Best Mutual Fund Investment Companies

A mutual fund is a pool of money managed by a professional fund manager. This pooled money is then invested by the fund manager across various asset classes including equity, debt, gold, and other securities to generate returns.

Gains and losses from these investments are distributed among investors according to their respective investment shares. An investor can profit from mutual funds in two different ways: either through the stock’s price rising or through dividend income.

Companies that are licensed to set up mutual funds create Asset Management Companies (AMCs), or fund houses, to collect and pool in the money from investors. They market mutual funds, manage investments, and enable investor transactions.

On the basis of structure, there are two kinds of mutual funds. Open-ended funds allow one to invest and redeem investments at any time and are perpetual in nature. On the other hand, close-ended schemes have a fixed maturity date and one can only invest at the time of the new fund offer and redemption can only be done on maturity.

Who should invest in mutual funds?

Mutual funds are convenient for all kinds of investors given the flexibility they provide. Most fund houses allow one to invest from as low as Rs 500 to Rs 1,000 per month.

Mutual funds allow the investor to begin with a small investment and gradually increase it with time. After completing the required KYC formalities, one can start a systematic investment plan (SIP) in the chosen mutual fund.

Mutual funds are the best option for investors who don't have a lot of money to invest or who don't have the time or desire to do market research but still want to increase their wealth.

The assets under management (AUM) of the Indian mutual fund industry as on June 30, 2023 stood at Rs 44.39 trillion, growing more than fivefold from Rs 8.11 trillion as on June 30, 2013.

India has more than 40 mutual fund companies, so choosing the best among these can be tricky.

The best mutual fund houses in India

1) SBI Mutual Fund

2) ICICI Prudential Mutual Fund

3) HDFC Mutual Fund

4) Kotak Mahindra Mutual Fund

5) Axis Mutual Fund

6) Aditya Birla Sun Life Mutual Fund

7) Bandhan Mutual Fund (formerly IDFC Mutual Fund)

8) DSP Mutual Fund

9) UTI Mutual Fund

10) Nippon India Mutual Fund

SBI Mutual Fund

SBI Funds Management is a joint venture between the nation's largest lender State Bank of India and Amundi, the largest European asset manager, and is the investment manager of SBI MNF and SBI Alternative Equity Fund and SBI Alternative Debt Fund.

The SBI Mutual Fund was set up in June 1987 and was incorporated in February 1992. The fund is estimated to have assets under management of over Rs. 7 lakh crore.

In the FY23 SBI Mutual Fund launched 26 new fund offers which includes 7 open ended funds and 19 Fixed Maturity debt funds mobilizing in aggregate Rs. 12,748 crore.

ICICI Prudential Mutual Fund

ICICI Prudential was set up in 1993 with Indian private sector lending giant ICICI Bank and Prudential Plc, a financial services company based out of the U.K., acting as partners.

The assets under management of ICICI Prudential Mutual Fund as on March 31, 2023 was Rs 5.23 lakh crore. In FY23, the fund had launched 17 open-ended schemes which includes 3 equity schemes, 6 exchange traded funds and eight 8 index funds.

It also launched 5 closed ended schemes which were Fixed Maturity Plan.

HDFC Mutual Fund

HDFC Mutual Fund was formed as a  joint venture between HDFC Limited & abrdn Investment Management (erstwhile known as Standard Life Investments).

In 2003, it acquired Zurich Mutual Fund schemes, and subsequently in 2014, it acquired Morgan Stanley Mutual Fund.

As on March 31, 2023, its assets under management were at Rs. 4.37 lakh crore. It has a total of 86 active schemes including 29 equity-oriented schemes, 32 debt-oriented schemes, 2 liquid schemes and 23 other schemes.

Kotak Mahindra Mutual Fund

Kotak Mutual Fund is the wholly-owned subsidiary of Kotak Mahindra Bank and it started its operations in December 1998.

It now has a distribution channel with over 72,000 empanelled distributors and an investor base of over 8.1 million. Its assets under management at the end of March 2023 were at Rs. 2.92 lakh crore.

Kotak Mahindra Asset Management Company, is the asset manager of Kotak Mahindra Mutual Fund (KMMF) provides mutual fund and portfolio management services, along with pension fund management services through its subsidiary, the Kotak Mahindra Pension Fund.

Axis Mutual Fund

Axis Mutual Fund launched its operations in 2009 with its first equity scheme, Axis Equity Fund.

Asset management firm Schroders bought a 25% stake in Axis Mutual Fund in April 2012.

In September 2019 Axis Mutual Fund introduced the Axis Nifty 100 Index Fund, an index fund based on the Nifty 100. Then in January 2020, it introduced an ESG fund.

As on March 31, 2023, the company’s assets under management stood at Rs. 32,615 crore.

Aditya Birla Sun Life Mutual Fund

Established in 1994, Aditya Birla Sun Life AMC is co-owned and backed by Aditya Birla Capital Limited and Sun Life (India) AMC Investments. It is primarily the investment manager of Aditya Birla Sun Life Mutual Fund.

It also operates multiple alternate strategies including portfolio management services, real estate investments and alternative investment funds.

Aditya Birla Sun Life Mutual Fund is servicing around 8 million investor folios across 290 plus locations and has total assets under management of over Rs. 2.86 lakh crore for the quarter ending March 31, 2023.

Bandhan Mutual Fund (formerly IDFC Mutual Fund)

IDFC Mutual Fund was rebranded and launched as Bandhan Mutual Fund from March 2023.

In 2022, IDFC Asset Management Company was acquired by the consortium, which comprises Bandhan Financial Holdings, Singapore sovereign wealth fund GIC, and Indian private equity firm ChrysCapital.

As of Feb 28, 2023, the assets under management of the company was Rs 1.18 lakh crore. It offers over 75 primary mutual fund schemes to its investors.

DSP Mutual Fund

DSP Mutual Fund, ​managed by ​DSP Asset Managers, is a fully independent Indian asset management company.

Formerly known as DSP Blackrock Mutual Fund, it was was joint venture between the India’s DSP Group and investment major BlackRock that was formed in 2008 and lasted till 2018.

Prior to joining forces with Blackrock, the business entered a joint venture in 1996 with Merrill Lynch Investment Managers. DSP Merrill Lynch Asset Management (India) Ltd. was the name at the time.

The mutual fund is now estimated to have over Rs.1.1 lakh crore in assets under management.

UTI Mutual Fund

The UTI Mutual Fund was established as a SEBI-registered mutual fund house in January 2003. It is backed by five large institutional partners which include the SBI, Bank of Baroda, Punjab National Bank, the LIC, and T Rowe Price Group Inc.

As on March 31, 2023, the company’s quarterly average asset under management (QAAUM) stood at Rs. 2.39 lakh crore for the mutual fund business.

The company has 62,500 empaneled distribution partners across mutual fund distributor, national distributor and banks. Its total live folios stood at 1.22 crore as on March 31, 2023.

Nippon India Mutual Fund

Set up in June 1995 as Reliance Mutual Fund, the company was was a joint venture between India's Reliance Capital and Japan's Nippon Life Insurance company.

 In October 2019, Reliance's stake was bought by Nippon, and the fund house was renamed as Nippon India Mutual Fund.

Nippon India Mutual Fund (NIMF) is one of India's leading mutual funds, with Average Assets Under Management (AAUM) of Rs 2.93 lakh crore from Jan 2023 to Mar 2023 and 196.24 lakh folios as on March 31, 2023​​​​​.​ ​

Factors to consider before choosing the best mutual fund company

Risk Appetite and Investment Goal: It is critical that the investor assesses his own risk profile and the time horizon of goals before deciding on the investment and the mutual fund house. A person who is willing to take on more risk may invest in high-risk funds, which are not ideal for more cautious investors. The length of time one plans to keep an investment for a particular goal, or the time horizon for your goals, is another crucial consideration.

Track Record of Mutual Fund House

An investor must study the past performance of the mutual fund house to ensure that their investment is in safe hands. An analysis of the performance of its schemes will help to determine if the fund will be able to provide consistent returns. It also shows the mutual fund house's adaptability amid choppy market situations.

Performance of Fund Manager

The person in charge of managing the investment is known as the investment manager, who will eventually be responsible for the performance of the fund. Therefore, it is important to research the experience and track record of the fund manager and the different schemes managed by him or her.

Customer Service Record

As one is investing their hard-earned money it is important that they have access to information regarding their investment and have someone to assist them whenever required. So, one must ensure that the mutual fund has good customer service.

Investment Approach

Some mutual fund houses have particular investment strategies, such as growth or value investing. Therefore,  it is crucial for the investor to ensure that their investment philosophy and goals are in line with the mutual fund company they opt for.

Reputation

The reputation of the mutual fund house is also a good indicator of its general calibre. One must research the company's background and industry analysts' evaluations of it.

Taxation on mutual funds

While mutual funds are one of the most popular investing options as they can help one to reach their  financial objectives fast, they are also a tax-effective financial tool. A mutual fund investment offers the advantages of professional money management and tax-efficient returns.

Mutual fund investment profits are taxable as "capital gains". Therefore, one must be aware of how the earnings will be taxed before investing in mutual funds. In some circumstances, one can also get tax deductions.

Understanding mutual funds taxation can help one to plan their investments to minimize the overall tax outgo.

Generally, capital gains from the sale of mutual fund units held for less than three years are considered short-term capital gains and are taxed at the investor’s applicable income tax rate. However, if held for more than three years, the gains are treated as long-term capital gains.

Conclusion

Investing in mutual fund companies can greatly increase wealth and help to reach one’s financial objectives. Additionally, with the help of qualified fund managers, an investor can diversify their portfolio and possibly achieve greater returns than what they would get by investing in individual equities.

However, before investing, one must do their research on the fund and its management team and ensure that they are aware of all the costs and dangers related to mutual funds. One must also ensure that a mutual fund investment fits with their overall financial strategy by speaking with a financial counsellor as well.