Create wealth with these mutual funds

Wealth Creation

by 5paisa Research Team Last Updated: 2022-04-21T16:45:12+05:30

Mutual funds are one of the best ways to create wealth over the long term. In this article, we have listed the best mutual funds for wealth creation in the longer run. So, stay tuned! 

There has been a record inflow in the equity mutual funds and in March 2022 it surged by about 44%. This can be very well attributed to crude oil prices remaining constant and Foreign Institutional Investors (FII) lowering their pace of selling despite the ongoing geopolitical concerns. According to figures issued by the Association of Mutual Funds in India (AMFI), net inflows into equity mutual funds totalled Rs 28,463.49 crore in March 2022, up from Rs 19,705.27 crore the previous month. 

When it comes to wealth accumulation, it is critical to maintain realistic expectations, and it is even more critical to understand what wealth entails. Wealth is defined as the amount of money left over after deducting inflation. And, as we all know, the inflation issue is worsening not only in India but internationally. Inflation is a wealth destroyer and we believe that any return over inflation with a 2% margin of safety is wealth. 

Say, for instance, our inflation is hovering around 7%, and if you are investing in bank fixed deposits (FD) fetching a mere 6% to 6.5%, then you cannot create any wealth. In fact, your wealth is being destroyed due to a negative real rate of returns. And if you simply invest in debt mutual funds generating returns around 7% to 8%, then you can neither be creating wealth nor destroying. However, if you are investing in a good mix of equity and debt funds fetching returns of around 10% to 12%, then certainly you are creating wealth. 

So, to create wealth you don’t need to take higher risks than your actual risk tolerance level. We have listed the best five funds for wealth creation. 

Trailing Returns (%) 

1-Year 

3-Year 

5-Year 

SBI Small Cap Fund 

33.1 

27.6 

20.9 

Baroda BNP Paribas Midcap Fund 

30.0 

24.8 

15.0 

Axis Small Cap Fund 

41.5 

32.0 

21.6 

Parag Parikh Flexi Cap Fund 

26.3 

25.4 

21.0 

DSP Small Cap Fund 

45.8 

28.2 

14.8 


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