Finding a mutual fund that consistently delivers strong returns can significantly shape your investment journey. In India, the top-performing mutual funds have outpaced inflation and rewarded investors with substantial wealth creation over time.
However, selecting the right fund requires careful evaluation of both returns and risk factors. In this blog, we will explore the top-return mutual funds in India based on recent performance data and guide you on sensibly approaching high-return investments.
Top Returns Mutual Fund Categories in India
Whether you want long-term growth, regular income, or a balance between both, thereтАЩs a mutual fund category suited to your needs. Let’s look closer at India’s top return mutual fund categories and who they are best suited for.
Equity Mutual Funds
Equity mutual funds primarily invest in shares of listed companies. They aim for higher returns over the long term but also carry higher market risk than debt funds.
- Large-Cap Funds: These invest in well-established companies with large market capitalisations. They offer relatively stable returns.
- Mid-Cap and Small-Cap Funds: These invest in mid-sized and smaller companies, offering higher growth potential but also greater volatility.
- ELSS (Equity Linked Savings Scheme): These are tax-saving equity funds under Section 80C with a mandatory 3-year lock-in period.
Who should consider: Investors with a long-term horizon and higher risk tolerance.
Debt Mutual Funds
Debt funds invest in fixed-income securities like government bonds, corporate bonds, treasury bills, and money market instruments.
- Short-Term Debt Funds: Suitable for a short horizon (up to 3 years), offering better returns than savings accounts.
- Corporate Bond Funds: Invest in top-rated corporate bonds, balancing safety and returns.
- Money Market Funds: Ideal for parking funds temporarily with low risk and high liquidity.
Who should consider: Conservative investors looking for regular income or parking surplus cash for the short term.
Hybrid Mutual Funds
Hybrid funds invest in both equity and debt, balancing risk and return based on asset allocation.
- Aggressive Hybrid Funds: Higher equity exposure (65тАУ80%), aiming for capital appreciation.
- Conservative Hybrid Funds: Higher debt exposure (75тАУ90%), providing more stability and modest equity participation.
Who should consider: Moderate risk investors seeking balanced growth and income.
Sectoral and Thematic Funds
Sectoral funds invest in specific sectors like technology, pharma, or banking, while thematic funds invest based on broader themes like consumption, infrastructure, or ESG (Environmental, Social, and Governance).
- Technology Funds: Invest in tech companies.
- Infrastructure Funds: Focus on companies from the infrastructure sector.
Who should consider: Experienced investors who understand sectoral trends and are comfortable with high risk.
Mutual Fund with the Highest Return in Recent Years
Based on the latest 3-year and 5-year data, hereтАЩs an overview of top-performing mutual funds and the fund houses behind them.
| Mutual Fund | AUM (Assets Under Management) | 3-Year Return | 5-Year Return | Expense Ratio |
| Motilal Oswal Midcap Direct Growth | тВ╣26,028 Cr | 27.99% | 38.88% | 0.64% |
| Bandhan Small Cap Fund Direct Growth | тВ╣9,516 Cr | 27.93% | 38.16% | 0.50% |
| Edelweiss Mid Cap Fund Direct Plan Growth | тВ╣8,634 Cr | 24.85% | 35.59% | 0.39% |
| ICICI Prudential Dividend Yield Equity Fund Direct Growth | тВ╣4,995 Cr | 24.80% | 34.90% | 0.73% |
| Nippon India Growth Fund Direct Plan Growth | тВ╣33,175 Cr | 24.63% | 34.56% | 0.80% |
Best Performing Mutual Funds by Category
Here are the best-performing mutual funds by category:
Large-Cap Funds
| Fund Name | 3-Year Returns | 5-Year Returns |
| ICICI Prudential BHARAT 22 FOF Direct Growth | 28.08% | 34.15% |
| Nippon India Large Cap Fund Direct Growth | 21.07% | 28.32% |
| ICICI Prudential Bluechip Fund Direct Growth | 18.53% | 26.13% |
| Quant Focused Fund Direct Growth | 15.4% | 27.27% |
| DSP Top 100 Equity Direct Plan Growth | 20.4% | 23.87% |
Mid-Cap and Small-Cap Funds
| Fund Name | 3-Year Returns | 5-Year Returns |
| Tata Small Cap Fund Direct Growth | 22.37% | 37.31% |
| Quant Small Cap Fund Direct Growth | 21.75% | 49.68% |
| Bandhan Small Cap Fund Direct Growth | 27.9% | 38.11% |
| Invesco India Smallcap Fund Direct Growth | 24.09% | 35.91% |
| Nippon India Small Cap Fund Direct Growth | 22.48% | 39.99% |
| Motilal Oswal Midcap Fund Direct Growth | 27.96% | 38.83% |
| HDFC Mid Cap Opportunities Fund Direct Growth | 25.59% | 34.39% |
| ITI Mid Cap Fund Direct Growth | NA | NA |
| Edelweiss Mid Cap Direct Plan Growth | 24.82% | 35.55% |
| Nippon India Growth Fund Direct Growth | 24.6% | 34.52% |
ELSS (Tax Saving) Funds
| Fund Name | 3-Year Returns | 5-Year Returns |
| SBI Long Term Equity Fund Direct Growth | 25.01% | 30.34% |
| Motilal Oswal ELSS Tax Saver Fund Direct Growth | 24.09% | 28.38% |
| HDFC ELSS Tax Saver Fund Direct Plan Growth | 23.36% | 29.33% |
| Parag Parikh ELSS Tax Saver Fund Direct Growth | 19.56% | 29.81% |
| ITI ELSS Tax Saver Fund Direct Growth | 21.98% | 25.32% |
How to Choose Mutual Funds for High Returns
Choosing the right mutual fund is important if you want to aim for higher returns while managing risk. ItтАЩs not just about picking the fund with the highest past returns. You need to align the fund with your personal financial goals, investment horizon, and risk appetite. Here are the key factors you should consider:
Risk Appetite and Investment Horizon
You should always start by evaluating how much risk you are comfortable taking. Equity mutual funds may suit you if you can handle short-term market ups and downs and have a long investment horizon (5+ years). If you prefer lower risk or plan to invest for a short period, debt or hybrid funds might be a better fit. Matching your fund type with your risk profile and timeline increases your chances of achieving better results without unnecessary stress.
Expense Ratio and Fund Manager Experience
The expense ratio is the percentage of your invested money that is deducted annually to manage the fund. Lower expense ratios mean more of your money stays invested and compounds over time. A fund managerтАЩs experience, decision-making ability during different market cycles, and past fund management record are crucial. A skilled fund manager can make a meaningful difference in returns, especially during volatile markets.
Consistency in Past Performance
Past performance should not be the only factor, but it helps you understand how consistently a fund has delivered returns across different periods and market conditions. Focus on funds that show steady growth across 3-year, 5-year, and 7-year horizons rather than those with sudden spikes. Also, a fundтАЩs performance can be compared against its benchmark index and peer group to get a more realistic picture.
How to Select a Good Mutual Fund in India
Selecting a good mutual fund requires a systematic evaluation, not guesswork. Given the wide variety of funds available, itтАЩs important to be methodical. HereтАЩs a checklist and a few practical tools you can use:
Checklist for Evaluating a Mutual Fund
- Fund Type: Is it equity, debt, hybrid, or sector-specific?
- Investment Objective: Does the fundтАЩs objective align with your financial goal?
- Expense Ratio: Is it reasonable compared to similar funds?
- Fund Manager Track Record: How experienced is the manager? Have they handled different market cycles well?
- Consistency: Has the fund consistently outperformed its benchmark and peers over 3тАУ5 years?
- Portfolio Quality: What is the quality of the portfolio of stocks or bonds?
Tools and Resources for Fund Comparison
To compare mutual funds, you can use online platforms like Moneycontrol, Morningstar India, Value Research Online, and fund house websites. Before deciding, look at detailed fact sheets, risk-return ratios, portfolio holdings, and fund category rankings. These tools provide updated and verified information that helps you make an informed choice.
Role of Ratings and Reviews
Ratings from agencies like CRISIL, Morningstar, and Value Research provide a quick view of a fundтАЩs quality relative to others in the category. However, donтАЩt depend entirely on ratings. Use them as a starting point and combine them with deeper research based on your specific needs.
FAQs
Which mutual fund has the highest return in India right now?
The highest-return mutual funds change frequently based on market movements. As of recent data, some small-cap and sector-specific equity funds have delivered the highest returns over 1тАУ3 years. However, choosing a fund only based on recent performance can be risky.
How do I identify the best-performing mutual funds for my goals?
Start by defining your financial goal (short-term, medium-term, or long-term) and risk tolerance. Then, look for funds that consistently outperformed their benchmark and peer group across periods, like 3, 5, and 7 years.
What are the key factors to consider when selecting a good mutual fund?
Some of the key factors are:
- Your risk appetite and investment timeline
- The fundтАЩs historical consistency, not just peak returns
- The experience of the fund manager
- The expense ratio (lower is usually better)
- Quality and diversification of the fundтАЩs portfolio
Is it better to invest in equity funds for high returns?
Equity funds generally have the potential to offer higher returns compared to debt or hybrid funds, especially over the long term (5+ years). However, they come with higher short-term volatility. You should invest in equity funds only if you have a long investment horizon and can handle market ups and downs without panic.
Can past returns be used to predict the future performance of mutual funds?
Past returns offer useful insights into a fundтАЩs consistency and the fund managerтАЩs approach. However, they do not guarantee future performance. Markets, economic conditions, and management strategies can change. ItтАЩs better to combine past returns as part of your analysis and combine them with factors like portfolio quality, investment strategy, and fund manager expertise.
Disclaimer: Investments in securities markets are subject to market risks. Read all the related documents carefully before investing. The securities quoted are exemplary and are not recommended.
