The top 5 equity mutual funds with highest returns

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Equity mutual funds have emerged as a popular investment avenue for retail investors. Flows into equity mutual funds soared to a 14-month high in May 2021 as strength in the stock market prompted investors to pump more money into equity products. Investors poured Rs 10,083 crore into equity schemes, the third straight month of inflows.

Mutual fund schemes are classified as – (i) Equity Schemes, (ii) Debt Schemes, (iii) Hybrid Schemes, (iv) Solution Oriented Schemes – For Retirement and Children and (v) Other Schemes – Index Funds & ETFs and Fund of Funds.

As per Association of Mutual Funds in India, an Equity Scheme is a fund that:

~~ Primarily invests in equities and equity related instruments.

~~ Seeks long term growth but could be volatile in the short term.

~~ Suitable for investors with higher risk appetite and longer investment horizon.

The objective of an equity fund is generally to seek long-term capital appreciation. Equity funds may focus on certain sectors of the market or may have a specific investment style. 

Under the Equity category, there are Large cap, Mid cap and Small cap funds.

It is normally suggested that one should invest in mutual fund schemes with a horizon of 3-5 years to generate good returns. Retail investors generally look at historical returns before making a decision about which mutual fund scheme to invest in. 

One should not consider short term returns, say of 1 year, to judge the performance of a scheme. A longer tenor return of say 5 years should be checked. This will help you to identify schemes which have been consistent performers through good and bad times in the market.

Top 5 large, mid, small cap schemes generating highest 5 Year returns

Note: (i) CAGR is Compounded Annual Growth Rate of Return

Return is a dynamic figure and keeps on changing. 

In the large cap category, Canara Robeco Bluechip Equity Fund has generated the highest return of 18.9% per annum (p.a.) over a five year period. This is followed by Axis Bluechip Equity Fund (17.9% p.a.) and Mirae Asset Largecap Fund (17.0% p.a.). Axis has the largest assets under management amongst the Top 5 return generators followed by Mirae. 

In the mid cap category, Axis Midcap Fund has generated the highest return of 21.0% per annum (p.a.) over a five year period. This is followed by PGIM India Market Opportunities Fund. Kotak Emerging Equity Fund ranked 4th in 5 year returns has the largest assets under management followed by Axis. 

In the small cap category, Nippon Small Cap Fund has generated the highest return of 22.7% per annum (p.a.) over a five year period. This is followed by Kotak Small Cap Fund with 21.6% p.a. Nippon has the largest assets under management in this category followed by HDFC.

Axis Mutual Fund has one of its schemes listed amongst the Top 5 in each of the large, mid and small cap categories. Kotak and Edelweiss are among the Top 5 in two – large and mid cap – categories. 

As can be seen from the table, small cap funds have generated the highest returns, followed by mid cap and large cap funds as described in the risk versus return parameter. 

Disclaimer: This is not an investment recommendation and readers are expected to do their own research before investing.

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