As a mutual fund investor, you may not pay much attention to a fund’s expense ratio. After all, it looks like a small number. But over the long term, even a small difference in costs can have an impact on your overall returns. Now imagine finding funds that not only have low expense ratios but have also delivered strong long-term returns and earned top ratings.
To identify such funds, we analysed 23 active HDFC Mutual Fund equity schemes using Value Research data. We found three 5-star-rated funds that have relatively low expense ratios in their direct plans and have also delivered strong performance over the past 10 years. All three have outperformed their benchmark indices as well as their category averages.
Whether you’re starting a SIP or looking to strengthen your portfolio with quality equity funds, these HDFC schemes are worth a closer look.
Cheapest 5-star-rated HDFC mutual funds with strong 10-year returns
SIP performance
Among the funds below, HDFC Mid Cap Fund emerged as the best performer, generating a 10-year SIP return of 20.13%. At this return, a monthly SIP of Rs 10,000 would have grown to around Rs 34.46 lakh, making it the top wealth creator in the list.
HDFC Flexi Cap Fund also posted strong performance, delivering a 10-year SIP return of 17.64%. A monthly investment of Rs 10,000 in the fund would have accumulated to approximately Rs 30.18 lakh.
Meanwhile, HDFC Focused Fund generated a 10-year SIP return of 17.35%. Despite holding a concentrated portfolio, the fund would have turned a Rs 10,000 monthly SIP into nearly Rs 29.76 lakh.
| Funds | 10-Year SIP Returns In % | Expense Ratio |
| HDFC Mid Cap Dir | 20.13 | 0.61 |
| HDFC Flexi Cap Dir | 17.64 | 0.58 |
| HDFC Focused Dir | 17.35 | 0.61 |
Lump-sum performance
Among them, HDFC Mid Cap Fund emerged as the top performer, generating a 10-year annualised return of 18.37%. An investment of Rs 1 lakh made 10 years ago would have grown to approximately Rs 5.40 lakh.
HDFC Flexi Cap Fund also delivered impressive results, posting a 10-year annualised return of 16.31%. At this rate, a Rs 1 lakh lump sum investment would have grown to around Rs 4.53 lakh.
Meanwhile, HDFC Focused Fund generated a 10-year annualised return of 15.26%, turning a Rs 1 lakh investment into nearly Rs 4.13 lakh over the same period.
| Funds | 10-Year Lump-Sum Returns In % | Benchmark Returns In % | Category Average Returns In % |
| HDFC Mid Cap Dir | 18.37 | 17.69 | 17.12 |
| HDFC Flexi Cap Dir | 16.31 | 13.68 | 13.9 |
| HDFC Focused Dir | 15.26 | 13.68 | 14.05 |
Source: Value Research as of 16th July 2026
HDFC Mid Cap Fund – Direct Plan
The fund was launched on January 01, 2013, and since its inception, the fund has generated 20.29% returns. Chirag Setalvad is the fund manager of this mid-cap fund from HDFC AMC.
The fund recorded a mean return of 20.05%, outperforming both the benchmark BSE 150 MidCap TRI (19.41%) and the mid-cap category average (19.94%).
However, in the mid-cap category, the top 3 performing funds in the last 10 years are from Invesco India, Edelweiss, and Nippon India, where the 3 funds in the lowest performing list are from ICICI Prudential, Taurus, and ABSL.
Top 5 stock holdings: Federal Bank, Max Financial, AU Small Fin Bank, Balkrishna Ind and Fortis Healthcare.
Top 5 sector-wise holdings: Financial, Healthcare, Consumer Discretionary, Technology and Consumer Staples.
Risk profile: The risk metrics indicate that HDFC Mid Cap Fund has not only generated higher returns than its benchmark and category average but has also delivered those returns with better risk-adjusted performance and lower volatility.
With a standard deviation of 15.51%, HDFC Mid Cap Fund was significantly less volatile than both the benchmark (18.06%) and the category average (17.88%). The fund posted a Sharpe ratio of 0.92, comfortably ahead of the benchmark’s 0.75 and the category average’s 0.79, indicating superior risk-adjusted returns.
HDFC Mid Cap Fund’s Sortino ratio of 1.11 also exceeded the benchmark (0.99) and the category average (1.03), indicating better performance considering the downside risk.
The fund has a Beta of 0.84, compared with the category average of 0.96. A beta below 1 indicates that the fund has historically been less sensitive to market movements. HDFC Mid Cap Fund generated an Alpha of 2.83, substantially higher than the category average of 1.11.
HDFC Flexi Cap Fund – Direct Plan
Since its launch on January 1st, 2013, the fund has produced returns of 16.06%. Amit Ganatra is the current fund manager of the HDFC Flexi Cap Fund.
The fund has generated a mean return of 17.17%, significantly outperforming both the benchmark BSE 500 TRI (13.01%) and the flexi-cap category average (14.45%).
In the previous ten years, AMCs like Quant, Parag Parikh, and JM have produced the top three performing funds in the flexi cap category, whereas LIC MF, Taurus, and TATA have produced the lowest performing funds over the same period.
Top 5 stock holdings: ICICI Bank, Axis Bank, HDFC Bank, SBI and SBI Life Insurance.
Top 5 sector-wise holdings: Financial, Consumer Discretionary, Healthcare, Technology and Industrials.
Risk profile: The risk metrics suggest that HDFC Flexi Cap Fund has delivered superior returns while taking relatively lower risk than both its benchmark and the average flexi-cap fund category.
HDFC Flexi Cap Fund recorded a standard deviation of 13.00%, considerably lower than the benchmark (15.30%) and the category average (15.34%), indicating lower volatility.
The fund’s Sharpe ratio of 0.87 is substantially higher than the benchmark’s 0.47 and the category average’s 0.56. This indicates that the fund has generated significantly better returns for every unit of risk taken.
With a Sortino ratio of 1.05, the fund comfortably outperformed both the benchmark (0.61) and the category average (0.74), indicating the fund has generated better returns when considering the downside risk.
The fund has a Beta of 0.82, compared with the category average of 0.96. HDFC Flexi Cap Fund stands out with an Alpha of 5.46, far exceeding the category average of 1.74, indicating that the fund manager has consistently generated returns well above what would be expected.
HDFC Focused Fund – Direct Plan
The fund was launched on January 01, 2013, and since its inception, the fund has generated 14.96%. Amit Ganatra is the current manager of HDFC Focused Fund.
HDFC Focused Fund has delivered a mean return of 17.21%, outperforming both the benchmark BSE 500 TRI (13.01%) and the focused fund category average (14.63%).
AMCs like 360 ONE, Quant, and ICICI Prudential have produced the top three performing funds in the equity-focused category over the past ten years, while Axis, DSP, and Motilal Oswal have produced the lowest performing funds.
Top 5 stock holdings: ICICI Bank, HDFC Bank, Axis Bank, Kotak Bank and SBI.
Top sector-wise holdings: Financial, Consumer Discretionary, Technology, Industrials and Healthcare.
Risk profile: The risk metrics indicate that HDFC Focused Fund has delivered superior returns while maintaining lower volatility than both its benchmark and the average focused fund category.
The fund recorded a standard deviation of 12.79%, which is significantly lower than the benchmark (15.30%) as well as the category average (15.45%), indicating that the fund has experienced comparatively less volatility.
HDFC Focused Fund posted a Sharpe ratio of 0.89, well ahead of the benchmark’s 0.47 and the category average’s 0.57, suggesting that the fund has generated considerably higher returns for every unit of total risk undertaken.
The fund’s Sortino ratio of 1.00 also surpassed the benchmark (0.61) and the category average (0.75), suggesting that the fund has managed downside volatility while generating returns.
With a Beta of 0.79, HDFC Focused Fund is less sensitive to market movements than the category average Beta of 0.95. The fund has generated an impressive Alpha of 5.68, significantly higher than the category average of 1.98.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.
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