Top 5 performing Mutual Funds in India

Mutual funds have become an essential investment option for many Indians, offering a diverse and accessible way to grow wealth. As the mutual fund industry continues to expand, it’s crucial for investors to choose wisely. 

Investing in mutual funds allows investors to gain exposure to a wide range of companies and asset types, from equities to debt and other financial instruments. This diversified approach provides stability and mitigates risks, making mutual funds an attractive choice compared to more concentrated options like insurance or real estate. 

In this article, we will discuss the 5 top-performing mutual funds that have historically delivered strong returns and helped investors maximize their potential returns. But first, let’s understand what top-performing mutual funds are. 

What are Top Performing Mutual Funds?

Mutual funds are investment schemes that pool money from various investors to invest in a range of securities like stocks, bonds, and money market instruments. Managed by professional fund managers, these funds invest based on the fund's specific objectives, detailing expected returns, risk levels, and asset allocation strategies. Investors can choose a mutual fund that aligns with their risk tolerance, investment term, and sector preference.

Top-performing mutual funds are those that consistently meet or exceed their performance targets. Many funds have a benchmark index that they aim to outperform. A top-performing mutual fund will beat its benchmark with greater returns. They can be classified based on performance over various time periods, with the most reliable funds standing out for consistently outperforming their peers over the long term. Here are the 5 top-performing mutual funds.

5 Top Performing Mutual Funds

Overview of Best Performing Mutual Funds in India

Nippon India Small Cap Fund

The Nippon India Small Cap Fund aims to generate better risk-adjusted returns by investing in small-cap companies with growth potential and lower valuations. It focuses on businesses with strong growth prospects, quality management, and good valuations, using strategies like diversification and risk management. The fund’s asset allocation is 95.94% in equities, 4.04% in cash, and 0.02% in debt. It is suited for investors looking for long-term capital growth in small-cap stocks.

ICICI Prudential Infrastructure Fund    

The objective of this scheme is to achieve capital appreciation and income distribution for unit holders by primarily investing in equity and equity-related securities of companies within the infrastructure theme. The fund has invested in the financial, energy, metal and mining, construction, materials, capital goods, etc. among other sectors. This open-ended equity scheme is designed for investors seeking long-term wealth creation through investments in infrastructure and allied sector companies.

Bandhan Infrastructure Fund

The Bandhan Infrastructure Fund is focused on investing in companies across the infrastructure value chain, excluding sectors such as banking, autos, IT, pharma, and FMCG. It builds a diversified portfolio of companies benefiting from India's infrastructure growth. The fund selects well-managed growth companies available at reasonable valuations, identified through earnings forecasting, industry analysis, and interaction with company management to assess their core competencies for long-term sustainable profit growth. 

The scheme aims to provide superior relative returns through a focused, aggressive portfolio of fundamentally strong businesses. It is designed for investors seeking long-term wealth creation through investments in companies involved in the growth of Indian infrastructure.

DSP I.N.D.I.A. Tiger Fund

This thematic fund invests in companies that could benefit from India’s infrastructure growth, engineering & building revolution and economic reforms. It focuses on businesses with high growth potential at reasonable valuations. The scheme’s primary objective is to achieve capital appreciation by building a portfolio largely made up of equity and equity-related securities of companies that could benefit from structural changes driven by ongoing government economic liberalization and continued public and private sector investments in infrastructure. This fund is suited for experienced investors with a solid core portfolio, willing to allocate 10-15% to high-risk opportunities, and who understand the sector cycle changes.

Nippon India Power & Infra Fund

The scheme aims for long-term capital appreciation by investing in equity and related instruments of companies in India’s power and infrastructure sectors. The fund provides an opportunity to participate in India’s capex growth with a diversified portfolio across power and infrastructure companies, including transportation, energy, resources, and communication. The focus is on achieving long-term, risk-adjusted returns within these sectors. This fund is suited for investors targeting long-term capital growth through investments in the power and infrastructure space.

Disclaimer: The investment returns from the scheme may vary depending upon the scheme's performance. The schemes may not be suitable for all investors. Investors must read the Scheme Information Document (SID) before investing. Investors should consult their financial advisor if they doubt whether the product is suitable for them.

How to Select Top-Performing Mutual Funds?

Here’s how to identify and choose top-performing mutual funds that align with your financial goals:

Investment objective: Choose a suitable mutual fund scheme according to your investment objective. For example, if the aim is long-term wealth creation, invest in equity diversified large-cap schemes. If you want stable returns with low risk, invest in debt funds.

Look at performance: Check the historical returns of the mutual fund scheme over short-term (1-3 years), medium-term (3-5 years) and long term (more than five years). Select the top-performing funds based on their track performance record across various market cycles.

Diversification: Invest in diversified equity funds that offer exposure to large, mid, and small-cap stocks. Diversification across sectors and market capitalisation reduces risks.

The past performance of a mutual fund scheme is the most important parameter used in selecting a mutual fund scheme. It helps in knowing the risk-return profile of any mutual fund scheme and its performance compared to its benchmark and peers. But it is equally important to understand that past performance does not guarantee future returns. 

Top-performing mutual funds are identified by comparing their returns with other schemes from the same category over the past few years. The upper quartile performing plans are considered top-performing funds. So, that was our take on the top five mutual funds, performance-wise. Hope you found it helpful.