Best Equity Mutual Funds 2021 – Top Equity Mutual Funds

Best equity mutual funds

Best Equity Mutual funds for 2021 

Equity mutual funds are the most popular mutual fund type in India. They help investors to indirectly participate in the stock market.
Today, we will understand everything about equity mutual funds. We will also reveal the
best equity mutual funds for 2021. 

In this article: 

  • What are the best equity mutual funds
  • Who should invest in the best equity mutual funds
  • Why invest in equity mutual funds? 
  • Why should you not invest in equity mutual funds? 
  • List of the best equity mutual funds for 2021.
  • What is the best way of investing in the best equity mutual funds for 2021

What are Equity Mutual Funds

Equity mutual funds are mutual fund schemes that invest a minimum of 65% of their corpus in direct equities or stocks. Equity mutual funds can be broadly classified based on the following parameters: 

  • Management: Actively managed equity mutual funds (diversified mutual funds) and Passively managed equity mutual funds (index funds)
  • Market capitalisation: Large-cap, mid-cap and small-cap equity mutual funds 
  • Investment Objective: Focused equity mutual funds, sectoral equity mutual funds, multi-cap equity mutual funds, fund of funds etc. 

[Suggested Reading: Types of Mutual Funds in India ]

Best equity mutual funds are funds with a proven track record of outperforming the benchmark index and its peers while maintaining a low expense ratio. 

Since equity funds invest in stocks of companies, they carry high risk and are mostly preferred by aggressive investors. 

Who Should Invest in Best Equity Mutual Funds

Equity funds reduce the overall risk through diversification. They generate high returns but also carry high market risk and volatility. Hence before you invest in the best equity mutual funds, you should ascertain your risk profile and time horizon. 

  • If you are a conservative investor, or a beginner, with a short time horizon, then you should invest in large-cap mutual funds only. 
  • If you are an aggressive investor with a long time horizon, then you can invest in mid-cap, small-cap or sectoral funds. 
  • If you want to simply save tax, then ELSS is the best investment option for you. 
  • If you are confused and want to invest in both equity and debt, then balanced fund/aggressive hybrid funds are suitable for you. 

Why Should you Invest in Equity Mutual Funds? 

You should invest in equity funds because: 

  • They have a proven track record of generating superior risk-adjusted returns in comparison to traditional investments like PPF, Bank fixed deposits, EPF, Insurance policies, Bonds, Debt Funds and even gold. 
  • Equity mutual funds are affordable as you can start investing with as little as Rs 500 per month. 
  • Equity mutual funds do not have a lock-in period unlike PPF, which is locked in for 15 years. Equity mutual funds can be redeemed anytime as per the daily NAVs. 
  • Equity mutual funds are highly liquid and the redemption proceeds are received within two transaction days. 
  • Equity mutual funds are extremely safe and all market participants are strictly regulated by SEBI (market regulator) to protect the investors. 
  • Actively managed equity funds are managed by professional fund managers, who are experts in the field of finance and hence you have a high chance of generating superior returns. 

Why Should you Not Invest in Equity Mutual Funds? 

  • You should not invest in equity funds if you are scared of the market volatility. While equity mutual funds curb the fluctuations through diversification, they are still market linked funds and risky. 
  • You should not invest in equity funds if your risk profile is extremely conservative and your investment time horizon is short-term. 
  • You should not invest in equity mutual funds if you cannot hold the investment for a minimum of 5 years. 

List of the Best Equity Mutual Funds in India for 2021

While most ‘so-called expert’ investing platforms evaluate mutual funds in India based on a handful of parameters such as past performance, fund manager, expense ratio etc, RankMF evaluates mutual funds based on more than 20 million parameters! 

And after careful screening based on these 20 million parameters, we have shortlisted the top performing equity mutual funds in India for 2021. 

Best Equity Mutual Funds in India for 2021

Category Schemes MF Rating 1 Yr** 3 Yr** 5 Yr** AUM** Expense Ratio**
Best Large Cap Funds Axis Bluechip Fund 5 Star 20.92% 15.50% 16.59% Rs. 22,517 Cr 1.78%
UTI Mastershare Unit Scheme 5 Star 21.73% 10.64% 14.03% Rs. 7,425 Cr 1.97%
Best  Multi-Cap Funds UTI Equity Fund 5 Star 34.07% 16% 17.03% Rs. 14,861 Cr 2.05%
Parag Parikh Long Term Equity Fund 5 Star 32.77% 14.69% 16.94% Rs. 6,393 Cr 1.97%
Best Large & Mid Cap Funds Tata Large and Mid Cap Fund 5 Star 17.76% 8.43% 12.82% Rs. 1,934 Cr 2.18%
Kotak Equity Opportunities Fund 5 Star 19.22% 9.07% 15.32% Rs. 4,633 Cr 1.96%
Best Mid Cap Funds DSP Mid Cap Fund 5 Star 25.98% 7.67% 15.86% Rs. 9,823 Cr 1.88%
Axis Mid Cap Fund 5 Star 28.09% 14.27% 16.49% Rs. 8,515 Cr 1.89%
Best Small Cap Funds Kotak Small Cap Fund 5 Star 34.87% 6.55% 15.29% Rs. 2,372 Cr 2.11%
Axis Small Cap Fund 5 Star 23.93% 11.30% 15.80% Rs. 3,632 Cr 2.03%
Best Focused Funds Axis Focused 25 Fund 5 Star 21.71% 12.32% 18.02% Rs. 14,358 Cr 1.83%
Motilal Focused 25 Fund 5 Star 20.81% 10.63% 14.15% Rs. 1,548 Cr 2.14%
Best ELSS Funds Axis Long Term Equity Fund  5 Star 21.11% 12.55% 15.62% Rs. 27,181 Cr 1.62%
Canara Robeco Equity Tax Saver Fund 5 Star 32.26% 14.96% 16.21% Rs. 1,476 Cr 2.23%
Best Thematic Funds Axis ESG Equity Fund* 5 Star Rs 1,959 Cr 2.04%
DSP Quant Fund 5 Star 28.40% Rs. 571 Cr 1.3%

*Axis ESG Equity Fund was launched on 12th February 2020 hence 1,3&5 years returns not available.  

** Data as on January 2021. To check the latest data and ranking of all mutual funds visit www.RankMF.com 

What Is The Best Way of Investing in the Best Equity Mutual Funds for 2021

Identifying best equity is a science, but investing in the best equity funds is an art. 

While majority investment advisors and retail investors still believe that a systematic investment plan (SIP) is the best method of investing in equity funds; We at RankMF disagree. 

RankMF has discovered a unique method of investing in equity funds, based on Warren Buffett’s famous quote, ’Be greedy when others are fearful and be fearful when others are greedy”. 

RankMF’s SmartSIP is a unique proprietary technique which can potentially double the returns of a regular SIP. 

RankMF’s SmartSIP buys more equity units cheaply in a falling market and buys debt/liquid fund units in a rising market. 

Hence we believe that the most profitable method of investing in the best equity mutual fund is through RankMF’s SmartSIP. 

Final Thoughts

Equity funds are undoubtedly the best and most profitable investment option for retail investors. And while we have shared the list of the best equity mutual funds in India for 2021, there is a small condition. 

Contrary to popular beliefs, we do believe that timing your investment is crucial for generating higher returns. 

Hence you need to make sure that you time your investments in the best possible manner. 

To find out if this is the BEST time to invest in the above top performing equity mutual funds, open a Samco Demat account today and get FREE access to RankMF – The best mutual fund research and investment platform in India. 

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