Mutual funds are currently considered to be one of the safest financial instruments in the market. Not only do they offer the benefit of being professionally managed, but by diversifying risks they also provide a semblance of stability in an unpredictable environment. This is why a number of people are increasingly relying on mutual funds to meet their short-term and long-term financial objectives.
However, before you venture into this uncertain arena, it is vital to find out how the various types of mutual funds have fared in the past. Gathering knowledge about their historical performance would not just give you a detailed idea about what their future is most likely to be but it would also assist you in making a careful investment decision.
Although such an analysis can be based on a lot of factors, it is wise to only use the parameters of sustainability, consistency, and returns in order to make an objective comparison.
Performance of Various Mutual Funds
Here is a brief outline about how the different kinds of mutual funds have performed over the past decade:
- In the last ten years, mutual funds which were invested in the FMCG sector have reaped the best returns. Their average annual returns for the past decade have been to the tune of 20%.
- The banking and financial sector too has been a steady performer. The mutual funds which carry these stocks in their portfolio have realised about 15% annual returns in the last ten years.
- Mutual funds in the small cap, mid-cap, and large cap segment have registered variable performances over the past decade. Out of these, the small cap sector has been the most successful as it has delivered around 15% returns annually. It is closely followed by the mid-cap sector with approximately 13% annualised returns. And, last but not least, the large cap segment has given about 12% annual returns.
- Being tax efficient, the equity linked saving schemes (ELSS) funds have also put up a good show. Their annual yield for the past 10 years has been steady at 11%. However, if only the last 5 years are taken into consideration, the yield shoots up to a whopping 18%.
- The debt funds and balanced/hybrid funds have given constant returns which hover around 11% and 12%. These instruments are long-term and thus, they tend to provide a safe haven for people with a moderate to low risk profile.
Top Mutual Funds of The Last Decade
Once the general performance of various fund types has been understood, it becomes pivotal to find out which specific mutual funds have proven to be the most beneficial for investors in the last few years. These include:
Birla Frontline Equity Fund
The primary objective of this large cap fund has been to generate capital appreciation in the longer term, by creating a portfolio which is invested in diverse industries. In the last 5 years, it has delivered an average of 19% returns, whereas if a 10-year tenure is considered, the returns stand at 14%. These returns are much more than the fund’s benchmark, thus highlighting its excellent decadal performance.
HDFC Opportunities Fund
Launched with the goal of investing in medium-sized companies, the HDFC Opportunities fund has surpassed its benchmark in the last five years by providing average annual returns to the tune of 25%. It is a 5-star rated fund which has consistently given around 18% returns in the past ten years.
UTI Mid-cap Fund
The UTI mid-cap fund is presently considered to be an extremely reliable mutual fund simply owing to the fact that it has persistently provided around 16% returns in the past 10 years. Rather, its reward profile has only progressed upwards since its inception. This can be substantiated from analysing its returns from the last five years which have now grown to be about 26%.
DSP Small Cap Fund
As the name itself suggests, this fund aims to create long-term capital by investing in small cap companies. In fact, within the small cap segment, the DSP small cap fund has outperformed its counterparts by delivering almost 32% average annual returns in the last 5 years. Its 10 year returns too have been 19%. It is, currently, one of the largest small cap funds which has constantly been performing beyond expectations.
Franklin India Tax Saver Fund
Being an equity linked savings scheme, the Franklin India tax saver fund does not just aim for sustainable growth but it also helps provide income tax deductions to its investors. The fund has a portfolio which basically consists of public sector undertakings and debentures. It has reaped more than 14% annualised returns in the last one decade. In the ELSS scheme category, this fund has performed far better than other, similar funds.
The Road Ahead
By knowing how different funds have performed in the past, it becomes easy for the investor to make an informed decision. If you are looking for a good place to make such a comparison, you need to look no further than Oro Wealth. It is an online platform which uses state-of-the-art technology and time-tested strategies to enable you to undertake a comprehensive scrutiny of different types of mutual funds in India based on their past and present performance. This ensures that investors are adequately empowered to navigate this tough financial terrain.
Mutual funds have steadily gained the status of being a secure and reliable monetary vehicle. This trustworthiness has not been created in an instant. It is their performance over the years which has caused such a belief to be built up. As the market continues to grow more complex, mutual funds would prove to be nothing short of a wise investment decision.