The market in India for Mutual funds loaded with approximately half of a century and there are thousands of different schemes running across.To chose a mutual fund is a difficult task because your investment horizon, need for investment is more important for the fund’s selection. I have tried to collect the list of mutual funds that could be best to invest in 2012. They are being diversified equity and few debt funds.

Equity funds :
Any fund with holding of more than 65% in equity can be considered as an equity fund. But to keep things simple I have just taken 4 categories of diversified equity funds & ignored balanced funds, sector funds, international funds or Equity Linked Saving Schemes. Equity funds are divided according to Market Cap (size of the company).

Large Cap Funds :

Mutual Funds with more than 80 per cent of assets in large-cap companies over the last three years are added in this category. Large cap funds can provide stability to any portfolio.

Best Large Cap Mutual Funds 6m 1yr 3yr 5yr 10yr
DSP BlackRock Top 100 Equity -16.07 -20.02 17.76 8.03
Franklin Templeton Franklin India Bluechip -11.64 -16.65 22.83 7.44 25.86
ICICI Prudential Focused Bluechip Equity -10.91 -14.5 26.67
Category Average -14.6 -21.56 14.64 3.32 16.6

Large & Mid Cap Funds

Mutual Funds between 60 to 80 per cent of assets in large-cap companies over the last three years. They are definitely bit aggressive than large cap funds but still can get part in conservative investor’s portfolio. ( Just an update Fidelity has been taken over by L&T) and I did the story over it. Fund Managers

Best Large & Mid Cap Mutual Funds 6m 1yr 3yr 5yr 10yr
Fidelity Equity -13.88 -19.28 23.04 7.69
HDFC Top 200 -16.79 -22.21 22.74 9.65 28.87
UTI Opportunities -6.33 -10.8 27.61 12.87
Category Average -14.74 -21.65 15.62 2.88 18.8

Debt Funds

The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors.

Short Term Fund

Short-term plans invest in shorter dated paper, i.e. debt paper with lower maturity. There is also significant chunk invested in cash/call money. This tends to insulate the fund from volatility in debt markets which impacts longer dated paper. Short term funds invest in debt securities that mature in the next 15 – 18 months. They invest mostly into AAA or AA+ rated debt securities and interest rate hikes mildly impact the returns. Short term funds are best suited for investors with an investment horizon of 1 – 2 years.

Best Short Term Mutual Funds 6m 1yr 3yr 5yr 10yr
DSP BlackRock Short Term 4.45 8.76 6.34 6.84
Franklin Templeton Templeton India Short Term Income 4.53 9.04 8.81 9.14
Category Average 4.5 8.74 6.55 7.57 6.92

Debt Income Funds Returns

Debt Income funds 3m 6m 1yr 3yr
Canara Robeco InDiGo Fund – Growth 1.61 4.13 14.89 N/A
Escorts Income Plan- Growth 1.50 6.03 12.91 8.08
SBI Dynamic Bond Fund – Growth 1.97 7.34 12.51 7.88
UTI Bond Fund – Growth 2.38 6.39 11.31 7.56
Templeton India IBA – Plan B – Growth 2.86 6.42 11.28 7.20