Introduction:
Knowing the best-performing mutual funds over the last 5 years can help you make well-informed financial decisions. It is critical to concentrate on funds that have regularly produced high returns. Here, we look at mutual funds that have performed exceptionally well and may assist you in reaching your financial objectives.
Understanding mutual funds
In recent years, mutual funds have demonstrated their reliability and popularity as an investment choice for investors looking to expand their wealth. Mutual funds ensure risk diversification with features like liquidity and skilled management.
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However, it is always advisable to study the performance trends of mutual funds before making any investment decisions.
Top mutual funds in India based on past 5-year performance
Let’s dive deeper into the highest-performing mutual funds in the last 5 years. Mutual funds can be divided into 3 types depending on the primary capital investment instrument:
1. Equity
2. Debt
3. Hybrid
Let’s see the top performers in each of the above categories in the last 5 years:
Equity
o Quant Infrastructure Fund Direct-Growth: This fund witnessed a 41.81% annualised rate of return, making it the top-performing mutual fund in the last 5 years in the equity category. Its total market value (Assets Under Management or AUM) stands at ₹2,498.18 crore as of March 31, 2024. It invests 90.72% of its assets in equities and 5.4% in debts.
o Quant Small Cap Fund Direct Plan-Growth: The annualised growth rate of this fund was 40.19%, with an AUM worth ₹17,348.95 crore. Investment in equities and debt by this fund is 93.2% and 1.46%, respectively.
o Quant Mid Cap Fund Direct-Growth: With an annual return rate of 38.69%, this fund enjoys ₹5,873.25 crore worth of AUM. Investment allocations include 93.52% in equities and 4.56% in debts.
Debt
o Aditya Birla Sun Life Medium Term Plan Direct-Growth: The annualised growth rate of this fund was 9.31%, with its AUM standing at ₹1,863.18 crore. This fund invests 44.01% in low-risk securities and 46.21% in government securities.
o DSP Government Securities Direct Plan-Growth: This fund gave an annual return of 8.78%, and its market value is worth ₹755.19 crore. This fund allocates 97.45% of its investment in government securities.
o SBI Magnum Gilt Fund Direct-Growth: The annual rate of return for this fund was 8.41%, while its AUM is worth ₹7,884.27 crore. It invests 98.51% of its funds in debts, government securities being the primary investment instrument.
Hybrid
o Quant Multi Asset Fund Direct-Growth: This fund’s annualised rate of return was 30.11%, and its AUM stands at ₹1,829.08 crore. Its investment in equities is 65.84% and in debt 6.89%.
o Quant Absolute Fund Direct-Growth: The annual return on this fund was 26.02%, while its asset market value is ₹1,868.85 crore. Its investment portfolio comprises 65.55% and 21.16% in equities and debt, respectively.
o Bank of India Mid & Small Cap Equity & Debt Fund Direct-Growth: This fund gave an annualised rate of return of 23.30%, with ₹665.29 crore worth of AUM. The equity investment of this fund is 77%, while debt investment is 20.42%.
Things to keep in mind while investing in top-performing mutual funds of the last 5 years
You must keep the following things in mind while investing in the highest-return mutual funds in the last 5 years:
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Verify whether the fund's investment plan fulfils your financial aims, like growth, yielding income, or maintaining investment value.
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Analyse how the fund divides resources among equities, debts, and other investment instruments.
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Evaluate the fund's past price swings and performance in times of market slumps to see if it matches your risk threshold.
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Assess the fund manager's achievements in managing the specific fund.
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Compare the fund’s expense ratio with that of the other funds.
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Determine if the AUM of a fund is suitable for your investment and its effect on liquidity.
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Analyse the sectors and companies in which the fund is investing to ensure that your investment needs are met.
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Do not forget to understand the tax implications of the fund.
To sum it up
Putting money into the most successful mutual funds of the last 5 years could offer you great growth opportunities. However, it's vital to thoroughly examine every fund's investment approach, risk level, and leadership. Factors like historical performance, expense ratios, and suitability with your financial objectives must also be considered before making any final decisions.
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