Best Mutual Funds & SIP Investment Plans in UAE

Whether you’re new to investing or a seasoned investor, mutual funds pool money from multiple investors to invest in a wide range of assets such as stocks, bonds, or a combination of both. With various types of funds to choose from, you can tailor your investments to meet your specific financial goals and risk tolerance.

What Are Mutual Funds?

When you invest in a mutual fund, you buy shares or units in the fund, giving you a stake in the collective assets it holds. These funds can be actively managed, where a professional fund manager selects securities to outperform the market, or passively managed, aiming to replicate the performance of a specific market index.

Mutual funds in the UAE offer an easy way to diversify your investment portfolio, reduce risk, and benefit from professional management. This makes them an attractive choice for both beginner and experienced investors.

Top 10 Mutual Funds in the UAE

The UAE offers a variety of mutual funds for investors seeking different strategies, risk profiles, and investment goals.

Below are some of the best mutual funds in UAE you can consider for a diverse investment portfolio —

Mutual Fund	Annualised Return 1-Year	Annualised Return 3-Year
Shelton NASDAQ-100 Index Direct (NASDX)	25.73%	13.37%
Invesco Perpetual Asian Fund	NA	5.68%
Voya Russell Large Cap Growth Index Fund (IRLNX)	32.69%	14.75%
Fidelity 500 Index Fund (FXAIX)	26.35%	11.89%
Fidelity Global Dividend Fund	NA	10.85
Schroder Mid Cap US Fund	9.45%	15.38%
Voya Russell Large Cap Index Portfolio I (ILRX)	27.67%	12.46%
M&G Global Macro Bond Fund	NA	-1.42%
Fundsmith Equity Fund	NA	8.79%
Fidelity Emerging Market Funds	7.12%	-3.65%

Here are some of the top investment funds to consider for solid returns —

Shelton NASDAQ-100 Index Direct (NASDX)	Schroder Mid Cap US Fund
This fund focuses on tech and non-financial companies listed on the NASDAQ. It mirrors the performance of the NASDAQ-100 index and invests in top tech giants and large-cap stocks from sectors like technology and healthcare. This fund offers a low-cost way to get broad exposure to the tech-heavy market.	The Schroder Mid Cap US Fund focuses on medium-sized US companies, avoiding large tech giants like Facebook and Amazon that dominate the S&P 500. Instead, it invests in companies that are undervalued or poised for growth. The fund manager uses a research-based, bottom-up approach to identify companies with solid business models, strong management, and attractive valuations. About 80% of the fund is invested in equities of medium-sized US firms, aiming for capital growth.
Invesco Perpetual Asian Fund	Voya Russell Large Cap Index Portfolio I (ILRX)
This fund invests in Asian and Australasian businesses with the goal of long-term growth. With investments in leading firms like Samsung Electronics and Taiwan Semiconductor, it mainly concentrates on the financial services and technology industries. The fund invests at least 80% in equities of companies based in Asia or Australasia and also includes investments in securities, money-market instruments, and cash. The goal is to achieve long-term capital appreciation.	The Voya Russell Large Cap Index Portfolio I aims to replicate the performance of the Russell Top 200 Index, which focuses on large-cap U.S. equities. The fund invests at least 80% in the equities of companies listed on the index, convertible securities, and derivatives linked to the index’s performance. This fund offers an affordable option with a reasonable cost advantage over competitors, making it a good choice for investors looking for low-cost, broad exposure to large-cap US stocks.
Voya Russell Large Cap Growth Index Fund (IRLNX)	M&G Global Macro Bond Fund
With this fund, you can invest in large-cap U.S. companies that have high growth potential. Voya Russell Large Cap Growth Index Fund focuses on companies with strong cash flow growth and long-term sustainability. This fund aims to replicate the Russell Top 200 Growth Index.	The M&G Global Macro Bond Fund seeks higher total returns by investing in government and corporate bonds worldwide, including in emerging markets. The fund uses global macroeconomic analysis to find short-term opportunities in the bond market. It aims to balance risks by offering a mix of bonds and fixed-income securities. This medium-risk fund is ideal for investors looking to add bonds to their portfolios for income while managing stock market risks.
Fidelity 500 Index Fund (FXAIX)	Fundsmith Equity Fund
Fidelity 500 Index Fund tracks the S&P 500 index, giving you broad exposure to large-cap U.S. companies across various industries. It’s designed for long-term growth, making it a solid choice for anyone looking to invest in the broader U.S. market.	This fund targets global companies with strong long-term growth potential. This fund looks for businesses with solid financials, focusing on companies that don’t rely on debt to generate returns. It aims for sustainable growth with a high return on investment and avoids speculative assets.
Fidelity Global Dividend Fund	Fidelity Emerging Market Funds
Fidelity Global Dividend Fund invests in global companies that pay high dividends. The fund focuses on equities from both developed and emerging markets, prioritizing companies with strong environmental, social, and governance (ESG) profiles. At least 70-75% of its investments are in global equities.	This fund invests in emerging markets, including regions like Latin America, Eastern Europe, Southeast Asia, Africa, and the Middle East, with the goal of capital appreciation. It focuses on companies with strong market positions and competitive advantages, preferring firms with superior returns on assets and solid financial health. Around 70-75% of the fund is invested in equities from fast-growing emerging markets, with at least 50% invested in companies that meet Environmental, Social, and Governance (ESG) criteria.

Be sure to assess each fund's risk level and performance before investing. Consider consulting a financial advisor to find the best fit for your financial goals.

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Types of Mutual Funds

FMutual funds offer various types of investment options, each suited for different investor needs, risk tolerances, and financial goals.

Below are the key types of mutual funds in the UAE —

1. Money Market Funds

DMoney market funds are considered low-risk investments, as they focus on short-term, high-quality debt instruments like government bonds or corporate debt. These funds invest in highly liquid assets. This makes them a safe and stable choice for investors looking for a place to park cash temporarily. Although the returns are not high, they are often slightly better than savings accounts, making them an ideal option for emergency funds or short-term goals.

2. Bond Funds

You can invest in bonds issued by corporations, governments, or municipalities. Usually, the primary goal of these funds is to produce a consistent flow of income through interest payments. The risk level can vary depending on the types of bonds in the fund, with government bonds being relatively safer and high-yield bonds (also known as junk bonds) carrying more risk. Bond funds can be a good choice for conservative investors seeking reliable income, though they do come with some interest rate risk.

3. Stock Funds

Stock funds invest in corporate stocks and are designed for investors looking for potential capital appreciation. These funds can offer higher returns, but they also come with greater risk, especially during market downturn.

4. Target Date Funds

One well-liked option for retirement investment is target date funds. Over time, they automatically modify their asset allocation, growing more conservative as the desired retirement date draws near. For investors who would rather take a hands-off approach to retirement savings, these funds are appropriate. However, reviewing the fund's costs and investing strategy is crucial, as these might vary among fund managers.

5. Index Funds

Mutual funds that are passively managed and designed to mimic the performance of a particular market index, such the S&P 500, are index funds. These funds offer a low-cost and a straightforward way to invest in a broad market segment without the need for extensive research or active management. Additionally, Index funds are often more tax-efficient than actively managed funds and can outperform them in terms of returns due to their lower fees.

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SIP Calculator

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Use an SIP Calculator for Mutual Funds
An SIP calculator is a useful tool that helps you estimate the returns of your mutual fund investments over time. By inputting details like your monthly investment, expected return, and duration, you can calculate the estimated corpus you will have at the end of the investment period. This tool helps you plan your investment strategy effectively.

How to Select the Best Mutual Fund in the UAE?

Before investing in mutual funds in the UAE, several factors should be considered —

Active vs. Passive Management: Actively managed funds aim to outperform the market by selecting specific securities, while passive funds (such as index funds) mirror a specific market index and aim to match its performance
Set Your Investment Budget: Determine how much you're comfortable investing. Some of the top mutual funds in the UAE require a minimum investment, but once that threshold is met, you can usually contribute smaller amounts over time
Performance: Evaluate a fund's performance over a full market cycle (typically 3 to 10 years) and compare it to a relevant benchmark, such as the S&P 500
Choose Your Investment Platform: You can buy mutual funds through brokerage accounts, employer-sponsored retirement plans, or directly from fund providers. Platforms like Policybazaarinsurance.ae offer various options to compare and manage your investments easily
Understand the Fees: Always check the expense ratios, as high fees can eat into your returns. Make sure the fees align with the benefits you expect from the fund
Regularly Review Your Portfolio: It’s important to revisit your mutual fund investments regularly to ensure they align with your goals. If one of your funds grows rapidly, you may want to adjust your investments to maintain balance
Expense Ratios: This is the cost to manage the fund, expressed as a percentage of assets. Index funds typically have lower expense ratios than actively managed funds
Manager’s Tenure: The experience and stability of the fund manager can play a significant role in the fund’s success, particularly for actively managed funds

Frequently Asked Questions

Are mutual funds safe investments?

All investments, including mutual funds, come with some level of risk. The risk depends on factors such as its investment strategy, the assets it holds, and the competence of the funds’ management.

Is it possible to withdraw money from a mutual fund anytime?

Yes, mutual funds are generally highly liquid, meaning you can redeem your shares on any business day. However, some funds may impose fees or penalties for early withdrawals or it may have tax implications, if the fund has appreciated in value.

Do you actually make money in mutual funds?

Yes, you can make money in mutual funds through capital gains distributions, dividends, and interest income. As the securities within the mutual fund appreciate in value, the fund’s share price increases, allowing investors to make a profit.

Can we invest in mutual funds in the UAE?

Yes, you can invest in mutual funds in the UAE. They are widely available and provide an accessible way for individuals to invest in a diversified portfolio of assets like stocks, bonds, and other financial instruments. Both beginner and experienced investors can participate.

How do mutual funds work in the UAE?

Mutual funds in the UAE function similarly to those in other countries. They pool money from multiple investors to invest in a diversified selection of assets. When you invest, you buy units in the fund. A professional fund manager oversees the fund and makes investment decisions to achieve growth or income for the investors. The fund’s performance is reflected in the value of these units.

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