It’s often said that “While saving money is wise, investing it is profitable”, and for good reason. Investing your money helps multiply it and build wealth rather than leaving it sitting idle in your bank accounts. While there are several investment options out there, mutual funds are one of the best and simplest avenues that offer sizable returns.
While most people are aware of mutual funds, the challenge and confusion often ensue when those new to the mutual fund space realize that there are several different mutual funds. There are multiple parameters such as expense ratio, performance against a benchmark, fund manager’s experience, etc, to consider before investing. Understanding that doing extensive research on this can be tedious and time-consuming, we’ve put together the 10 best-performing mutual funds in the last five years to make it easier to choose the right one best suited to your financial capacity and risk appetite.
However, before delving into the best-performing mutual funds, it’s necessary to understand their classification. Mutual funds are often categorized as large-cap funds, mid-cap funds, small-cap funds, flexi cap funds, and ELSS (Equity-Linked Savings Scheme) funds.
1. Axis Bluechip Fund (Large-Cap)
Launched by Axis Mutual Fund, the Axis Bluechip Fund currently has an AUM of INR 29,160.6 crore and invests in blue-chip stocks or stocks of large organizations that are financially stable and established. While they are less volatile than mid-cap or small-cap stocks and have sufficient liquidity, they are rated high risk and the minimum SIP is set to INR 500 with the minimum lump sum investment set to INR 5000. The Axis Bluechip Fund aims to generate long-term capital growth through investment in a diverse portfolio and is suitable for investors who are looking for long-term capital appreciation. The 5-year CAGR for the fund is 18.50%.
2. Canara Robeco Bluechip Equity Fund (Large-Cap)
An equity mutual fund scheme launched by Canara Robeco Mutual Fund, this scheme has been available since 2013 and seeks to provide capital appreciation by mainly investing in companies having large market capitalization. With a current Asset Under Management (AUM) of INR 3,691.25 cr, the fund is rated extremely high risk and the minimum SIP (Systematic Investment Plan) is set to 1000. While the returns are taxed at 15% if the fund is redeemed before one year, customers are required to pay 10% along with an LTCG tax on the returns of INR 1 lakh+ in a financial year. The fund offers a 5-year CAGR of 18.08%.
3. PGIM India Mid-Cap Opportunities Fund
With an expense ratio of 0.37% and a minimum SIP amount of INR 1000, the PGIM India Midcap Opportunities fund currently has an AUM of INR 2383.38 cr. While the minimum lump sum amount is INR 5000, for units crossing 10% of the investment, 0.5% will be the levied charges for redemption within 90 days. Classified as very high risk, the PGIM India Midcap Opportunities Fund is best suited for investors who aim to invest for at least 3-4 years and are seeking high returns, and have a 5-year CAGR of 21.23%.
4. Axis Mid-Cap Fund
Having an AUM of INR 13,834.27 cr, the companies chosen for the portfolio of this fund are the ones with high growth prospects to assist the investment goal of quick wealth creation. While the Axis Midcap Fund is a moderately high risk, it’s suitable for those looking to invest for 3-4 years and wish to receive high returns. However, being a high-risk fund, investors also need to be prepared for the possibility of moderate losses in their investments. The fund has a 5-year CAGR of 21.13% and is ideal for long-term goals such as education, retirement, etc.
5. Nippon India Small-Cap Fund
Looking to focus on small-cap companies across sectors, the Nippon India Small-cap Fund is extremely high risk with minimum SIP investments set to INR 100 while the lump sum investment is 5000 with an exit load of 1% if redeemed within a month. Made available to investors in 2013, the fund is ideal for those with greater risk appetite and are expecting higher returns although investors need to be ready for moderate losses owing to the risk factor. The fund offers a 5-year CAGR of 23.61%.
6. SBI Small-Cap Fund
With a Net Asset Value (NAV) of INR 102.68 as of 16th Aug 2021, the SBI small-cap fund has an AUM of INR 9,620.21 cr with an expense ratio of 0.84%. Being extremely high risk, the fund has a minimum SIP of INR 500. The stock selection strategy includes both growth and value investing. Providing a 5-year CAGR of 23.31%, the fund aims to provide investors with opportunities for long-term wealth growth.
7. Parag Parikh Flexi-Cap Fund
Rated extremely high risk, the Parag Parikh Flexi-cap fund has an AUM of INR 13,186.70 cr but has a lower expense ratio of 0.89%. With a minimum lump sum investment amount of INR 5000, the fund comes with an exit load of 2% if redeemed within 365 days and 1% if redeemed between 366-730 days. Aiming to achieve long-term capital appreciation by investing primarily in equity and equity-related instruments, the fund is suitable for those looking to invest for 3-4 years and offers a 5-year CAGR of 21.51%.
8. PGIM India Flexi-Cap Fund
Aiming to generate income by investing in an actively managed diversified portfolio, the PGIM India Flexi-cap fund is extremely high risk and has an AUM of INR 1,688.70 cr. Having been made available to investors in March 2015, the fund offers high returns but investors need to be wary of experiencing moderate losses due to its high-risk nature. The PGIM India Flexi-cap fund offers a 5-year CAGR of 20.79%.
9. Quant Tax Plan (ELSS)
With an AUM of INR 327.45 cr, the Quant Tax Plan seeks to generate capital appreciation by investing in equity shares that display growth potential. Rated extremely high risk, the fund has a minimum SIP investment and a minimum lump sum investment of INR 500. Under Section 80C, up to INR 1.5 lakh on the returns will be exempted from tax but the fund requires a lock-in period of 3 years. Returns over INR 1.5 lakh will be taxed at 10%. The fund offers a 5-year CAGR of 23.92%.
10. Mirae Asset Tax Saver Fund (ELSS)
Having a low expense ratio of just 0.48%, the Mirae Asset Tax Saver Fund has a zero exit load with higher returns than the category average. Being an open-ended ELSS, the fund comes with a lock-in period of 3 years and is open to investing across market capitalizations. Its flexible approach offers a diversified portfolio containing stable, established companies and shows high growth potential. With a 5-year CAGR of 22.45%, the Mirae Asset Tax Saver fund is best suited for investors looking to place their money in an investment for 3 years. The fund serves a dual purpose – tax-saving and long-term wealth creation.
While there is no perfect mutual fund that offers less risk and high reward, the aforementioned are some of the best-performing ones over the last 5 years. Investors can simply opt for one that is fitting for their interests and risk appetite and get started with the investments to maximize their wealth.
(By Harsh Jain, Co-founder and COO, Groww)
Disclaimer: These are the personal views of the author. Please consult your financial advisor before making any investment.