Top Mutual Fund Investment Plans for 1 Year in 2024

Mutual funds offer diverse investment choices for both short-term and long-term investors. With the exception of ELSS, most of these investments lack a mandatory lock-in period. Investors can leverage market fluctuations, freely enter and exit funds without incurring substantial costs, making mutual funds SIP suitable for all investor classes. Here are concise details on mutual fund categories and recommended best investment plan for 1 year for a one-year investment horizon.

What is the Best Investment Plan for 1 Year?

Short-term funds, like liquid funds, ultra-short term funds, and low duration funds, are a type of mutual fund characterized by a brief maturity period typically lasting 1-3 years. These funds primarily invest in low-risk, high-quality assets, aligning with their goal of generating elevated returns for investors. The fund’s maturity is tied to that of its underlying assets, and being open-ended, investors can enter the market at any juncture.

Let us now figure out which mutual funds to invest in for 1 year.

List of Top 10 Best Mutual Funds for 1 Year

Here is an educational list of the best investment plans for 1 year in the Indian stock market for 2024:

Fund Name	NAV	3Y Returns
Mirae Asset Emerging Bluechip Fund	59.87	14.79%
SBI Magnum MultiCap Fund	53.63	53.63
DSP Equity Opportunities Fund	243.59	10.59%
SBI Bluechip Fund	43.97	10.39%
Motilal Oswal Multicap 35 Fund	28.19	10.43%
ICICI Prudential Bluechip Fund	46.21	12.01%
ICICI Prudential Equity & Debt Fund	147.88	10.75%
Aditya Birla Sun Life Tax Relief 96 Fund	33.68	11.12%
L&T India Value Fund	37.41	7.44%
L&T Tax Advantage Fund	56.61	9.08%

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data on the list is from 24th January, 2024.  However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today! Let us now learn more about what are the best mutual funds for 1 year!

Top Mutual Funds for 1 Year Investments: An Overview

The following overviews will help investors figure out which mutual fund is best for SIP or Lumpsum for 1 year. Here is a brief overview of the best SIP plans for 1 year listed above:

Mirae Asset Emerging Bluechip Fund

Mirae Asset Emerging Bluechip Fund, launched on July 9, 2010, is a Very High-risk Equity – Large and Mid-Cap fund. As of December 26, 2023, its NAV stands at ₹123.16, with an expense ratio of 1.60%. Managed by Neelesh Surana and Ankit Jain, the fund’s AUM is ₹30,284.45 Cr. The minimum initial investment in Lumpsum mode is ₹5000. It is one of the highest return mutual fund in 1 year. 

SBI Magnum MultiCap Fund 

SBI Multicap Fund, an Equity – Multi-Cap fund, commenced on Mar 8, 2022. Boasting a Very High risk level, the fund’s NAV reached ₹13.16 as of Dec 26, 2023, with an expense ratio of 0.88%. Managed by Rama Srinivasan and Mohit Jain, it currently holds an AUM of ₹13,806.96 Cr. The minimum initial investment stands at ₹5000 in Lumpsum mode. It is also one of the best mutual funds to invest now in 1 year. 

DSP Equity Opportunities Fund

DSP Equity Opportunities Fund, categorized as an Equity – Large and Mid-Cap fund, commenced on January 1, 2013. With a risk level classified as Very High, its Net Asset Value (NAV) stands at ₹525.15 as of December 26, 2023. The fund’s expense ratio is 0.87%, and it boasts an Assets Under Management (AUM) of ₹9,645.31 Cr. Managed by Rohit Singhania, Charanjit Singh, and Jay Kothari, the fund allows a minimum initial investment of ₹100 in Lumpsum mode. It is also one of the best SIP for long term or 1 year on our list. 

SBI Bluechip Fund

The SBI Bluechip Fund, initiated on January 1, 2013, falls under the category of Equity – Large-Cap funds. Currently exhibiting a Very High risk level, its Net Asset Value (NAV) stands at ₹84.23 as of December 26, 2023, with an expense ratio of 0.87%. Managed by Sohini Andani and Mohit Jain, the fund holds an Asset Under Management (AUM) of ₹40,740.72 Cr. For those considering investment, the minimum initial amount required is ₹5000 in Lumpsum mode. It is also one of the best mutual funds to invest in for 1 year on our list!

Motilal Oswal Multicap 35 Fund

Motilal Oswal Mutual Fund recently introduced its second fund in two months – the Motilal Oswal Most Focused Multicap 35. This versatile fund has the flexibility to invest in various sectors and market capitalizations. However, the primary restriction is on the number of stocks, capped at 35. It is also one of the best performing mutual funds for 1 year on our list!

ICICI Prudential Bluechip Fund

ICICI Prudential Mutual Fund Bluechip Growth, an Equity – Large-Cap fund, started on May 23, 2008. Currently, its NAV is ₹87.56 as of Dec 26, 2023, with a Very High risk level. The fund, managed by Anish Tawakley, Sharmila D’mello, Vaibhav Dusad, holds an AUM of ₹44,425.37 Cr. Its expense ratio is 1.60%, and the minimum initial Lumpsum investment is ₹100. It is also one of the best mutual funds for SIP for 1 year on our list!

ICICI Prudential Equity & Debt Fund 

The ICICI Prudential Equity & Debt Fund Direct Plan Growth, launched on Jan 1, 2013, is an Aggressive Allocation fund with a Very High risk level. As of Dec 26, 2023, its Net Asset Value (NAV) is ₹336.66, and it has an expense ratio of 1.13%. Managed by Sankaran Naren, Mittul Kalawadia, Nikhil Kabra, Sharmila D’mello, Sri Sharma, and Manish Banthia, the fund boasts an Asset Under Management (AUM) of ₹28,005.82 Cr. The minimum initial investment in Lumpsum mode is ₹5000. It is also one of the best mutual fund schemes for 1 year on our list!

Aditya Birla Sun Life Tax Relief 96 Fund

Aditya Birla Sun Life ELSS Tax Relief 96 Fund, introduced on January 1, 2013, falls under the category of Equity-Linked Savings Scheme (ELSS). It carries a Very High risk level and currently holds an NAV of ₹53.10 as of December 26, 2023. With an expense ratio of 0.92%, the fund boasts an AUM of ₹14,243.41 Cr. Atul Penkar, Dhaval Gala, and Dhaval Joshi jointly manage the fund. Investors can initiate their participation with a minimum lump sum investment of ₹500. It is also one of the best mutual fund for SIP for 1 year on our list. 

L&T India Value Fund

Launched on January 8, 2010, the L&T India Value Fund is an Equity – Value fund, carrying a Moderately High risk profile. Since its inception, the fund has delivered a commendable Compounded Annual Growth Rate (CAGR) return of 16.5%. Currently holding the 4th position in the Value category, the fund reported returns of 5.2%, 40.3%, and 14.6% for the years 2022, 2021, and 2020, respectively. It is also one of the best SIP to invest in for 1 year on our list!

L&T Tax Advantage Fund 

Launched on February 27, 2006, the L&T Tax Advantage Fund falls under the Equity-Linked Savings Scheme (ELSS) category, presenting a Moderately High risk profile. Since inception, it has demonstrated a commendable Compound Annual Growth Rate (CAGR) of 13.8%. Notably, it secured the 7th position within the ELSS category. The fund exhibited a -3% return in 2022, a robust 30.3% in 2021, and a steady 13.5% in 2020. It is also one of the best 1 year mutual fund to invest in on our list.

Types of MFs for 1 Year Investments

Explore six dynamic investment avenues for mutual fund enthusiasts eyeing a one-year horizon:

Liquid Funds

• Ideal for short-term parking (up to one year).
• Invest in money market instruments maturing within 90 days.
• Minimal price risk due to the short holding period.

Ultra-Short Duration Funds

• Gain popularity for their duration-based approach.
• Invest in debt securities maturing in 3-6 months.
• Suited for maturity matching, offering flexibility.

Low Duration Funds

• Focus on securities with a duration of 6-12 months.
• Well-suited for short-term fund placement.
• Balances risk and return effectively.

Money Market Funds

• Invest in money market instruments with a maturity of up to 1 year.
• High liquidity and low risk, with no credit risk compared to duration funds.

Floater Funds

• Debt funds allocating at least 65% to floating-rate bonds.
• Interest rates adjust with market changes, ideal during rising interest rate scenarios.
• Suited for short-term investments.

Arbitrage Funds

• Leverage price differentials in cash and derivatives markets.
• Classified as hybrid funds but function akin to debt funds.
• Popular for short-term parking (up to 1 year) with returns tied to asset volatility.

Explore these options strategically to align with your short-term investment goals.

How do Mutual Funds for 1 Year Investments Work?

Mutual funds tailored for a one-year investment horizon operate by pooling the best SIP plans in India from multiple investors to create a diversified portfolio. These funds, designed for short-term goals, typically invest in a mix of fixed-income securities such as Treasury bills, short-term bonds, and money market instruments. The primary objective is capital preservation and generating modest returns within a brief timeframe.

Investors in these funds benefit from professional fund management, as experienced portfolio managers make strategic decisions to navigate short-term market fluctuations. The returns generated are distributed among investors based on their proportional investments. It’s important to note that the performance of these best mutual funds in India for SIP for 1 year can be influenced by interest rate movements and market conditions.

While SIP mutual funds for one-year investments offer liquidity and professional management, investors should carefully assess their financial goals and risk tolerance before considering them. Understanding the fund’s investment strategy, expenses, and historical performance is crucial for making informed decisions aligned with individual financial objectives.

Features of Mutual Funds for 1 Year Investments

When considering mutual funds for short-term investment horizons, certain features merit attention.

• Liquidity: Mutual funds offer liquidity, allowing investors to redeem their units at the prevailing Net Asset Value (NAV) after a minimal holding period.
• Diversification: Even for a one-year investment, diversification within a mutual fund mitigates risk by spreading investments across various assets.
• Professional Management: Fund managers handle the day-to-day decisions, leveraging expertise to navigate market fluctuations and optimize returns.
• Low Minimum Investments: Many mutual funds have low minimum investment requirements, making them accessible for those looking to invest for a shorter duration.
• Transparent Pricing: Mutual funds provide daily NAV updates, ensuring transparent pricing and visibility into the fund’s performance.
• Flexibility: Investors can choose from various types of funds, such as debt or money market funds, aligning with their risk tolerance and return expectations for a one-year timeframe.

Who Should Invest in Mutual Funds for 1 Year Investments?

Investing in mutual funds for a one-year horizon is a strategic choice that suits specific financial goals. Individuals with short-term objectives, such as saving for a down payment or a planned expenditure within the next 12 months, may find these best SIP mutual funds for 1 year beneficial. Additionally, those seeking a moderate level of risk and potential returns, but without the day-to-day market monitoring that direct stock investments require, might consider mutual funds for their one-year investment plans.

It’s important to note that mutual funds for short-term goals generally involve less market volatility than longer-term investments. This makes them suitable for investors who prioritize capital preservation and a more predictable return profile. However, as with any investment decision, potential investors should conduct thorough research, assess their risk tolerance, and align their investment strategy with their specific financial objectives before considering mutual funds for one-year investments.

Factors to Consider Before Investing in Best Investment Plan for 1 Year

Before investing in short term mutual funds in India, consider these crucial factors:

Define Your Investment Goal

Clearly identify your investment goal. If you aim for short-term gains, short-term mutual funds are the ideal choice.

Evaluate Your Risk Profile

Understand your risk tolerance by taking an online risk assessment test or consulting with an investment advisor. Invest only in products aligning with your risk profile.

Embrace Diversification

Mitigate risk by diversifying across various mutual funds or stocks within the same sector. This strategy minimizes overall risk while maximizing potential gains in specific sectors.

Understand Tax Implications

Be aware of the tax treatment linked to best short term mutual funds for 1 year. If held for less than three years, investors are subject to capital gains tax upon selling or expiration.

Assess Fund Performance

1 year mutual funds, investing in low-risk bonds and easily liquidated securities, offer a lower risk profile. Expect an average annual return of 4% to 6%, varying based on investment location and provider.

Consider Expense Ratio

The expense ratio, representing the cost per dollar invested, covers management fees and operating expenses. Opt for lower expense ratios to enhance future withdrawals.

Navigate Entry and Exit Loads

Entry and Exit Loads, fees incurred when buying or selling 1 year investment plan with high return shares through a broker, range from 0% to 3%. Understand these fees before investing.

Explore Tax Implications

Some 1 year SIP plans offer tax-free accounts, deferring taxes on investment earnings until withdrawal, which may occur decades later. Familiarize yourself with any applicable taxes.

Risks Involved While Investing in Best Investment Plan for 1 Year

When considering mutual funds for short-term gains, it’s essential to navigate the potential risks associated with such ventures. Here are key considerations to bear in mind:

Market Volatility

One of the primary risks in the best one year investment plans is market volatility. The inherent nature of the stock market means that prices can swing dramatically in a short period. For a one-year investment horizon, unforeseen economic events or sudden market shifts can significantly impact returns. Investors should be prepared for fluctuations and carefully assess their risk tolerance before diving into such funds.

Liquidity Risk

Good investment plan for 1 year may face challenges in maintaining high liquidity levels, especially during periods of market stress. If a surge in redemption requests occurs, the fund may struggle to meet them promptly, potentially leading to a dip in returns. Investors should be aware of this liquidity risk and consider it as part of their overall risk management strategy.

Interest Rate Fluctuations

Debt-oriented mutual funds, common choices for short-term investments, are sensitive to changes in interest rates. In a fluctuating interest rate environment, the returns on these best SIP investments for 1 year may vary. Investors need to monitor the prevailing interest rate trends, as they can directly impact the fund’s performance over a one-year period.

Currency Risk (for International Funds)

For those considering international funds, currency risk becomes a prominent factor. Exchange rate fluctuations can influence returns when converting profits back to the investor’s home currency. Political and economic developments in foreign markets can add an additional layer of unpredictability, underscoring the importance of thorough research before venturing into international short-term funds.

Benefits of Investing in Best Investment Plan for 1 Year

Short-term mutual funds offer a host of advantages that make them an attractive option for investors seeking stability and liquidity in their portfolios.

Reduced Volatility and Lower Risk

Investing in short-term mutual funds provides a shield against high volatility and categorization as high-risk funds. This is attributed to the low or negligible risk associated with the underlying assets or instruments of these funds. The inherent stability in short-term investments makes them a prudent choice, especially for risk-averse investors who prioritize the preservation of capital.

Liquidity in Emergencies

One of the primary benefits of the best mutual fund to invest for 1 year is their role as a reliable source of liquidity during emergencies. These funds ensure that investors can readily access their funds when urgent financial needs arise. This liquidity feature adds a crucial layer of financial security, offering peace of mind to investors who may need quick and flexible access to their investments in unforeseen circumstances.

Stable Returns in a Short Timeframe

The Best mutual fund to invest lumpsum for 1 year stand out for their ability to deliver relatively good and stable returns within a short period. This characteristic is particularly appealing to investors seeking quicker returns on their investments without exposing themselves to the prolonged market uncertainties associated with long-term commitments. The predictability of returns in the short term enhances the appeal of these funds for a wide range of investors.

Diversification Opportunities

Investors in SIP investment plan for 1 year gain the advantage of diversification, a fundamental principle of any mutual fund. These funds provide exposure to various debt and money market instruments, thereby allowing investors to spread their risk across different assets. This diversification not only enhances the overall stability of the portfolio but also grants investors access to segments of the market that might be otherwise challenging for the average investor to navigate.

How to Choose the Best Investment Plan for 1 Year?

Choosing the best mutual fund for 1 year involves strategic considerations. Begin by assessing your risk tolerance level, aligning it with the chosen mutual fund’s risk profile. Clearly define your financial goals and the one-year timeframe to match with the fund’s objectives, whether it’s capital preservation, income generation, or capital appreciation.

Evaluate the fund’s expense ratio, representing the annual cost of managing the fund. Lower expense ratios are generally preferable for short-term investments, impacting returns positively. Analyze the fund’s historical performance for insights into its consistency and volatility, keeping in mind that past performance doesn’t guarantee future results.

Prioritize liquidity by opting for funds with high liquidity, facilitating easy buying or selling of shares – a crucial aspect for short-term investment plans. Ensure diversification across asset classes to reduce the impact of volatility. Additionally, be aware of any exit loads or fees associated with the mutual fund, considering their potential impact on short-term investment strategies.

What are the Returns on Best Investment Plan for 1 Year & How are they Calculated?

Understanding how mutual fund 1 year returns are calculated is crucial when considering mutual funds for a one-year investment horizon. Returns in mutual funds are primarily derived from the performance of the underlying assets within the fund portfolio.

The most common metric for assessing 1 year mutual fund returns is the Compound Annual Growth Rate (CAGR). CAGR accounts for the compounding effect on investment over time, providing a smoothed annual rate of return. This metric is particularly insightful for gauging the consistency of performance.

Total returns, on the other hand, encompass not only the capital appreciation but also any dividends or interest earned during the investment period. Investors should carefully review both CAGR and total returns to get a comprehensive view of the fund’s performance.

It’s essential to note that short-term investments, such as those with a one-year horizon, may be subject to market volatility. Returns can be influenced by economic conditions, interest rates, and specific market events. Investors should approach one-year mutual fund investments with a clear understanding of the associated risks and align their expectations accordingly. Always consult with financial experts for personalized advice based on your unique financial goals and risk tolerance.

Taxability on Best Investment Plan for 1 Year

For gains from liquid funds held under 3 years, known as Short Term Capital Gains (STCG), you’ll be taxed at your applicable slab rate. Let’s break it down: If your slab rate is, say, 30%, and you invested Rs 10 lakh in a liquid fund, selling it after a year at an NAV of Rs 10.5 lakh, you’ve gained Rs 50,000. This gain is subject to a 30% tax, amounting to Rs 15,000 (plus any applicable surcharge/cess).

Hold on for more than 3 years, and you’re dealing with Long Term Capital Gains Tax (LTCG) at 20%. Bonus: you get the benefit of indexation to ease the tax burden. But here’s a tip: liquid funds might not be your best bet for over 3 years; consider short term debt funds instead.

Quick note: No TDS for resident Indians on liquid fund gains. On the flip side, FDs get TDS if interest exceeds Rs 10,000/year. NRIs face TDS on both liquid funds and FDs.

Dividends from Liquid Funds? Brace yourself for a 25% Dividend Distribution Tax, totaling about 29% with surcharge and cess. The AMC deducts it when declaring dividends, making the dividend itself tax-free for investments.

To Wrap It Up…

To invest wisely in Indian mutual funds for a one-year term, assess key financial metrics and related factors. Always consult a financial advisor and conduct independent research before investing. Note that past performance doesn’t guarantee future outcomes, and mutual fund investments carry market risks.

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