Mutual funds provide many investment options for both short-term and long-term investors. Except for ELSS, most of these investments do not have a mandatory lock-in period. This flexibility allows investors to potentially benefit from market fluctuations and enter or exit funds with relative ease, which may minimise substantial costs. Consequently, mutual fund Systematic Investment Plans (SIPs) can be considered suitable for a wide range of investors. Here are brief details on mutual fund categories ideal for 1-year investments and the best investment plans for a one-year investment horizon.
List of Top 10 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 | Category | AUM (in Cr) | Expense Ratio (%) | Absolute Returns- 1Y |
|---|---|---|---|---|
| HDFC Defence Fund | Thematic Fund | ₹3,232.88 | 0.74 | 141.66 |
| SBI PSU Fund | Thematic Fund | ₹2,352.22 | 0.82 | 102.45 |
| Invesco India PSU Equity Fund | Thematic Fund | ₹956.83 | 0.93 | 102.24 |
| Aditya Birla SL PSU Equity Fund | Thematic Fund | ₹4,711.18 | 0.45 | 99.23 |
| Motilal Oswal S&P BSE Enhanced Value Index Fund | Index Fund | ₹401.51 | 0.38 | 95.07 |
| UTI Nifty 500 Value 50 Index Fund | Index Fund | ₹278.46 | 0.57 | 93.74 |
| ICICI Pru PSU Equity Fund | Thematic Fund | ₹2,588.85 | 0.63 | 89.59 |
| LIC MF Infra Fund | Sectoral Fund - Infrastructure | ₹267.88 | 1.45 | 87.51 |
| Bandhan Infrastructure Fund | Sectoral Fund - Infrastructure | ₹1,171.09 | 0.97 | 86.87 |
| Invesco India Infrastructure Fund | Sectoral Fund - Infrastructure | ₹1,239.68 | 0.79 | 85.14 |
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 top mutual funds list for 1 year is from 19th June, 2024. This data is derived from the Tickertape Mutual Funds Screener.
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
- Plan: Growth
- Absolute Retuns for 1-Year: Sorted from Highest to Lowest
Top Mutual Funds for 1 Year Investments: An Overview
Here is a brief overview of the plans for 1 year listed above:
HDFC Defence Fund
HDFC Defence Fund is an equity mutual fund from HDFC Mutual Fund, managed by Abhishek Poddar. With a Assets Under Management (AUM) of ₹3,232.88 cr, expense ratio of 0.74% and PE ratio of 60.47, it has delivered a return of 141.66% over the past year. Investors can start a SIP in this scheme with a minimum amount of ₹100. The fund’s CAGR for one year is 140.61%.
SBI PSU Fund
SBI PSU Fund is an equity mutual fund offered by SBI Mutual Fund, managed by Rohit Shimpi. The fund has an AUM of ₹3,071.30 cr and a current Net Asset Value (NAV) of ₹35.714. Over the past year, the SBI PSU Fund scheme has shown absolute returns of 102.45%, over the past year. Investors can start with a minimum SIP amount of ₹500. The fund’s one year CAGR is 100.55%, expense ratio is 0.82% and PE ratio is 22.29.
Invesco India PSU Equity Fund
Invesco India PSU Equity Fund is an equity mutual fund from Invesco Mutual Fund, managed by Dhimant Kothari. It has assets under management (AUM) of ₹1,137.59 cr and a net asset value (NAV) of ₹78.580. Over the past year, the Invesco India PSU Equity Fund scheme has delivered 1-year absolute returns of 102.24%. Investors can start a SIP in this scheme with a minimum amount of ₹500. The fund’s CAGR for one year is 101.13%. expense ratio is 0.93%, and PE ratio is 33.32.
Aditya Birla SL PSU Equity Fund
Aditya Birla Sun Life PSU Equity Fund is an equity mutual fund offered by Aditya Birla Sun Life Mutual Fund. Managed by Dhaval Gala, it has an AUM of ₹4,711.18 cr and a NAV of ₹38.070. Over the past year, the fund has returned 99.23%. You can start a SIP in this scheme with a minimum investment of ₹100. The fund’s 3 year CAGR is 41.21%, expense ratio is 0.45% and PE ratio is 18.94.
Motilal Oswal S&P BSE Enhanced Value Index Fund
Motilal Oswal S&P BSE Enhanced Value Index Fund is an equity mutual fund from Motilal Oswal Mutual Fund. Managed by Swapnil P. Mayekar and Rakesh Shetty, the fund has an AUM of ₹401.51 cr and a NAV of ₹25.053. Over the last year, the fund returned 95.07%. The minimum SIP investment is ₹500. The fund’s 3-year CAGR is 64.28%, the expense ratio is 0.38%, and PE ratio is 14.80.
UTI Nifty 500 Value 50 Index Fund
UTI Nifty 500 Value 50 Index Fund is an equity mutual fund from UTI Mutual Fund, managed by Sharwan Kumar Goyal. The fund has assets under management (AUM) of ₹278.46 cr and a net asset value (NAV) of ₹19.959. Over the past year, the fund has delivered 1-yaer absolute returns of 93.74%. Investors can start a Systematic Investment Plan (SIP) with a minimum amount of ₹500. The 3-year CAGR of the fund is 83.57%, the expense ratio is 0.57%, and PE ratio is 17.64.
ICICI Pru PSU Equity Fund
ICICI Prudential PSU Equity Fund is an equity mutual fund from ICICI Prudential Mutual Fund, managed by Mittul Kalawadia and Anand V Sharma. It has an AUM of ₹2,588.85 cr and a latest NAV of ₹21.590. Over the last year, the fund has delivered absolute returns of 89.59%. You can start a SIP in this scheme with a minimum investment of ₹100. The fund’s 3-year CAGR is 53.06%, the expense ratio is 0.63%, and PE ratio is 17.07.
LIC MF Infra Fund
LIC MF Infrastructure Fund is an equity mutual fund from LIC Mutual Fund managed by Yogesh Patil. The fund’s assets under management (AUM) total ₹267.88 cr, and its latest net asset value (NAV) is ₹54.716. Over the past year, the LIC MF Infrastructure Fund scheme has delivered absolute returns of 87.51%. The minimum SIP investment amount is ₹1000. The fund’s 3-year CAGR is 39.54%, the expense ratio is 1.45%, and PE ratio is 60.76.
Bandhan Infrastructure Fund
Bandhan Infrastructure Fund is an equity mutual fund from Bandhan Mutual Fund, managed by Vishal Biraia. It has an AUM of ₹1,171.09 cr, with the latest NAV at ₹61.459. Over the past year, the fund has had absolute returns of 86.87%. The minimum SIP investment amount is ₹100. The fund’s 3-year CAGR is 37.67%, expense ratio is 0.97%, and PE ratio is 51.65.
Invesco India Infrastructure Fund
Invesco India Infrastructure Fund is an equity mutual fund from Invesco Mutual Fund managed by Amit Nigam. It has an AUM of ₹1,239.68 cr and a NAV of ₹79.360. Over the past year, the fund has had absolute returns of 85.14%. The minimum SIP investment amount is ₹500. The fund’s 3-year CAGR is 38.11%, expense ratio is 0.79%, and PE ratio is 57.15.
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 characterised 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.
The best investment plans for 1-year are funds that meet the investment objectives of those investors whose investment horizon is limited to one year. There are a few types of mutual funds that may be suitable for 1-year investments and have been listed below.
Types of MFs for 1 Year Investments
Explore six dynamic investment avenues for mutual fund enthusiasts eyeing a one-year horizon:
- Liquid Funds: The best mutual funds for 2024 for 1 year are ideal for short-term parking (up to one year). Investors can invest in money market instruments maturing within 90 days. Due to the short holding period, there is minimal price risk.
- Ultra-Short Duration Funds: Investors can gain popularity for their duration-based approach. They can invest in debt securities maturing in 3-6 months. These securities are suited for maturity matching, offering flexibility.
- Low-Duration Funds: These funds focus on securities for 6-12 months. They are well-suited for short-term fund placement and effectively balance risk and return.
- Money Market Funds: Investors can invest in money market instruments with a maturity of up to 1 year. These funds have high liquidity and low risk, with no credit risk compared to duration funds.
- Floater Funds: Debt funds allocate at least 65% to floating-rate bonds. Interest rates adjust with market changes, which is ideal during rising interest rate scenarios. These funds are suited for short-term investments.
- Arbitrage Funds: Investors can leverage price differentials in cash and derivatives markets. They are classified as hybrid funds but function akin to debt funds. Arbitrage funds are 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.Alternatively, you can consult a financial advisor before making an investment decision.
How do Mutual Funds for 1 Year Work?
Mutual funds tailored for a one-year investment horizon operate by pooling funds from multiple investors to create a diversified portfolio. These funds, often designed for short-term goals, may typically invest in a mix of fixed-income securities such as Treasury bills, short-term bonds, and money market instruments. The primary objectives of these funds may include 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 typically distributed among investors based on their proportional investments. It’s important to note that the performance of these the best mutual funds to invest in 2024 for 1 year can be influenced by interest rate movements and market conditions.
While the best mutual funds in India for 1 year may 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 can be 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 multiple 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 the top mutual funds to invest in 2024 can mitigates risk by spreading investments across various assets.
- Professional Management: Fund managers handle the day-to-day decisions regarding the best funds for 1 year. They leverage expertise to navigate market fluctuations and optimise returns.
- Low Minimum Investments: Many mutual funds have low minimum investment requirements. This makes them accessible for those looking to invest for a shorter duration.
- Transparent Pricing: The best mutual fund to invest in 2024 for 1 year provides daily NAV updates. This ensures 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. They can thus align with their risk tolerance and return expectations for one year.
Who Should Invest in Mutual Funds for 1 Year Investments?
Investing in mutual funds for a one-year horizon is a strategic choice that may suit 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 top performing mutual funds in India for 1 year beneficial.
- 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 can make them suitable for investors prioritising 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.
Benefits of Investing in the Best Investment Plan for 1 Year
Short-term mutual funds offer many advantages, making them an attractive option for investors seeking stability and liquidity.
- Reduced Volatility and Lower Risk: Investing in the best mutual funds to invest in 2024 for 1 year protects against high volatility and categorisation as high-risk funds. This is attributed to the low or negligible risk that may be associated with these funds’ underlying assets or instruments. The inherent stability in short-term investments makes them a prudent choice, especially for risk-averse investors prioritising capital preservation.
- Liquidity in Emergencies: One of the primary benefits of the top mutual funds in India for 1 year is their role as a reliable source of liquidity during emergencies. These funds ensure 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 circ*mstances.
- Stable Returns in a Short Timeframe: The top performing mutual funds for 1 year stand out for their ability to deliver relatively good and stable returns within a short period. This characteristic particularly appeals 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 expose investors to various debt and money market instruments, 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 market segments 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.
- Assess Risk Tolerance: Investors can begin by assessing their risk tolerance level, aligning it with the chosen mutual fund’s risk profile. They can clearly define their financial goals and the one-year timeframe to match the fund’s objectives. These objectives may be capital preservation, income generation, or capital appreciation.
- Evaluate Expense Ratio: Investors can evaluate the fund’s expense ratio, which represents the annual cost of managing the fund. Lower expense ratios are generally preferable for short-term investments and positively impact returns. They can analyse the fund’s historical performance for insights into its consistency and volatility. However, they should also keep in mind that past performance doesn’t guarantee future results.
- Liquidity: Prioritise liquidity by opting for the best mutual fund in India for 1 year with high liquidity during mutual fund selection. This can facilitate easy buying or selling of shares—a crucial aspect of short-term investment plans. Investors can ensure diversification across asset classes to reduce the impact of volatility.
- Exit Loads: Investors can consider any exit loads or fees associated with the mutual fund. Thereby 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.
On the other hand, total returns encompass not only the capital appreciation but also any dividends or interest earned during the investment period. Investors should carefully review CAGR and total returns to comprehensively view 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. You may want to consult financial experts for personalised advice based on your unique financial goals and risk tolerance.
Taxation on the Best Mutual Funds for 1 Year as per Union Budget 2024-25
The tax treatment of the capital gains earned on mutual fund investments can be divided into long-term and short-term capital gains. The Union Budget 2024-25, delivered by Finance Minister Nirmala Sitharaman, has revised a few regulations surrounding these tax rates. Let’s take a look at the significant changes that may affect the taxation on the best mutual funds for 1 year:
Equity Mutual Funds
- Short-Term Capital Gains Tax: Any gains made when holding equity mutual funds for less than 12 months are considered short-term capital gains. The Union Budget 2024-25 increased the tax rate on these gains to 20%. The STCG tax rate was previously 15%.
- Long-Term Capital Gains Tax: For equity mutual funds held for over a year, gains are classified as long-term capital gains. The new budget introduces these key changes:
- Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
- Tax Rate: The gains exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
Indexation was a method that allowed investors to adjust the purchase price of assets for inflation. This adjustment reduced taxable profits when selling assets like property or gold. Previously, these long-term capital gains were taxed at 20%. The new rule imposes a flat 12.5% tax on all long-term capital gains but eliminates any indexation benefits.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
Debt Mutual Funds
- Short-Term Capital Gains (STCG): If you sell your debt fund units within a period of 36 months, the gains are classified as short-term capital gains. The STCG will be taxed according to your income tax slab rate.
- Long-Term Capital Gains (LTCG): For debt funds held for a period over 36 months, the gains are classified as long-term capital gains. The new budget outlines a few changes on the LTCG for debt funds, including:
- Tax Rate: A flat 12.5% tax rate applies to these gains.
- No Indexation Benefit: The previous benefit of adjusting the purchase price for inflation is removed. Now, the entire gain after three years is taxable at 12.5%.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 36 months | Taxed according to your income tax slab | Taxed according to your income tax slab |
| Long-Term Capital Gains (LTCG) | More than 36 months | 10% | 12.50% |
Risks Involved While Investing in Best Investment Plan for 1 Year
When considering mutual funds for short-term gains, navigating the potential risks associated with such ventures is essential. 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: A good one-year investment plan 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 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. The returns on these best SIP investments for 1 year may vary in a fluctuating interest rate environment. 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 may become a prominent factor. Exchange rate fluctuations can influence returns when converting profits to the investor’s home currency. Political and economic developments in foreign markets can add a layer of unpredictability, underscoring the importance of thorough research before venturing into international short-term funds.
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: Investors can clearly identify their investment goal. Short-term mutual funds can be the ideal choice if you aim for short-term gains.
- Evaluate Your Risk Profile: Investors can try to understand their risk tolerance by taking an online risk assessment test or consulting with an investment advisor. Investors can then invest in products aligning with their risk profile.
- Understand Tax Implications: Investors should be aware of the tax treatment linked to best short term mutual funds for 1 year. If held for under three years, investors are subject to capital gains tax upon selling or expiration.
- Assess Fund Performance: One-year mutual funds invest in low-risk bonds and easily liquidated securities, potentially offering a lower-risk profile. Investors may expect an average annual return of 4% to 6%, depending on investment location and provider.
- Consider Expense Ratio: The expense ratio, representing the cost per dollar invested, covers management fees and operating expenses. Investors can opt for lower expense ratios to enhance future withdrawals.
- Navigate Entry and Exit Loads: Entry and Exit Loads are fees incurred when buying or selling a 1-year investment plan through a broker. They can range from 0% to 3%. Investors can understand these fees before investing.
To Wrap It Up…
Assessing key financial metrics and related factors while investing in Indian mutual funds for a one-year term can be beneficial. However, it may always be worthwhile to consult a financial advisor and conduct independent research before investing. Remember, past performance doesn’t guarantee future outcomes, and mutual fund investments carry market risks.
Most Popular Mutual Funds:
As an investor to have a diversified mutual funds portfolio, you might also like to know more about these different types of funds for investing –
| Large Cap Mutual Funds | Mutual Fund Bulk Deals | SBI Mutual Funds for SIP | SBI MF for Long Term SIP | Sectoral Mutual Funds | Short Term Mutual Funds | Tax Saving Mutual Funds | Mid Cap Mutual Funds |
| Small Cap Mutual Funds | Pharma Mutual Funds | 80c Mutual Funds | 1 Year Mutual Funds | International Mutual Funds | Tata Mutual Funds | Mutual Fund Portfolio | Best Mutual Funds |
| High Risk Mutual Funds | Micro Cap Mutual Funds | AMCs | MNC Mutual Funds | Equity Mutual Funds | Overnight Funds | ICICI Pru Mutual Funds | HDFC Mutual Funds |
| Best Investment Plans | Fixed Income Mutual Funds | Penny Stock Mutual Funds | Retirement Mutual Funds | Floater Rate Funds | Aggressive Hybrid Funds | Multi Asset Allocation Funds | Children’s Funds |
| Medium Duration Funds | Debt Funds | Corporate Bonds | Ultra Short Term Funds | Value Funds | Contra Funds | Focused Funds | Funds of Funds |
| Money Market Funds | Arbitrage Funds | Gold Mutual Funds | Books on Mutual Funds | Best Mutual Funds for SIP | SBI Mutual Funds | Low Risk Mutual Funds | Dividend Paying Funds |
| Long Term Mutual Funds | Banking Mutual Funds | Gilt Funds | Mutual Funds for 10 Years | Monthly Income Mutual Funds | Nifty 50 Index Funds | Lumpsum Investment Funds | Blue Chip Mutual Funds |
| Low Expense Ratio Funds |
Frequently Asked Questions About the Best Mutual Funds for 1 Year
1. Are mutual funds safe for 1 year?
To thrive in a one-year investment span investors can try to strike a balance between capital safety and liquidity when venturing into mutual funds. They can aim for steady returns, even if they trail behind extended investment plans.
2. Where do the best investment plans for 1 year invest?
The best investment plans for a one-year horizon typically allocate funds to options that may prioritise capital preservation and short-term liquidity. These plans often involve instruments designed to generate stable returns within a relatively brief timeframe.
3. What are the returns on the best investment plan for 1 year?
The returns on the best investment plan for one year can vary depending on market conditions and the specific investment chosen. For optimal returns, it may be crucial to research and select a plan that aligns with your financial goals and risk tolerance.
4. When should I invest in the best investment plan for 1 year?
You can consider investing in the best one-year investment plan when you seek a short-term financial strategy that aligns with your goals and risk tolerance. Timing your investment based on your financial objectives and market conditions can bee crucial for optimal results.
5. What is the lock-in period for the best investment plan for 1 year?
The best investment plan for one year typically doesn’t impose a lock-in period. This means you may have the flexibility to withdraw your funds at any time within the one-year timeframe without facing any restrictions.
