Mutual Funds for Beginners

Updated on October 19, 2025 , 7423 views

investing in Mutual Funds for the first time? Good choice. Mutual fund investment offers an advantage of diversification and easy liquidity. But there is a process to be followed while Investing for the first time. Also, you need to invest in best mutual funds so that it gives you the motivation to invest more. Your fund investment should be simple, useful and easy to implement. There are both qualitative and quantitative parameters to look for.

What are Mutual Funds?

A mutual fund is formed by pooling in the money by a large number of investors. This money or fund raised is then managed by a fund manager who specialises in investing that money in different financial products.

Now that you know, what are Mutual Funds, let's look what process you need to follow to invest in mutual fund for the first time.

Beginners Guide to Mutual Funds

As a first timer investor, there are certain guidelines you must follow before picking any funds to invest.

1. Define your Goals

It is very important to define a clear goal for the investing in mutual funds. You must decide what kind of investment are you looking into. Is it a short-term or a long-term investment? What will be the time period for the investment? As a result of such precise planning, it becomes easier to map the road ahead. Another crucial step to follow is to avoid impatience or overexcitement. You should stick to your objective and avoid getting lured by certain funds (herd mentality or any other bias), without proper knowledge.

Ready to Invest?
Talk to our investment specialist

2. Calculate your Risk Appetite

With every investment, comes a risk. Thus, it is important to understand the risks involved. Every investor must assess risks involved with the help of risk profiling. There are various criteria concerned with risk profiling. Age, Income, investment horizon, loss tolerance, experience in investing, Net worth, and cash flows. Each of these criteria contributes to your risk appetite. A good risk profiling helps you in selecting a mutual fund which best matches your needs.

3. Choosing the Right Mutual Fund

We are finally getting down to the business. After defining clear goals and an informed risk profile, selecting a Mutual Fund which caters all your needs becomes easy. There are many Types of Mutual Funds schemes available in the Market. For investing in mutual funds, you should consider the ratings given by the rating companies. ICRA, CRISIL, MorningStar, ValueResearch, etc., are some of the notable rating systems which will provide you with the best Mutual Fund to invest in. Along with ratings, one must also look for the returns provided by the fund.

However, to make the fund selection process easy for you, we have shortlisted some of the Best Mutual Funds to Invest:

Fund	NAV	Net Assets (Cr)	3 MO (%)	6 MO (%)	1 YR (%)	3 YR (%)	5 YR (%)	2024 (%)	Sub Cat.
DSP US Flexible Equity Fund Growth	₹70.5162 ↑ 0.58	₹1,000	10.2	40.9	25.9	22.1	17.5	17.8	Global
Franklin Asian Equity Fund Growth	₹34.5711 ↑ 0.47	₹260	10.9	27.3	16.3	16.7	4.5	14.4	Global
ICICI Prudential Banking and Financial Services Fund Growth	₹137.74 ↑ 0.02	₹9,688	2.5	7.6	10.6	16.9	21.1	11.6	Sectoral
Aditya Birla Sun Life Banking And Financial Services Fund Growth	₹62.93 ↑ 0.23	₹3,374	2.7	7.6	9.8	16.8	21.3	8.7	Sectoral
Axis Credit Risk Fund Growth	₹21.9872 ↑ 0.02	₹366	2	4.3	8.9	8	6.8	8	Credit Risk
Invesco India Growth Opportunities Fund Growth	₹104.42 ↑ 0.38	₹8,125	2.5	16.6	8.5	25.9	23.8	37.5	Large & Mid Cap
PGIM India Credit Risk Fund Growth	₹15.5876 ↑ 0.00	₹39	0.6	4.4	8.4	3	4.2		Credit Risk
UTI Banking & PSU Debt Fund Growth	₹22.4143 ↑ 0.01	₹813	1.4	3.6	8.1	7.7	7	7.6	Banking & PSU Debt
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 20 Oct 25

Research Highlights & Commentary of 8 Funds showcased

Commentary	DSP US Flexible Equity Fund	Franklin Asian Equity Fund	ICICI Prudential Banking and Financial Services Fund	Aditya Birla Sun Life Banking And Financial Services Fund	Axis Credit Risk Fund	Invesco India Growth Opportunities Fund	PGIM India Credit Risk Fund	UTI Banking & PSU Debt Fund
Point 1	Upper mid AUM (₹1,000 Cr).	Bottom quartile AUM (₹260 Cr).	Highest AUM (₹9,688 Cr).	Upper mid AUM (₹3,374 Cr).	Lower mid AUM (₹366 Cr).	Top quartile AUM (₹8,125 Cr).	Bottom quartile AUM (₹39 Cr).	Lower mid AUM (₹813 Cr).
Point 2	Established history (13+ yrs).	Established history (17+ yrs).	Established history (17+ yrs).	Established history (11+ yrs).	Established history (11+ yrs).	Oldest track record among peers (18 yrs).	Established history (11+ yrs).	Established history (11+ yrs).
Point 3	Top rated.	Rating: 5★ (top quartile).	Rating: 5★ (upper mid).	Rating: 5★ (upper mid).	Rating: 5★ (lower mid).	Rating: 5★ (lower mid).	Rating: 5★ (bottom quartile).	Rating: 5★ (bottom quartile).
Point 4	Risk profile: High.	Risk profile: High.	Risk profile: High.	Risk profile: High.	Risk profile: Moderate.	Risk profile: Moderately High.	Risk profile: Moderate.	Risk profile: Moderate.
Point 5	5Y return: 17.49% (upper mid).	5Y return: 4.50% (bottom quartile).	5Y return: 21.05% (upper mid).	5Y return: 21.34% (top quartile).	1Y return: 8.88% (lower mid).	5Y return: 23.76% (top quartile).	1Y return: 8.43% (bottom quartile).	1Y return: 8.07% (bottom quartile).
Point 6	3Y return: 22.09% (top quartile).	3Y return: 16.69% (lower mid).	3Y return: 16.87% (upper mid).	3Y return: 16.78% (upper mid).	1M return: 0.94% (upper mid).	3Y return: 25.91% (top quartile).	1M return: 0.27% (bottom quartile).	1M return: 0.71% (lower mid).
Point 7	1Y return: 25.94% (top quartile).	1Y return: 16.26% (top quartile).	1Y return: 10.64% (upper mid).	1Y return: 9.81% (upper mid).	Sharpe: 2.16 (top quartile).	1Y return: 8.51% (lower mid).	Sharpe: 1.73 (top quartile).	Sharpe: 1.46 (upper mid).
Point 8	Alpha: -2.48 (lower mid).	Alpha: 0.00 (top quartile).	Alpha: -2.57 (bottom quartile).	Alpha: -6.06 (bottom quartile).	Information ratio: 0.00 (lower mid).	Alpha: 11.03 (top quartile).	Information ratio: 0.00 (lower mid).	Information ratio: 0.00 (bottom quartile).
Point 9	Sharpe: 0.77 (upper mid).	Sharpe: 0.49 (lower mid).	Sharpe: 0.03 (lower mid).	Sharpe: -0.18 (bottom quartile).	Yield to maturity (debt): 7.93% (top quartile).	Sharpe: 0.03 (bottom quartile).	Yield to maturity (debt): 5.01% (upper mid).	Yield to maturity (debt): 6.61% (top quartile).
Point 10	Information ratio: -0.62 (bottom quartile).	Information ratio: 0.00 (upper mid).	Information ratio: 0.32 (top quartile).	Information ratio: 0.14 (upper mid).	Modified duration: 2.30 yrs (bottom quartile).	Information ratio: 1.26 (top quartile).	Modified duration: 0.54 yrs (lower mid).	Modified duration: 1.70 yrs (bottom quartile).

DSP US Flexible Equity Fund

Upper mid AUM (₹1,000 Cr).
Established history (13+ yrs).
Top rated.
Risk profile: High.
5Y return: 17.49% (upper mid).
3Y return: 22.09% (top quartile).
1Y return: 25.94% (top quartile).
Alpha: -2.48 (lower mid).
Sharpe: 0.77 (upper mid).
Information ratio: -0.62 (bottom quartile).

Franklin Asian Equity Fund

Bottom quartile AUM (₹260 Cr).
Established history (17+ yrs).
Rating: 5★ (top quartile).
Risk profile: High.
5Y return: 4.50% (bottom quartile).
3Y return: 16.69% (lower mid).
1Y return: 16.26% (top quartile).
Alpha: 0.00 (top quartile).
Sharpe: 0.49 (lower mid).
Information ratio: 0.00 (upper mid).

ICICI Prudential Banking and Financial Services Fund

Highest AUM (₹9,688 Cr).
Established history (17+ yrs).
Rating: 5★ (upper mid).
Risk profile: High.
5Y return: 21.05% (upper mid).
3Y return: 16.87% (upper mid).
1Y return: 10.64% (upper mid).
Alpha: -2.57 (bottom quartile).
Sharpe: 0.03 (lower mid).
Information ratio: 0.32 (top quartile).

Aditya Birla Sun Life Banking And Financial Services Fund

Upper mid AUM (₹3,374 Cr).
Established history (11+ yrs).
Rating: 5★ (upper mid).
Risk profile: High.
5Y return: 21.34% (top quartile).
3Y return: 16.78% (upper mid).
1Y return: 9.81% (upper mid).
Alpha: -6.06 (bottom quartile).
Sharpe: -0.18 (bottom quartile).
Information ratio: 0.14 (upper mid).

Axis Credit Risk Fund

Lower mid AUM (₹366 Cr).
Established history (11+ yrs).
Rating: 5★ (lower mid).
Risk profile: Moderate.
1Y return: 8.88% (lower mid).
1M return: 0.94% (upper mid).
Sharpe: 2.16 (top quartile).
Information ratio: 0.00 (lower mid).
Yield to maturity (debt): 7.93% (top quartile).
Modified duration: 2.30 yrs (bottom quartile).

Invesco India Growth Opportunities Fund

Top quartile AUM (₹8,125 Cr).
Oldest track record among peers (18 yrs).
Rating: 5★ (lower mid).
Risk profile: Moderately High.
5Y return: 23.76% (top quartile).
3Y return: 25.91% (top quartile).
1Y return: 8.51% (lower mid).
Alpha: 11.03 (top quartile).
Sharpe: 0.03 (bottom quartile).
Information ratio: 1.26 (top quartile).

PGIM India Credit Risk Fund

Bottom quartile AUM (₹39 Cr).
Established history (11+ yrs).
Rating: 5★ (bottom quartile).
Risk profile: Moderate.
1Y return: 8.43% (bottom quartile).
1M return: 0.27% (bottom quartile).
Sharpe: 1.73 (top quartile).
Information ratio: 0.00 (lower mid).
Yield to maturity (debt): 5.01% (upper mid).
Modified duration: 0.54 yrs (lower mid).

UTI Banking & PSU Debt Fund

Lower mid AUM (₹813 Cr).
Established history (11+ yrs).
Rating: 5★ (bottom quartile).
Risk profile: Moderate.
1Y return: 8.07% (bottom quartile).
1M return: 0.71% (lower mid).
Sharpe: 1.46 (upper mid).
Information ratio: 0.00 (bottom quartile).
Yield to maturity (debt): 6.61% (top quartile).
Modified duration: 1.70 yrs (bottom quartile).

4. Asset Management Company

Choosing a right asset management company is also very important while Investing in Mutual Funds for the First Time. Track record of the asset management company (AMC), the age of the fund and the track-record of the fund are also essential factors while finalising on investing in mutual funds. Thus, choosing the right mutual funds for the first investment links both the qualitative and quantitative measures.

There is no shortage of knowledge about investing in mutual funds. Sufficient information will only help at the time of investment and stops you from being a victim of misselling. The decision of investing in mutual funds for the first time has to be a well-informed and well thought. This will only encourage you to invest more. This can be your first step towards a gradual wealth creation.

How to Invest in Mutual Funds Online?

Open Free Investment Account for Lifetime at Fincash.com.

Complete your Registration and KYC Process

Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!

Get Started

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.