Since the March 2020 low, India’s NSE Nifty 50 is on a bullish run, setting new records every month, and making it one of the best performers in the world today. It is also among Asia’s top gainers this month, surpassing the regional benchmark by 4 percentage points. On the other hand, consumer prices rose above 6 percent in the last two months, driven by higher food and oil prices. This high inflation led to the dwindling of returns on traditional investment sources such as bank deposits, compelling investors to look for juicier and market-linked avenues of investment like mutual funds. The last 12 months have witnessed some high return mutual funds in India drawing the attention of new and existing investors towards them.
Investing in High Return Mutual Funds in India
The primary objective of your mutual fund investments usually is to multiply and accumulate wealth. Wealth accumulation is not a short-term process but a process that needs to be looked at from a long-term perspective. While investing across mutual fund sub-types such as equities, debt, and hybrid, it is pertinent to note that the high-performing mutual funds in India mostly comprise the small and mid-cap equities. This can be attributed to the fact that equities normally demonstrate a high growth rate over the other fund sub-types. The table shown below indicates a list of high return mutual funds in India in 2021:
Small-Cap Equity Mutual Funds
| Fund Name | NAV (as of Jul 27, 2021) in Rs. | 3-year Return | 5-year Return |
| Quant Small Cap Fund | 129.86 | +72% | +39.01% |
| Kotak Small Cap Fund | 165.65 | +51.5% | +30.27% |
| Axis Small Cap Fund | 61 | +44.21% | +29.25% |
| Nippon India Small Cap | 82.98 | +46.99% | +28.55% |
| ICICI Prudential Small Cap Fund | 50.87 | +47.17% | +26.8% |
Check out the Kotak Mutual Funds AMC Page
Mid Cap Equity Mutual Funds
| Fund Name | NAV (as of Jul 27, 2021) in Rs. | 3-year Return | 5-year Return |
| PGIM India Midcap Opportunities Fund | 42.19 | +50.98% | +30.41% |
| Quant Midcap Fund | 114.73 | +45.55% | +28.75% |
| Axis Midcap Fund | 69.77 | +34.14% | +25.41% |
| Edelweiss Midcap Fund | 51.84 | +39.66% | +24.99% |
| Kotak Emerging Equity Fund | 74.01 | +37.8% | +24.09% |
Check out the Axis Mutual Funds AMC Page
Large Cap Equity Mutual Funds
| Fund Name | NAV (as of Jul 27, 2021) in Rs. | 3-year Return | 5-year Return |
| Canara Robeco Bluechip Equity Fund | 42.05 | +27.18% | +20.74% |
| Axis Blue Chip Fund | 46.92 | +23.84% | +20.03% |
| Kotak Bluechip Fund | 378.85 | +26.03% | +18.57% |
| Mirae Asset Large Cap Fund | 78.06 | +23.96% | +18.11% |
| Edelweiss Large Cap Fund | 54.38 | +23.72% | +17.82% |
Check out the Canara Robeco Mutual Funds AMC Page
Large and Midcap Equity Mutual Funds
| Fund Name | NAV (as of Jul 27, 2021) in Rs. | 3-year Return | 5-year Return |
| Mirae Asset Emerging Bluechip Fund | 97.44 | +34.56% | +24.52% |
| Canara Robeco Emerging Equities Fund | 162.92 | +31% | +21.46% |
| Edelweiss Large & Midcap Fund | 53.76 | +30.16% | +21.1% |
| Principal Emerging Bluechip Fund | 178.89 | +30.87% | +20.55% |
| DSP Equity Opportunities Fund | 371.28 | +30.81% | +20.5% |
Check out the Mirae Mutual Funds AMC Page
High Return Hybrid Mutual Funds
| Fund Name | NAV (as of Jul 27, 2021) in Rs. | 3-year Return | 5-year Return |
| Quant Multi-Asset Fund Direct-Growth | 72.56 | +27.89% | +17.68% |
| Quant Multi-Asset Fund Growth | 71.89 | +27.49% | +17.46% |
| Quant Absolute Fund Direct-Growth | 269.3 | + 26.51% | +19.27% |
| Quant Absolute Fund Growth | 260.42 | +25.45% | +18.57% |
| Kotak Asset Allocator Fund Direct-Growth | 132.93 | +18.95% | +15.02% |
High Return Debt Mutual Funds
| Fund Name | NAV (as of Jul 27, 2021) in Rs. | 3-year Return | 5-year Return |
| IDFC Government Securities Fund Constant Maturity Direct-Growth | 36.37 | +12.02% | +9.98% |
| IDFC Government Securities Investment Plan Direct-Growth | 29.62 | +11.82% | +9.56% |
| ICICI Prudential Constant Maturity Gilt Fund Direct-Growth | 19.6 | +11.47% | +9.32% |
| DSP Government Securities Direct Plan-Growth | 77.82 | +11.28% | +9.14% |
| Nippon India Nivesh Lakshya Fund Direct-Growth | 13.72 | +11.07% | – |
Check out the ICICI Prudential Mutual Funds AMC Page
From the above-tabulated information, it is evident that small and midcap equities can be deemed as high return mutual funds in India. They are providing around 30 percent return over a 5-year long-term duration as compared to a roughly 20 percent return from large caps for the same period. However, investment in small and midcap mutual funds is riskier than in large caps funds, despite their high growth potential.
So, investors who have a high-risk appetite for market volatility over a long-term investment period may opt for small and midcap mutual funds. Investors with short-term investment goals are advised to stay away from these funds. Alongside, there are a few factors that you need to keep an eye on while investing in high return mutual funds in India 2021:
Investment Style
Depending on your risk tolerance level, you can choose from large caps, midcap, small-cap, or multi-cap funds that can offer you high returns.
Expense Ratio
This is the cost of managing the mutual fund. The higher the expense ratio, the maximum it shall impact the fund’s performance. High-performing mutual funds in India from small and midcap equities usually have a relatively lower expense ratio, guaranteeing some plum returns.
Entry and Exit Load Charges
As an investor, you must look to minimize the additional charges on your mutual fund investment. Entry and exit load charges can reduce your NAV value, and so you must choose from the high-performing mutual funds in India that have NIL or minimal entry and exit load charges to maximize the returns.
Brokerage Charges
Direct mutual funds normally generate higher returns than regular mutual funds as there are no brokerage charges. Buying direct mutual funds from any online platform not just helps avoid paying a commission to an AMC or a brokerage firm but also maximizes your investment returns.
Conclusion
Mutual fund investing, in general, requires immense patience, effort as well as risk appetite. Risk and returns are directly proportional and thus balancing your desire for returns with your risk appetite becomes crucial. So, while investing in small and midcap equities that promise superior returns, you need to be careful about the risk of possible unsuccessful ventures and the adverse impact of market volatility on these small-cap funds. A better way out would be to invest very nominally in such risk-prone small-cap funds without making them part of your core investment portfolio. This way, their growth can be balanced by reducing any overexposure to risk.
