Best Mutual Funds to Invest in 2022

The first half of 2022 flew by as equity markets stayed under pressure. Will the rest of the year lift the profits? Let’s find out.

After 3 months of steep correction, S&P BSE Sensex and NIFTY 50 saw the sharpest rise this year with 8.58% & 8.73% gains respectively in July 2022 on the back of commodity prices and crude oil prices stabilizing. Exporters benefitted from rupee depreciation, and agriculture production would boost as the monsoon began on a healthy note. 

Corporate earnings so far, are in line with expectations. 

FIIs who were aggressive sellers this year but turned net buyers in equities in July 2022 after a gap of almost 9 months.

However, while many analysts believe that most of the damage seems to be done, signs of a mild recession in the US, Global central banks struggling to maintain a balance between inflation & growth, and future interest rate hikes will keep markets on the edge.

Now the real question is - What is the best mutual fund for YOU in the current market scenario?

Considering the market volatility so far, Balanced Advantage Funds and Flexi-cap funds might be the saviors.

While choosing Mutual funds, you should consider starting a Systematic Investment Plan (SIP) for long-term gains. Because the market can be uncertain due to various
reasons such as inflation, changes in commodity prices, or geo-political tensions. In such scenarios, SIP is always a safe investment method.

We have curated a list of funds that you can consider depending on your current portfolio. But don’t just pick a fund to put your hard-earned money in.

There are a few parameters that will help you choose a suitable Mutual Fund. 

Let’s shed more light on it.

What are Balanced Advantage Funds?

These are a type of hybrid funds that distribute investments in both equity and debt funds with no restrictions.

There is no threshold for asset allocation. Fund managers can decide whether to allocate maximum funds into equity or debt. These decisions can be dynamic and are made based on the model followed by the mutual fund house factoring the stock market condition, price to book (PB), price to equity (PE), etc.

But, in simple words, when the stock market goes down, the fund manager invests more money into equity instruments in these funds. Otherwise, they explore fixed-income instruments.

As these funds are dynamic, you may receive superior risk-adjusted returns over a period of time.

We have already shortlisted some Balanced Advantage Funds (BAF) for you to explore.

List of Balanced Advantage Funds (BAF) in No Particular Order


Similar to any Mutual Fund, you can check past performance but don’t rely on it. There could be ten different reasons behind the fund’s past performance.

In the case of BAF, take a look at stock exposure.

Let’s say the investor inside you peeks up and says- the market will fall further. In that case, you’ll need Balanced Advantage funds with low stock exposure so that the
market correction affects the fund less as compared to a fund with higher stock exposure.

A quick glance at the stock exposure field in the above table will give you the list of three funds. DSP Dynamic Asset Allocation Fund, SBI Balanced Advantage Fund,
ICICI Prudential Balanced Advantage fund. These three schemes have low stock exposure. That will be beneficial if the market falls further.

Now, let’s say your calculations tell you that the market will go up from here on. Then you will benefit from the schemes with higher equity exposure. So, Edelweiss
Balanced Adv Fund and HDFC Balanced Advantage Funds are better suited for you. 

Apart from Balanced Advantage Funds, Flexi-cap mutual funds are another good category to consider in the current market scenario. If you are planning to explore
mutual funds, we’ve also shortlisted some Flexi-cap schemes for you.

What Are Flexi-Cap Funds?

As the name suggests, Flexi-Cap funds have the flexibility of investing in a broader spectrum of market capitalization. These funds have the freedom to invest money in
large, mid, and small-cap companies without any restrictions.

How is it different from Multi-cap funds, you may ask?

In multi-cap funds, the fund manager needs to invest at least 25% of total assets into each category - Large cap, Midcap, and small-cap companies. Whereas, Flexi-cap
funds do not have any threshold restrictions. Fund managers have the freedom to explore any market capitalization based on their analysis.

Having said that, below is a list of Flexi cap funds that we have created for you.

List of Flexi-cap Mutual Funds in no particular order

Now, if you see the above table, almost all schemes have decent returns over a 3-year period. Past performance can give you hindsight on the returns on the scheme.

BUT…it is not the only important parameter.

When it comes to evaluating the Mutual Fund scheme, consider looking at:

  • Cash Holding and Asset Allocation
  • Portfolio Risk
  • Fund Manager’s Strategy


Take a look at cash holding under the asset allocation field in the above table. The schemes with more cash holdings will be able to buy more stocks when the market falls.
For example, Axis Flexi-cap has 12.49% of cash holdings. If the market goes down, this scheme will have more cash to buy more stocks.

But again, if you think the market has fallen enough and will only go up from that point on- consider lower cash-holding funds. 

And if you are still unsure which scheme to choose, you can seek professional advice from our experts. 

By now, you might have shortlisted a few schemes. To narrow it down further to figure out which one(s) to add to your portfolio based on your financial objectives, current holdings, risk appetite, etc.

Key Takeaway

Even though half of 2022 is gone, you still have the opportunity to explore the equity markets, which may perform well in the second half of the year. As mentioned earlier, crude and commodity prices have normalized, rupee depreciation may Favour exports, and agriculture may boost consumption due to a good monsoon.

This means the rest of the year might have the potential to lift the markets. 

If you are planning to invest in mutual funds, don’t forget to evaluate all the above factors. Shortlist Mutual Funds based on parameters that suit your goals. Don’t get influenced by past performance. Instead, focus on asset allocation and risk profile with respect to your portfolio.

If you have any queries regarding investments, VNN Wealth experts are just a call away. Get in touch with us and plan your financial goals with us.

Also Read-

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7 Types of Equity Mutual Funds to Invest in India