years to reward investors with extraordinary risk-adjusted returns. The fund follows an active investment approach whereby it constantly hunts for attractive opportunities, which has helped it to generate remarkable alpha in recent years and handsomely rewarded its investors. It aims to hold a well-diversified portfolio that is market cap and sector agnostic, and remains fully invested in equities.

Quant ELSS Tax Saver Fund currently tops the returns chart by a wide margin across most time frames. Due to its agile investment approach, the volatility registered by the fund is higher than the benchmark and most of its peers. Nonetheless, its Sharpe ratio, which is a measure of risk-adjusted returns is currently among the highest in the ELSS category.

Click here to read PersonalFN's analysis on the features and performance of Quant ELSS Tax Saver Fund.

How much to allocate in the best equity mutual funds for 2024?

Equity mutual funds can generate higher returns compared to debt funds and gold, but note that every category varies in terms of risk-reward profile. Therefore, make sure to select mutual fund schemes that match your risk profile, investment objective, and investment horizon goal. Avoid riskier categories such as Mid Cap Funds and Small Cap Funds if you do not have the appetite to handle intense market volatility.

For instance, conservative investors and investors with moderate risk appetite should ideally have a higher allocation to Large Cap Funds (around 50-70% or more of their equity portfolio), and the balance can be in Value Funds, Flexi Cap Funds, Large & Mid Cap Fund, and ELSS (for tax-saving needs).

On the other hand, aggressive investors can consider allocating 30-50% of their equity assets in Large Cap Funds and the balance in Value Funds, Flexi Cap Funds, Mid Cap Funds, and some portion in Small Cap Funds, along with ELSS (for tax-saving needs).

Avoid investing in equity mutual funds if you have a very short-term investment horizon of, say, 6 months, 1 year, or 2 years.

How to invest in the best mutual funds in 2024?

Considering the volatile and uncertain nature of equity markets, take the Systematic Investment Plan (SIP) route while you build the portfolio of the best equity-oriented mutual funds in 2024. Click here to read about the benefits of investing in mutual funds via SIP.

You can also consider opting for the Direct plan option of mutual funds to enhance the portfolio returns, as the expense ratio of Direct plans is around 50-100 bps lower than that of the Regular plan.

Watch this video to find out common mistakes mutual fund investors make and how they can avoid them:

Note:  This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

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DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.
Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.