Best diversified Mutual Funds - Consider the best performing diversified mutual funds to invest in 2025 with Scripbox.com. Find the list of best diversified funds in India on the basis of Returns, Latest Nav, Ratings, Performance etc.
While selecting the diversified mutual funds it’s crucial for you to firstly establish your expectation from your investment. You must establish an understanding of risk and returns from investments. Other than these primary factors you must also consider the fund’s historical performance, NAV, AUM, returns, investment horizon, fund manager’s performance and exit load before investing. These factors will help you select the best diversified mutual funds and make a well-informed investment decision.
What are Best Diversified Mutual Funds
The best diversified mutual funds invest in certain proportions in large-cap, mid-cap and small-cap stocks. This method is fairly different wherein the mutual fund invests in equity shares of companies with different market capitalizations. Diversified mutual funds in India are considered less risky and can be better in terms of returns.
A fund manager, depending on the changes in market conditions, keeps switching holdings between large-cap, mid-cap and small-cap stocks. This, in turn, helps the investors to not miss out any golden opportunities in a rallying market.
Since the investments made are in multi-cap companies, they can deliver handsome high returns which eventually leads to growth for the investors. By investing in diversified funds, investors would still be affected by the volatility of equities in changing market conditions.
Who should invest in Diversified Mutual Funds?
Multi-cap funds consist of a diversified portfolio of stocks which are distributed across different market sectors with companies having different market capitalization. Such a structure allows investors to have a broader market exposure.
The multi-cap funds help avoid the trouble of stock-picking and make the investments according to their own research and analysis. Once the investors are aware of the markets, they can start considering making the investments on their own.
Since it is a multi-cap fund, the returns are also balanced across the portfolio of the investors. Investors having a decent understanding of equity market risk can consider investing in multi-cap funds. When the markets are up, small-caps can perform better as compared to the others and when it is down, the well-established companies perform better which offsets the falling returns.
Factors to consider as an Investor
1. Investment Horizon
Multi-cap funds are suitable for investors who have a long-term investment horizon. The important factor here is to stick to the period of investment in order to obtain handsome high returns.
These funds experience a lot of fluctuation in the short-term but are better performers in the long run. The best example of this would be ELSS(Equity Linked Saving Scheme) which is a tax saving mutual fund which comes with a lock-in period of 3 years and offers higher returns.
2. Investor Objective
As multi-cap funds come with a diversified investment strategy, they are considered beneficial for achieving the long-term objectives of the investors like retirement planning, child’s education etc. If the investors are invested for their investment period, these funds accumulate a substantial level of wealth in terms of returns.
3. Costs
Similar to various other funds, multi cap mutual funds also charge a fee to manage the investor’s money, also known as the expense ratio. Since these funds are managed to take advantage of the changing market scenarios, these funds might have a high turnover ratio and related transaction cost.
However, despite having the costs at a higher-end, these funds perform better than large-cap and small-cap stocks in terms of returns.
4. Fund Objective
Multi-cap funds aim to achieve wealth creation by investing in stocks across market capitalization. Their portfolio comprises large-cap, mid-cap and small-cap stocks and are relatively less risky as compared to pure mid-cap stocks. The fund manager also considers factors such as PE ratio, EPS etc. before investing in a stock.
5. Risks
As with other funds, multi-cap funds also face market-risks depending on the overall market conditions. A fund manager plays an important role in changing the sub-asset allocation across the portfolio to take advantage of the changing market conditions.
How to Evaluate Best Diversified Mutual Funds?
History of the fund
In the case of multi-cap funds, it is important to evaluate the history of the fund along with the fund manager. A fund manager plays a crucial role in terms of taking advantage of the market conditions and creating wealth for investors.
Ideally, investors should be looking for past performance, market reputation and the workings of the fund. Furthermore, it is important to keep a track on the fund manager and the changes, if any.
Returns
It is important to compare the 5 – 10 years returns of the fund. The funds that have beaten their benchmark indices can be considered for the investments. Furthermore, it is also important to compare the returns of the fund with peers. This will lead to a better understanding for the investors.
Expense Ratio
Expense ratio measures how much of a fund’s assets are used for meeting the operating expenses of the fund. Simply put, it is the money charged by the fund to manage their expenses.
Ratios
Sharpe ratio is considered as an important metric when it comes to multi-cap funds. The Sharpe ratio measures the performance of the investment as compared to a risk-free asset.
It is calculated by taking the difference between the returns of the investment and the risk-free return divided by the standard deviation of the investment. The higher the Sharpe ratio, the better is the risk adjustment of that fund.
How to invest in a Best Diversified Mutual Fund?
You can invest in Scripbox recommended best diversified mutual funds in India by following the below-mentioned steps:
Select the mode of investment i.e. monthly SIP, one time or STP
Enter the amount of investment
Based on the amount of investment, the recommended funds will be provided. You can change the funds and the distribution of amount
Select the payment mode and proceed toward payment
How does Scripbox rate funds?
Proprietary system to rate mutual funds
We use a proprietary system to rate mutual funds and based on the outcome of the rating, we classify funds into 4 categories namely "Recommended", "Top Ranked", "Neutral" and "Not Recommended".
Scripbox algorithm recommends 2-4 funds for investment for an investment asset class such as large cap, diversified, liquid etc. When you invest for an objective, the algorithm suggests the appropriate asset class and funds.
Top Ranked
These funds are the top performers within a category of mutual funds considering a combination of criteria. The best amongst these funds are also labelled as Scripbox Recommended.
Neutral
Scripbox recommends other funds, which are more suitable for your investment objectives, within this asset and sub asset class.
Not Recommended
Scripbox algorithm classifies funds as "not recommended" when they perform poorly on a combination of criteria. These funds are usually the poorest performers within a category.
Things we consider to provide ratings for a mutual fund.
Outperformance Consistency
We look at the consistency of the outperformance that the fund has displayed. A fund with high consistency is preferred
Rolling Returns (1 Year Holding Period)
We consider average 1 year return that the fund has delivered over an extended period of time
Rolling Returns (3 Year Holding Period)
We consider average 3 year return that the fund has delivered over an extended period of time
Volatility of Outperformance
We consider how volatile the out-performance over the benchmark has been. A lower volatility is preferred
Downside Protection Measure
We look at how resilient the fund is to market down trends. A fund that has shown a higher resilience is preferred
Upside Participation Measure
We consider how well the fund has been able to participate in upmoves in the market. A fund that participates well is preferred
Fund Size
We look at the size of the fund with respect to other funds in the category. Larger funds are preferred.
How to invest in best mutual funds?
Investing through Scripbox is made easy and paperless. All you need to do is follow the below steps and start investing.
0 1
Choose a plan
Choose a plan to invest to start investing
0 2
Create an Account
Create an account with Scripbox through a paperless process, to invest in best mutual funds.
0 3
Invest online & transfer
Invest via netbanking, UPI or through an SIP (eNACH mandate).
0 4
Track your investments
Track, invest more and withdraw your investments through the Scripbox dashboard
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