Summary: Returns are an essential consideration before investing in a mutual fund. Among other factors of course, you need to consider a fund’s long-term returns to make a prudent choice. In this blog, we’ve listed the top equity, debt, and hybrid funds with the best returns in the last five years.
Mutual funds are a staple of the Indian investor’s diet, and the last decade has seen explosive growth in mutual fund investment. Assets under management (AUM) of the Indian mutual funds industry have witnessed a more than six-fold increase in a span of 10 years. Prudent investment in mutual funds can help you build a corpus for various short and long-term goals, such as an emergency fund, children’s higher education, and retirement, among others.
Returns are an important consideration for investors willing to invest money in mutual funds. This blog sheds light on the funds that offered the best returns in the last five years.
Important considerations
The mutual fund universe is large. We have made some considerations to find out funds with the best returns in the last five years. These include:
- Point-to-point returns: A point-to-point return is the annualised return offered by a fund between two points of time. The starting date for calculation is taken as 28th August 2018 and the end date as 28th August 2023.
- Direct plans: For our calculation, we have considered direct plans. Direct plans in mutual funds don’t require any intermediary; therefore, their expense ratio is lower than regular plans. All mutual funds have a direct variant whose underlying portfolio is the same as a regular plan.
- Open-ended funds: Open-ended funds are funds that you can buy and sell anytime. Unlike close-ended funds that you can redeem only when the tenure is over, open-ended funds are more liquid, meaning that you can convert them into cash whenever required.
Equity mutual funds with the best returns in the last five years
Equity mutual funds primarily invest in shares and stocks of other companies. As per SEBI’s regulation, an equity mutual fund invests at least 65% of its assets in equity and equity-related instruments. While equity mutual funds are volatile in the short term, they have the potential to offer inflation-beating returns in the long run.
They are a prudent investment option for realising long-term goals such as higher education and retirement, among others, as they have the potential to deliver returns up and above inflation. If you are an aggressive investor who can stomach market volatility, you can opt for equity mutual funds. The top five equity funds that delivered the highest returns in the last five years are as follows:
| Fund Name | Point-to-point returns |
|---|---|
| Quant Small Cap Dir | 29.31% |
| Quant Infrastructure Dir | 24.51% |
| Quant Tax Plan Dir | 24.07% |
| Axis Small Cap Dir | 23.57% |
| Quant Mid Cap Dir | 23.10% |
Source: Value Research
Debt mutual funds with the best returns in the last five years
Debt mutual funds are another category of mutual funds primarily investing in debt securities such as government bonds, treasury bills, commercial papers, etc. Debt funds are relatively less volatile than equity funds and provide stability to your portfolio during market downturns. If you are not an aggressive investor and want safety with your mutual fund investment, you can invest in debt funds.
They are ideal for addressing short-term goals like building an emergency corpus, accumulating money for making a downpayment of house/car, etc. The top five debt funds that have delivered the best returns in the last five years are as follows:
Fund Name | Point to point returns |
|---|---|
| Nippon Ind Nivesh Lakshya Dir | 9.18% |
| DSP Govt Securities Dir | 8.97% |
| SBI Magnum Gilt Dir | 8.78% |
| ABSL Medium Term Dir | 8.78% |
| Bandhan GSF Investment Dir | 8.73% |
Source: Value Research
Hybrid mutual funds with the best returns in the last five years
If you are looking to capitalise on the wealth creation potential of equity funds and harbour in the safety of debt funds simultaneously, you can invest in hybrid mutual funds. These funds give you the best of both worlds as they invest in equity and debt in a particular proportion. The fund manager decides the allocation of equity and debt based on the fund’s objective and the prevailing market conditions.
Hybrid funds can be a good starting point if you are a first-time mutual fund investor. With them, you can create wealth and protect your corpus at the same time. The top five hybrid funds that have delivered the best returns in the last five years are as follows:
| Fund Name | Point to point returns |
|---|---|
| Quant Multi Asset Dir | 22.98% |
| Quant Absolute Dir | 19.80% |
| Kotak Multi Asset Allocator FoF - Dyn Dir | 17.57% |
| ICICI Pru Eqt & Debt Dir | 16.36% |
| ICICI Pru Multi Asset Dir | 16.26% |
Source: Value Research
Need to look beyond returns
While returns are likely the biggest factor that will determine your investment decisions, they are not the only one. Consider if the promising invest you are about to pick also aligns with your financial goals and risk appetite.
With discipline and proper homework, you can pick up funds that are right for you and be on your path to financial freedom.
Happy investing!
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.