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4 mutual fund categories that are shining bright in these dark days

Most mutual fund investors have resigned to their fate as the markets are constantly experiencing a breakdown on the back of negative news past few months such as the novel coronavirus, YES bank scam, oil price war, and so on. However, you would be surprised to notice that 4 mutual fund categories are shining bright in these dark days. In fact, these categories are offering double-digit returns to their investors. Even very high double-digits in some cases.

If you are confused where to invest money, here are four investment options that have performed decently well and provided significant returns in the past one year:

  1. Gold funds
    Gold funds have offered significant returns with returns as high as 35% in a duration of one year. One category of Gold ETFs in India have also provided returns around 38% p.a. As these funds are considered to be good diversifiers, mutual fund experts recommend allocating a minimum of 5 to 10% of one’s investment portfolio to gold funds. In uncertain times when the equity markets have gone for a toss, these mutual funds can act as a hedge to one’s investment portfolio.
  2. Long duration bonds
    The dip in crude oil prices led to a fall in the prices of the 10-year-g-sec that helped long duration bonds generate better returns. These mutual fund schemes have offered returns around 19% in the last year.
  3. Gilt funds
    Owing to the dip in yields and on hopes of a rate cut by the Reserve Bank of India (RBI), gilt funds have offered exceptional returns in the last year. Several market experts are anticipating the RBI to follow cur rates and US fed. Gilt funds with a 10-year constant duration have provided yields around 16% p.a. in the last year.
  4. Banking and PSU funds
    Been on the recommendation list of advisors for a long time, these funds are believed to be a good substitute to credit risk funds that offers more stability to investors with limited exposure to risk and volatility. These funds have provided an average returns of over 11% in a duration of one year.

Although these funds have provided exceptional returns in a period of one year, this does not mean that they will continue to offer exceptional returns in the coming returns. One year performance of mutual funds is not a clear indicative of their potential to generate significant returns. As an investor, you must look at the average returns of the scheme for a period of at least five to ten years. Also, it is advised to compare them to the relevant benchmark and understand how well other mutual funds in the same category are performing. With different types of investment available to an investor, choose the one that best aligns with your investment portfolio. Understand the importance of investing and get started with your financial planning as soon as possible. Happy investing!

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