Top 3 Mutual Funds For Government Employees

A government job has multiple perks, and a handsome salary and job security are among them. But as retirement catches up with everyone, saving for your vulnerable days and building up a retirement corpus should be among your top priorities. And mutual funds are one of the best ways to build up a large saving corpus. So in this article, we will list the top 3 mutual funds for government employees to invest in.

Investing in individual stocks is super risky, and it is a full-time job. It is nearly impossible for a government employee (or any jobholder for that matter) to go through years of financial data of multiple companies, assess the risk of each of the companies, and then select a stock or bond for investing.

But all of the above work (and much more) is already done for you by a team of professional investment managers when you invest via mutual funds.

So the best way for a government employee to participate in the growing Indian economy is through mutual funds.

So, here are the top 3 mutual funds for every government employee in India.

3 Best Mutual Funds For Government Employees

#1 Quant Tax Plan (Direct and Growth)

NAV as of 28th February 2023 – Rs. 242.06/-

The first mutual fund we will be talking about is the Quant Tax Plan. It is an ELSS mutual fund. It means investors can enjoy a tax deduction of up to Rs. 1,50,000/- under Section 80C of the Indian Income Tax Act by investing in this mutual fund.

It is similar to that of a Public Provident Fund or PPF.

But your investments in an ELSS mutual fund, in this case, the Quant Tax Plan, are locked in for three years, unlike that of a PPF, which has a lock-in of 15 years.

The Quant Tax Plan mutual fund manages a sum of Rs. 2,692.00 Crores as of 8th March 2023 and has a Crisil ranking of 5 Stars.

The Direct and Growth Plan of the Quant Tax Plan mutual fund has generated an annualized return of 22.94% for the last five years.

While in the last ten years, the fund has generated a return of 22.28% per year. The highest in its category and among its peers.

The ELSS from Quant has an Expense Ratio of 0.57%.

It means – For every One Hundred Rupees of your portfolio value, the Quant Tax Plan fund will charge you 57 Paise annually.

The Expense Ratio is a management fee that a mutual fund charges to manage and invest your money in the market.

How Much Should You Invest In An ELSS?

As there is no upper limit on the investment amount, you can invest as much as you like. But the best amount to invest in any ELSS monthly is Rs. 12,500/-. That equates to Rs. 1,50,000/- annually, covering your 80C tax saving quota.

And the best way to invest in the Quant Tax Plan ELSS, or any mutual fund for that matter, is via the SIP method.

Before we move on to the other mutual funds for government employees, here are some honorable mentions in the ELSS category.

IDFC Tax Advantage (ELSS) Fund – Direct and Growth

Annualized Returns as of February 2023
3 Years – 28.10%
5 Years – 13.45%
10 Years – 17.54%

Expense Ratio – 0.74%

Mirae Asset Tax Saver Fund – Direct and Growth

Annualized Returns as of February 2023
3 Years – 23.96%
5 Years – 15.74%
10 Years – Not Available

Expense Ratio – 0.54%

#2 Nippon India Multi Cap Fund (Direct and Growth)

NAV as of 28th February 2023 – Rs. 174.50/-

The next type of mutual fund every government employee should have on their radar is a Multi Cap Fund. And the star in the category is the Nippon India Multi Cap Fund.

Unlike market cap-specific mutual funds like Large Cap Funds, Mid-cap Funds, Small-cap Funds, etc., which have to invest a specific percentage of their total AUM in companies of a particular market capitalization, Multi Cap mutual funds don’t have any such limitation.

Multi Cap funds can invest as much of their AUM as they choose in companies of whichever size. And as this type of fund invests across the breadth of the equity market, they have a very diversified portfolio. This article will help you learn more about Multi Cap funds.

Now let’s talk about the Multi Cap mutual fund from Nippon India.

Nippon India Multicap Fund is a Large and Mid Cap oriented Multi Cap fund as the fund generally invests 70% or above of its AUM in Large and Mid Cap companies.

The Large Cap companies in the fund’s portfolio provide stability, while the Mid Cap and Small Cap companies are the growth propellers of the fund.

The Nippon India Multi Cap Fund will suit investors who want to generate inflation-beating returns from their investment and have a long investment horizon, generally 5 to 7 years or above.

As of February 2023, with a Crisil Rating of 4 Stars, the fund has an AUM of more than Rs. 14,000.00 Crores.

The Direct and Growth Plan of the fund has generated a return of 13.47% per annum in the last five years.

And in the last ten years, the annualized return of Nippon India Multi Cap Fund stands at 15.21%.

The Expense Ratio of the Multi Cap fund from Nippon India stands at 1.12%. That is higher compared to the Category Average of 0.75%.

An Expense Ratio of 1.12% means – For every hundred Rupees invested, the fund will deduct Rs. 1.12/- from your total portfolio value per year.

How Much Should You Invest In A Multi Cap Fund?

If you are a Conservative and Risk-averse investor with a long-term investment horizon, then you should allocate 40% to 50% of your investable corpus to a Multi Cap Fund.

And if you are an aggressive investor with a long-term investment horizon, then you should allocate 30% to 40% of your investable corpus to a Multi Cap Fund.

Before we move on, here are some honorable mentions in the Multi Cap mutual fund category.

Quant Active Fund – Direct and Growth

Annualized Return as of February 2023
3 Years – 38.83%
5 Years – 20.77%
10 Years – 21.02%

Expense Ratio – 0.58%

Invesco India Multicap Fund – Direct and Growth

Annualized Returns as of February 2023
3 Years – 20.37%
5 Years – 11.54%
10 Years – 18.16%

Expense Ratio – 0.65%

Now let us move on to the last fund on our list of mutual funds for government employees.

#3 Mirae Asset Emerging Bluechip Fund (Direct and Growth)

NAV as of 28th February 2023 – Rs. 102.39/-

The last fund on our list is a Large And Midcap category mutual fund.

As the category name suggests, this type of mutual fund focuses mainly on Large Cap and Mid Cap companies. And according to SEBI Rules, funds that categorize themselves as Large And Midcap mutual funds have to invest 35% of their AUM in Large Cap companies and another 35% of the AUM in Mid Cap companies.

And holding the top spot in this category for nearly a decade is the Mirae Asset Emerging Bluechip Fund.

The Mirae Asset Emerging Bluechip Fund is among the most famous funds in the Indian mutual fund industry.

And that is why the Emerging Bluechip Fund of Mirae Asset has a humongous AUM of more than Rs. 23,300.00 Crores. It is one of the biggest among all the funds available in India.

The fund became so big and famous that investors blindly started pouring money into the fund. And it became a massive headache for the fund managers to find suitable opportunities in the market to invest the mammoth inflow.

The fund house placed two crucial restrictions on the investors to mitigate the problem of over-inflow.

The first restriction is – Investors are now no more allowed to invest in the Mirae Asset Emerging Bluechip Fund via the Lumpsum investment method.

They can only invest in the fund through SIP.

The second restriction is – Investors cannot invest more than Rs. 2,500/- via SIP per month.

Now let’s see how the fund has performed in the past.

In the last five years, Mirae Asset Emerging Bluechip Fund has generated an annualized return of 14.59%, the highest in the category. While during the same period, the Category Average was 11.21%.

And in the last ten years, the fund has generated a mind-boggling return of 22.71% per annum.

Anyone who has been dealing with the equity market for a long time knows how hard and near-to-impossible it is to ‘consistently’ generate such a high rate of return from the market.

Based on the extraordinary returns the fund generated, the fund house could have charged a premium fee to its investors.

But the AMC has kept the Expense Ratio of Mirae Asset Emerging Bluechip Fund at 0.68%, whereas the average Expense Ratio among the category is 0.89%.

An Expense Ratio of 0.68% means you will be charged 68 Paise per annum for every hundred Rupees of your Total Portfolio Value.

How To Invest More Than Rs. 2,500/- Per Month In Mirae Asset Emerging Bluechip Fund?

As there is no way to invest more than Rs. 2,500/- per month in the Mirae Asset Emerging Bluechip Fund, you can consider investing in other funds of the same category.

For example –

If you want to invest Rs. 8,500/- per month in the Large And Midcap category, you can invest Rs. 2,500/- in the Mirae Asset Emerging Bluechip Fund and the remaining Rs. 6,000/- in a fund of your choice from the list below.

Below is a list of funds from the same category that performed excellently in the past.

Canara Robeco Emerging Equities – Direct and Growth

Annualized Return as of February 2023
3 Years – 21.48%
5 Years – 11.94%
10 Years – 21.11%

Expense Ratio – 0.58%

Quant Large and Mid Cap Fund – Direct and Growth

Annualized Returns as of February 2023
3 Years – 30.02%
5 Years – 14.00%
10 Years – 18.75%

Expense Ratio – 0.56%

We have compared some of the top Large And Midcap mutual funds in this article. Do give it a read, as you may find it helpful.

And here, we have explained in detail how to build a personal mutual fund portfolio.

Now let us answer a few commonly asked questions of government employees regarding the equity market and mutual funds.

That was it.

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