It is often said, “Saving money is smart, but it pays to invest” and for good reason. Investing your money will help multiply it and build wealth instead of leaving it idle in your bank accounts. Although there are several investment options, mutual funds are one of the best and easiest options that offer substantial returns.
While most people are familiar with mutual funds, challenge and confusion often arise when newcomers to mutual funds realize that there are several different mutual funds. There are several parameters, such as expense ratio, benchmark performance, fund manager experience, etc., that need to be considered before investing. Knowing that conducting extensive research on this topic can be tedious and time-consuming, we have rounded up the 10 best performing mutual funds over the past five years to help you choose the fund that best suits your financial situation and risk tolerance. However, before diving into the best performing mutual funds, you need to understand their rankings. Mutual funds are often classified as large-cap funds, mid-cap funds, small-cap funds, flexible-cap funds, and ELSS (EquityLinked Savings Scheme) funds.
- Axis Bluechip Fund (LargeCap)
The Axis Bluechip Fund, launched by Axis Mutual Fund, currently has assets under management of INR 29,160.6 billion and invests in first class stocks or stocks of large companies that are financially stable and well established . Although they are less volatile than mid- or small-cap stocks and have adequate liquidity, they are classified as high risk and the minimum SIP is INR 500 with a minimum investment of INR 5000. The Axis Bluechip Fund aims for long-term capital growth by investing in a diversified portfolio and is suitable for investors seeking long-term capital growth. The 5-year CAGR for the fund is 18.50%.
- Canara Robeco Bluechip Equity Fund (LargeCap)
An equity fund launched by Canara Robeco Mutual Fund that has been available since 2013 and aims to achieve capital growth by investing primarily in large-cap companies. With an Asset Under Current Management (AUM) of INR 3,691.25 cr, the fund is classified as extremely risky and the minimum SIP (Systematic Investment Plan) is set at 1000. While returns are taxed at 15% if the fund redeemed 1 year ago, customers must pay 10% along with LTCG income tax of INR 1 lakh + in a fiscal year. The fund offers a 5-year CAGR of 18.08%.
- PGIM India MidCap 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 assets under management of INR 2383.38 Cr. While the minimum fixed rate is 5000 INR, shares that exceed 10% of the investment will be charged 0.5% of the redemption fee within 90 days. Classified as very high risk, the PGIM India Midcap Opportunities Fund is best suited for investors who are targeting an investment horizon of at least 34 years, seeking high returns, and have a 5-year CAGR of 21.23 %.
- Axis MidCap Fund
With assets under management of INR 13,834.27 cr., The companies selected for this fund’s portfolio are those with high growth prospects to support the investment objective of rapid capital accumulation. Although the Axis Midcap Fund is moderately high risk, it is suitable for those who want to invest for 34 years and achieve high returns. However, since this is a high risk fund, investors should also be prepared for the possibility of moderate losses on their investments. The fund has a 5-year CAGR of 21.13% and is ideal for long-term goals like education, retirement, etc.
- Nippon India SmallCap Fund
The Nippon India Smallcap Fund focuses on cross-sector small-cap companies and has a minimum high-risk SIP investment is set at INR 100, while the fixed investment is 5000 with an exit fee 1% if paid within a month. The fund, which was made available to investors in 2013, is ideal for those with a higher tolerance for risk who expect higher returns, although investors should expect moderate losses due to the risk factor. The fund offers a 5-year CAGR of 23.61%.
- SBI SmallCap Fund
With a Net Asset Value (NAV) of INR 102.68 as of August 16, 2021, the SBI SmallCap Fund has assets under management of INR 9,620.21 cr with an expense ratio of 0.84%. Due to its extremely high risk, the fund has a minimum SIP amount of INR 500. The security selection strategy includes both growth and value investments. With a 5-year CAGR of 23.31%, the fund aims to provide investors with opportunities for long-term wealth growth.
- Parag Parikh FlexiCap Fund
The high risk Parag Parikh Flexicap Fund has assets under management of INR 13,186.70 cr but a lower expense ratio of 0.89%. With a minimum investment of INR 5000, the fund has an exit charge of 2% for repayment within 365 days and 1% for repayment within 366 730 days. The fund aims to achieve long-term capital growth by investing primarily in equities and equity-related instruments. The fund is suitable for investors looking to invest for 34 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.