How to get higher returns from Mutual Funds in India?

How to get higher returns from Mutual Funds in IndiaHow to get higher returns from Mutual Funds in India?

Mutual funds are one of the best investment plans which give highest returns compared to any other investment options. While choosing a good mutual fund can give you higher returns, there are several other ways where you can invest smartly and get higher returns from mutual funds. In this article, I would provide some amazing tips on how to get higher returns from mutual funds in India. What are the best ways to get higher returns from Mutual Funds in India?

How to get higher returns from Mutual Funds in India?

Here are the some of the quick tips on various ways where you can get high returns from Mutual Funds.

1) Pick up Top Rated Mutual Funds

This is no brainer. An investor should pick-up top rated mutual fund to invest. There are several ways to check the top rated mutual funds to invest in India.

  • One can check the performance of the mutual fund scheme in last 5-10 years.
  • Filter such funds based on Crisil Ranking and Value Research Rankings. Invest in Crisil Rank-1 and Rank-2 and where Value Research Online ranking is 5 Star, 4 star and 3 star funds.
  • One should pick-up fund that has performed well in all market cycles.
  • You should pick-up mutual funds where AUM > Rs 100 Crores which gives investor confidence in such funds.
  • All these filters can give you the top 10 mutual funds to invest.

2) Invest in Mutual Funds based on your goal

If you want to invest for 5 years, do you invest in debt funds? No, right. One should invest in mutual funds based on financial goals.

  • If your aim is to achieve long term appreciation for 8-10 years, you can invest in best large cap mutual funds.
  • If your aim is to achieve long term appreciation and willing to take high risk, you can invest in mid-cap and smallcap funds. You should pick-up top aggressive mutual funds to invest that can provide very high returns.
  • If you feel that specific sectors are expected to perform well and you are willing to invest in high risk high return mutual funds, you can consider sector based mutual funds.
  • If you want to invest in mutual funds, but can take considerably low risk, you can invest in top balanced or hybrid funds. Balanced funds invest upto 65% in equity and balance in debt instruments. Such funds give stability to your returns as some component is invested in fixed income options.
  • If you are willing to invest in mutual funds for short term say less than 3 years, no point in investing in equity funds. You can consider investing in debt funds or gilt funds for such short period.
  • Investing in right category of mutual fund would help you to get good returns for the duration of your investment.
These 5 Debt Mutual Funds generated over 7% returns every year consistently in last 10 years

4) Invest based on your risk appetite

Investments should be done based on risk appetite. Similarly investment in mutual funds too should be done based on your risk appetite.

  • If you are high risk taker, invest in sector funds or midcap/small cap funds.
  • If you are moderate to high risk taker, investing in a good large cap fund would be good idea
  • If you are low to moderate risk taker, you should invest in balanced funds or debt funds.

5) Invest through SIP in mutual funds

Systematic Investment Plan (SIP) in mutual funds is where you invest specific amount every month / quarter into a specific mutual fund scheme. You should increase some amount in SIP every year. Investing such amount regularly would help you to overcome market fluctuations and it can give higher returns in longer run of 8-10 years.

6) Investment in lump sum when markets are low / taking correction

When markets are taking correction, generally one would start selling off their investments. During market corrections, NAV of the mutual fund would fall as underlying stock prices would fall. You can invest lumpsum during such market corrections.

One of my friend started investing in mutual funds at the age 55. Stock market SENSEX was at 26K and he invested approximately Rs 5 Lakhs. Later it moved to 28K within 3 months. His mutual funds appreciated by over 13%. Later it moved back to 26K. He came running, asking what to do now, as his return are 1% negative. My advice to him was, to invest more and he invested Rs 10 Lakhs. Now SENSEX moving to 30K, all his investments have given over 20% returns. We would not get such opportunity every time, but during market corrections, one can invest lumpsum which can give superior returns.

7) Invest on various dates in a month for SIP

Many would overlook about the date of Systematic Investment Plans. They would keep all SIP’s on 5th or 10th of the month i.e. on single date. Instead invest on various dates of the month. E.g. If you are investing in 5 mutual fund SIPs, keep first SIP on 5th May, second SIP on 10th May, 3rd SIP on 15th May, 4th SIP on 20th May  and 5th SIP on 25th May. This approach would ensure that you are NOT investing all funds on single day, but investing and getting MF units with various NAV rates.

8) Invest in Direct Plans of Mutual Funds

Direct plans are where investor invests directly without any intermediary / broker. In direct plan of mutual funds, there is no commission payable by AMC to such brokers. Hence direct plan of mutual funds would provide 0.5% to 2% higher returns compared to regular mutual fund schemes. You can invest directly through AMC website or through MF Utility or thru any broker who are offering investment in direct plans of mutual funds. You can review this article on how to invest in direct plans of mutual funds online.

Conclusion: Investing in good mutual funds is not sufficient. You should know smart ways on how you can invest in mutual funds and get higher returns.

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How to get higher returns from Mutual Funds

Suresh KP

26 thoughts on “How to get higher returns from Mutual Funds in India?”

  1. Hi,

    Is it advisible to invest a lupsome say, Rs.50k directly in a particular mutual fund or should one make it a SIP in different mutual funds. Time to invest is for 3 years.


  2. its a best way to get knows which mutual fund best performerence and why i invest in this fund.

  3. Hi Suresh,

    I would turn 30 this August and my investment time horizon is 10 years. My goal is to get at least 10% return on each of the mutual funds in my portfolio. I am a moderate investor.

    I would like to invest 14K per month in the below MF's. Please advise about my portfolio:

    1) HDFC BALANCED  (5K)







  4. What is your recommendation for a low risk investor for medium term –Balanced funds, Equity savings/income funds or Dynamic asset allocation funds especially when equity is heated up like now

  5. Hello Sir, I read your all comments and blogs above in this article , its very nice and good. My question is that my salary is 20000/- per month. there is any chance to invest in mutual funds with low budget? If yes so how to start this ?

    1. Bijendra, You need to invest huge amounts. You can invest as low as Rs 500 in mutual fund scheme. Approach any MF broker (like ICICI Direct or fundsindia) and open MF account. You can create SIP for Rs 500 per scheme. You can invest in large cap funds like ICICI Focussed blue chip fund or Birla SL Frontline equity fund or SBI bluechip fund etc.,

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